<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
TECHNOLOGY STOCKS BOOST THE FUND'S RETURN IN LATE RALLY
A roundtable discussion with the Fund management team for
AIM V.I. Capital Appreciation Fund for the six-month period ended June 30, 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. IT WAS A VOLATILE SIX MONTHS may be broadening as investors' Following technology, the Fund's
IN THE MARKET, AND MID-CAP STOCKS psychology improves. largest weighting at about 16% was
LAGGED LARGE COMPANY STOCKS. in the health-care sector. As seen
HOW DID AIM V.I. Q. WHAT TOUCHED OFF THE MARKET VOLATILITY? in the technology sector, health-care
CAPITAL APPRECIATION FUND A. The primary cause of the market stocks have been extremely volatile
PERFORM IN weakness in the first quarter was as the group sorts out leaders
THAT ENVIRONMENT? vigorous economic expansion which and laggards, and that
A. We are pleased with the Fund's raised concerns that the Federal affected the Fund's performance
performance during that challenging Reserve Board would hike interest earlier in the year.
period. For the six-months ended rates to forestall inflation.
June 30, 1997, the Fund posted Stock prices were already plunging Q. GIVEN THEIR WEAK PERFORMANCE
a solid total return when the Fed nudged rates higher EARLIER IN THE YEAR, HAVE YOU
of 8.34%. in March. The popular Dow Jones CHANGED YOUR OUTLOOK TOWARD
Much of the Fund's gain occurred Industrial Average (DJIA) of 30 TECHNOLOGY AND HEALTH CARE?
late in the period when the market large-company stocks lost 9.8% A. Not at all. Despite some
staged an impressive rally led by of its value by mid-April-- short-lived weakness in seasonal
technology stocks, the Fund's just short of the 10% decline profits, we remain committed to
largest position. The Fund's total many market observers had predicted. technology as a high-growth
return was 13.29%, besting the Later reports showing that sector over the long-term.
11.84% total return of the Standard economic growth was slowing and Technology has been the chief
and Poor's Midcap 400 Index over the inflationary pressures were minimal engine of economic expansion
period April 30 to June 30. sparked a spirited stock-market rally. the past few years, generating
The unmanaged S&P 400 measures The DJIA recouped its losses and up to one-third of all economic
the performance of medium-size advanced to record highs in June. growth by some estimates.
companies, such as those
in which the Fund invests. Q. WHERE HAS THE FUND PLACED
THE MOST EMPHASIS?
Q. WHY DID MID-CAP STOCKS LAG THE A. The technology sector was the
PERFORMANCE OF LARGE-CAP STOCKS Fund's largest weighting at about
EARLIER IN THE YEAR? 35% of the portfolio on
A. Dramatic market volatility, June 30, 1997. Technology stocks
uneasiness about earnings trends, led the market rally which began
and concerns about the pace of in May, the first time in months
economic growth have driven the group advanced as a whole. While
investors to the relative safety most technology companies continued
and liquidity of stocks in large, to report strong growth, some
predictable companies. That created companies failed to meet
an unusually narrow market which expectations and the entire group
persisted through the first four was punished severely in the market
months of the reporting period. before the recent rally.
However, the rally touched off
in May was led by small- and
mid-cap stocks, a positive sign
that the narrow market
-------------------------
Despite some
short-lived weakness
in seasonal profits,
we remain committed to
technology as a high-growth sector
over the long-term.
-------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Among our largest technology industry. An excellent example seems well grounded. The economy
holdings at the end of the of this trend is HEALTHSOUTH continues to grow at a healthy, but
reporting period were well-known Corp., one of the Fund's top 10 manageable pace. Importantly, there
industry leaders Dell Computer holdings. is no inflation, and that reduces
Corp., Microsoft Corp., and BMC the likelihood of higher interest
Software, Inc. Q. WHAT IS YOUR OUTLOOK FOR rates which could erode
Within the health-care sector, THE MARKET IN GENERAL NEAR TERM? corporate profits.
we have emphasized three major A. After two extraordinary years Nonetheless, it is important
areas where there appears to be of double-digit returns on stocks, that investors maintain realistic
attractive long-term potential many analysts were warning about expectations about investment
for earnings growth: hospitals, the potential for a significant performance. We have enjoyed
which are benefiting from market decline, with some making recorded-breaking returns from
ongoing consolidation efforts; bearish forecasts for a market stocks in recent years, but
assisted living facilities, correction--a decline of 20%. indications are that stock
with their appeal to aging After approaching those performance may be returning to
baby boomers; and health estimates in early spring, the historic norms that bear closer
maintenance organizations, markets have recovered swiftly to 10% per year than 20%.
which continue to lead the and completely. And the optimism
efficiency drive in this
Top 10 Equity Holdings
As of 6/30/97, based on total net assets
1. Dell Computer Corp. 1.30%
2. Sun Microsystems, Inc. 1.07
3. HealthSouth Corp. 1.06
4. Tenet Healthcare Corp. 1.00
5. Microsoft Corp. 0.93
6. Tellabs, Inc. 0.83
7. BMC Software, Inc. 0.80
8. Service Corp. International 0.77
9. Green Tree Financial Corp. 0.74
10. KLA-Tencor Corp. 0.74
Please keep in mind that the Fund's portfolio composition is subject to change
and there is no assurance the Fund will continue to hold any particular
security.
Growth of a $10,000 Investment
From 5/5/93 - 6/30/97
AIM V.I. Capital S&P 500 Lipper Capital Appreciation
Appreciation Fund Stock Index Fund Index
(In thousands)
<S> <C> <C> <C>
5/5/93 $10,000 $10,000 $10,000
7/30/93 10,390 10,155 10,542
10/29/93 11,440 10,675 11,449
1/31/94 12,590 11,062 11,866
4/29/94 11,939 10,430 11,100
7/29/94 11,379 10,681 10,929
10/31/94 12,620 11,088 11,547
1/31/95 12,097 11,123 11,312
4/28/95 13,623 12,247 12,242
7/31/95 16,534 13,462 13,937
10/31/95 16,886 14,011 14,175
1/31/96 16,769 15,412 15,086
4/30/96 18,727 15,937 16,281
7/31/96 17,000 15,678 15,114
10/31/96 19,028 17,376 16,491
12/31/96 19,540 18,344 17,018
6/30/97 21,169 22,120 18,747
AVERAGE ANNUAL TOTAL RETURN Past performance cannot guarantee comparable
As of 6/30/97 future results.
1 Year 13.84%
Inception (5/5/93) 19.79
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 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--Registered
Trademark--.
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. Results shown are for the
period 4/30/93 through 6/30/97. Source: Towers Data Systems HYPO--Registered
Trademark--.
An investment cannot be made in the indexes listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
4
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION> MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS - 85.12%
ADVERTISING/BROADCASTING - 1.43%
American Radio Systems Corp.(a) 10,000 $ 398,750
- ------------------------------------------------------------------
CanWest Global Communications Corp. (Canada) 77,700 1,150,930
- ------------------------------------------------------------------
Chancellor Corp. - Class A(a) 4,000 160,000
- ------------------------------------------------------------------
Clear Channel Communications, Inc.(a) 51,600 3,173,400
- ------------------------------------------------------------------
Jacor Communications, Inc.(a) 27,500 1,051,875
- ------------------------------------------------------------------
Omnicom Group, Inc. 15,000 924,375
- ------------------------------------------------------------------
Paxson Communications Corp.(a) 10,000 127,500
- ------------------------------------------------------------------
6,986,830
- ------------------------------------------------------------------
AIRLINES - 0.09%
Southwest Airlines Co. 16,600 429,525
- ------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES - 0.08%
Mark IV Industries, Inc. 16,978 407,472
- ------------------------------------------------------------------
BANKING - 0.67%
AmSouth Bancorporation 25,000 945,313
- ------------------------------------------------------------------
BankBoston Corp. 31,900 2,298,793
- ------------------------------------------------------------------
3,244,106
- ------------------------------------------------------------------
BIOTECHNOLOGY - 0.49%
Amgen, Inc.(a) 31,000 1,801,875
- ------------------------------------------------------------------
Biogen, Inc.(a) 16,800 569,100
- ------------------------------------------------------------------
2,370,975
- ------------------------------------------------------------------
BUSINESS SERVICES - 1.12%
AccuStaff, Inc.(a) 29,300 694,042
- ------------------------------------------------------------------
Corrections Corp. of America(a) 40,000 1,590,000
- ------------------------------------------------------------------
Equifax, Inc. 14,000 520,625
- ------------------------------------------------------------------
Healthcare COMPARE Corp.(a) 13,700 717,538
- ------------------------------------------------------------------
Paychex, Inc. 34,350 1,305,300
- ------------------------------------------------------------------
Romac International, Inc.(a) 20,000 655,000
- ------------------------------------------------------------------
5,482,505
- ------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.19%
IMC Global, Inc. 27,000 945,000
- ------------------------------------------------------------------
COMPUTER MINI/PCS - 3.24%
Compaq Computer Corp.(a) 35,400 3,513,450
- ------------------------------------------------------------------
Dell Computer Corp.(a) 54,000 6,341,625
- ------------------------------------------------------------------
Micron Electronics, Inc.(a) 40,000 712,500
- ------------------------------------------------------------------
Sun Microsystems, Inc.(a) 140,800 5,240,400
- ------------------------------------------------------------------
15,807,975
- ------------------------------------------------------------------
COMPUTER NETWORKING - 2.61%
ACT Networks, Inc.(a) 12,000 153,000
- ------------------------------------------------------------------
Ascend Communications, Inc.(a) 36,400 1,433,250
- ------------------------------------------------------------------
Bay Networks, Inc.(a) 80,800 2,146,250
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER NETWORKING - (CONTINUED)
Cabletron Systems, Inc.(a) 25,500 $ 721,969
- ------------------------------------------------------------------
Cisco Systems, Inc.(a) 23,300 1,564,012
- ------------------------------------------------------------------
ECI Telecommunications Ltd. Designs (Israel) 35,000 1,041,250
- ------------------------------------------------------------------
Newbridge Networks Corp. (Canada)(a) 65,500 2,849,250
- ------------------------------------------------------------------
3Com Corp.(a) 62,300 2,803,500
- ------------------------------------------------------------------
12,712,481
- ------------------------------------------------------------------
COMPUTER PERIPHERALS - 2.04%
Adaptec, Inc.(a) 69,600 2,418,600
- ------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 43,300 2,297,606
- ------------------------------------------------------------------
EMC Corp.(a) 63,600 2,480,400
- ------------------------------------------------------------------
Microchip Technology, Inc.(a) 81,500 2,424,625
- ------------------------------------------------------------------
Storage Technology Corp.(a) 7,600 338,200
- ------------------------------------------------------------------
9,959,431
- ------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 10.01%
Adobe System, Inc. 23,500 823,969
- ------------------------------------------------------------------
Affiliated Computer Services, Inc.(a) 30,500 854,000
- ------------------------------------------------------------------
Baan Co., N.V. (Netherlands)(a) 19,700 1,356,838
- ------------------------------------------------------------------
BDM International Inc.(a) 12,000 276,000
- ------------------------------------------------------------------
BISYS Group, Inc. (The)(a) 12,000 501,000
- ------------------------------------------------------------------
BMC Software, Inc.(a) 70,300 3,892,862
- ------------------------------------------------------------------
Cadence Design Systems, Inc.(a) 89,950 3,013,325
- ------------------------------------------------------------------
CBT Group PLC-ADR (Ireland)(a) 900 56,812
- ------------------------------------------------------------------
Centura Software Corp.(a) 2,295 5,164
- ------------------------------------------------------------------
Computer Associates International, Inc. 20,800 1,158,300
- ------------------------------------------------------------------
Computer Sciences Corp.(a) 24,000 1,731,000
- ------------------------------------------------------------------
Compuware Corp.(a) 70,800 3,380,700
- ------------------------------------------------------------------
CSG Systems International, Inc.(a) 15,100 466,212
- ------------------------------------------------------------------
DST Systems, Inc.(a) 34,800 1,159,275
- ------------------------------------------------------------------
Electronic Arts, Inc.(a) 15,700 527,912
- ------------------------------------------------------------------
First Data Corp. 28,600 1,256,613
- ------------------------------------------------------------------
Fiserv, Inc.(a) 42,500 1,896,562
- ------------------------------------------------------------------
HBO & Co. 47,344 3,260,818
- ------------------------------------------------------------------
HPR, Inc.(a) 13,600 251,600
- ------------------------------------------------------------------
IDX Systems Corp.(a) 12,100 417,450
- ------------------------------------------------------------------
McAfee Associates, Inc.(a) 40,000 2,525,000
- ------------------------------------------------------------------
Microsoft Corp.(a) 35,800 4,524,225
- ------------------------------------------------------------------
National Data Corp. 22,500 974,530
- ------------------------------------------------------------------
Oracle Corp.(a) 60,575 3,051,466
- ------------------------------------------------------------------
Parametric Technology Co.(a) 61,100 2,600,569
- ------------------------------------------------------------------
Physician Computer Network, Inc.(a) 33,800 228,150
- ------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
5
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES - (CONTINUED)
Security Dynamics Technologies, Inc.(a) 34,400 $ 1,268,500
- -----------------------------------------------------------------
Sterling Commerce, Inc.(a) 75,055 2,467,432
- -----------------------------------------------------------------
Sterling Software, Inc.(a) 16,800 525,000
- -----------------------------------------------------------------
SunGard Data Systems Inc.(a) 17,600 818,400
- -----------------------------------------------------------------
Sybase, Inc.(a) 35,100 522,112
- -----------------------------------------------------------------
Synopsys, Inc.(a) 50,400 1,852,200
- -----------------------------------------------------------------
Tecnomatix Technologies Ltd. (Israel)(a) 18,600 604,500
- -----------------------------------------------------------------
Transition Systems, Inc.(a) 600 10,912
- -----------------------------------------------------------------
Wind River Systems(a) 15,000 573,750
- -----------------------------------------------------------------
48,833,158
- -----------------------------------------------------------------
CONGLOMERATES - 0.69%
Corning Inc. 33,800 1,880,125
- -----------------------------------------------------------------
Tyco International Ltd. 13,968 971,649
- -----------------------------------------------------------------
U.S. Industries, Inc.(a) 15,000 534,375
- -----------------------------------------------------------------
3,386,149
- -----------------------------------------------------------------
CONSUMER NON-DURABLES - 0.41%
Blyth Industries, Inc.(a) 18,300 617,625
- -----------------------------------------------------------------
Central Garden and Pet Co.(a) 10,000 250,000
- -----------------------------------------------------------------
Rexall Sundown, Inc.(a) 30,100 1,173,900
- -----------------------------------------------------------------
2,041,525
- -----------------------------------------------------------------
COSMETICS & TOILETRIES - 0.67%
General Nutrition Companies, Inc.(a) 68,500 1,918,000
- -----------------------------------------------------------------
McKesson Corp. 17,300 1,340,750
- -----------------------------------------------------------------
3,258,750
- -----------------------------------------------------------------
ELECTRIC POWER - 0.29%
AES Corp.(a) 20,000 1,415,000
- -----------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 2.03%
AMETEK, Inc. 9,000 211,500
- -----------------------------------------------------------------
ASE Test Ltd.(a) 4,100 173,225
- -----------------------------------------------------------------
Berg Electronics Corp.(a) 13,600 488,750
- -----------------------------------------------------------------
BMC Industries, Inc. 13,700 469,225
- -----------------------------------------------------------------
Methode Electronics, Inc. - Class A 9,150 181,856
- -----------------------------------------------------------------
Molex, Inc. - Class A 10,507 366,432
- -----------------------------------------------------------------
Raychem Corp. 9,000 669,375
- -----------------------------------------------------------------
SCI Systems, Inc.(a) 37,700 2,403,375
- -----------------------------------------------------------------
Symbol Technologies, Inc. 25,800 867,525
- -----------------------------------------------------------------
Tektronix, Inc. 15,400 924,000
- -----------------------------------------------------------------
Teradyne, Inc.(a) 67,300 2,641,525
- -----------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 16,100 493,062
- -----------------------------------------------------------------
9,889,850
- -----------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS - 0.59%
Arrow Electronics, Inc.(a) 11,600 616,250
- -----------------------------------------------------------------
Avnet, Inc. 7,000 402,500
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONIC/PC DISTRIBUTORS - (CONTINUED)
Ingram Micro, Inc. - Class A(a) 40,700 $ 981,888
- ----------------------------------------------------------------
Micro Warehouse, Inc.(a) 51,000 873,374
- ----------------------------------------------------------------
2,874,012
- ----------------------------------------------------------------
FERTILIZERS - 0.16%
Potash Corp. of Saskatchewan Inc. (Canada) 10,500 788,156
- ----------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 4.22%
Aames Financial Corp. 37,650 696,525
- ----------------------------------------------------------------
American Express Co. 22,600 1,683,700
- ----------------------------------------------------------------
Capital One Financial Corp. 17,900 675,725
- ----------------------------------------------------------------
Cityscape Financial Corp.(a) 5,500 109,656
- ----------------------------------------------------------------
Concord EFS, Inc.(a) 83,900 2,170,912
- ----------------------------------------------------------------
Green Tree Financial Corp. 101,700 3,623,062
- ----------------------------------------------------------------
Household International, Inc. 23,000 2,701,062
- ----------------------------------------------------------------
Imperial Credit Industries, Inc.(a) 30,000 616,875
- ----------------------------------------------------------------
IMC Mortgage Co.(a) 47,000 781,375
- ----------------------------------------------------------------
MBNA Corp. 69,325 2,539,028
- ----------------------------------------------------------------
Money Store, Inc. (The) 48,000 1,377,000
- ----------------------------------------------------------------
PMT Services, Inc.(a) 29,500 449,875
- ----------------------------------------------------------------
Student Loan Marketing Association 15,000 1,905,000
- ----------------------------------------------------------------
SunAmerica, Inc. 25,000 1,218,750
- ----------------------------------------------------------------
20,548,545
- ----------------------------------------------------------------
FINANCE (LEASING COMPANIES) - 0.20%
Comdisco, Inc. 37,500 975,000
- ----------------------------------------------------------------
FINANCE (SAVINGS & LOAN) - 0.30%
ContiFinancial Corp.(a) 15,000 547,500
- ----------------------------------------------------------------
Washington Mutual, Inc. 15,200 908,200
- ----------------------------------------------------------------
1,455,700
- ----------------------------------------------------------------
FUNERAL SERVICES - 1.19%
Equity Corp. International(a) 13,800 333,788
- ----------------------------------------------------------------
Service Corp. International 114,000 3,747,750
- ----------------------------------------------------------------
Stewart Enterprises, Inc. - Class A 41,250 1,732,500
- ----------------------------------------------------------------
5,814,038
- ----------------------------------------------------------------
FURNITURE - 0.31%
Leggett & Platt, Inc. 35,000 1,505,000
- ----------------------------------------------------------------
GAMING - 0.46%
GTECH Holdings Corp.(a) 21,300 686,925
- ----------------------------------------------------------------
International Game Technology 38,700 686,925
- ----------------------------------------------------------------
MGM Grand, Inc.(a) 23,700 876,900
- ----------------------------------------------------------------
2,250,750
- ----------------------------------------------------------------
HOTELS/MOTELS - 0.82%
Choice Hotels International, Inc.(a) 36,000 609,750
- ----------------------------------------------------------------
Doubletree Corp.(a) 25,200 1,036,350
- ----------------------------------------------------------------
HFS, Inc.(a) 24,800 1,438,400
- ----------------------------------------------------------------
Promus Hotel Corp.(a) 18,750 726,563
- ----------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
6
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOTELS/MOTELS - (CONTINUED)
Sun International Hotels Ltd.(a) 5,200 $ 192,075
- ----------------------------------------------------------------------
4,003,138
- ----------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 0.05%
Conseco Inc. 6,700 247,900
- ----------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 1.29%
Aegon N.V. (Netherlands) 8,688 608,727
- ----------------------------------------------------------------------
CapMAC Holdings, Inc. 25,900 870,888
- ----------------------------------------------------------------------
Everest Re Holdings, Inc. 21,800 863,825
- ----------------------------------------------------------------------
MGIC Investment Corp. 66,200 3,173,463
- ----------------------------------------------------------------------
Progressive Corp. 1,600 139,200
- ----------------------------------------------------------------------
Providian Financial Corp. 20,000 642,500
- ----------------------------------------------------------------------
6,298,603
- ----------------------------------------------------------------------
LEISURE & RECREATION - 0.78%
Harley-Davidson, Inc. 52,200 2,502,338
- ----------------------------------------------------------------------
Regal Cinemas, Inc.(a) 27,500 907,500
- ----------------------------------------------------------------------
Speedway Motorsports, Inc.(a) 17,900 389,325
- ----------------------------------------------------------------------
3,799,163
- ----------------------------------------------------------------------
MACHINE TOOLS - 0.23%
Precision Castparts Corp. 17,000 1,013,625
- ----------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 0.49%
Kulicke & Soffa Industries, Inc.(a) 12,500 405,859
- ----------------------------------------------------------------------
Pentair, Inc. 14,500 476,688
- ----------------------------------------------------------------------
Thermo Electron Corp.(a) 44,300 1,506,200
- ----------------------------------------------------------------------
2,388,747
- ----------------------------------------------------------------------
MEDICAL (DRUGS) - 2.63%
Cardinal Health, Inc. 43,025 2,463,181
- ----------------------------------------------------------------------
Covance, Inc.(a) 56,025 1,081,983
- ----------------------------------------------------------------------
Curative Technologies, Inc.(a) 12,600 362,250
- ----------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 32,300 1,287,963
- ----------------------------------------------------------------------
Elan Corp. PLC-ADR (Ireland)(a) 53,200 2,407,300
- ----------------------------------------------------------------------
Express Scripts, Inc. - Class A(a) 21,800 910,150
- ----------------------------------------------------------------------
Forest Laboratories, Inc.(a) 21,200 882,450
- ----------------------------------------------------------------------
Jones Medical Industries, Inc. 35,300 1,676,750
- ----------------------------------------------------------------------
Parexel International Corp.(a) 13,400 425,450
- ----------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR (Israel) 20,300 1,314,425
- ----------------------------------------------------------------------
12,811,902
- ----------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 8.25%
American HomePatient, Inc.(a) 22,050 551,250
- ----------------------------------------------------------------------
Beverly Enterprises, Inc.(a) 50,000 812,500
- ----------------------------------------------------------------------
Cerner Corp.(a) 25,000 525,00
- ----------------------------------------------------------------------
Columbia/HCA Healthcare Corp. 59,220 2,328,086
- ----------------------------------------------------------------------
FPA Medical Management, Inc.(a) 46,400 1,099,100
- ----------------------------------------------------------------------
Genesis Health Ventures, Inc.(a) 22,700 766,125
- ----------------------------------------------------------------------
Health Care and Retirement Corp.(a) 52,500 1,752,188
- ----------------------------------------------------------------------
Health Management Associates, Inc. - Class A(a) 119,512 3,406,092
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES) - (CONTINUED)
HEALTHSOUTH Corp.(a) 207,000 $ 5,162,062
- ---------------------------------------------------------------------
Humana, Inc.(a) 75,000 1,734,375
- ---------------------------------------------------------------------
Lincare Holdings, Inc.(a) 38,000 1,634,000
- ---------------------------------------------------------------------
MedPartners, Inc.(a) 22,500 486,562
- ---------------------------------------------------------------------
OccuSystems, Inc.(a) 41,500 1,203,500
- ---------------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 15,000 272,813
- ---------------------------------------------------------------------
Oxford Health Plans, Inc.(a) 50,000 3,587,500
- ---------------------------------------------------------------------
PhyCor, Inc.(a) 36,300 1,250,080
- ---------------------------------------------------------------------
Quorum Health Group, Inc.(a) 33,000 1,179,750
- ---------------------------------------------------------------------
Tenet Healthcare Corp.(a) 165,665 4,897,472
- ---------------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 18,800 755,525
- ---------------------------------------------------------------------
United Healthcare Corp. 42,200 2,194,400
- ---------------------------------------------------------------------
Universal Health Services, Inc. - Class B(a) 46,300 1,782,550
- ---------------------------------------------------------------------
Vencor, Inc.(a) 39,300 1,660,425
- ---------------------------------------------------------------------
Wellpoint Health Networks, Inc.(a) 25,700 1,178,988
- ---------------------------------------------------------------------
40,220,343
- ---------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS - 2.71%
Dentsply International, Inc. 11,000 539,000
- ---------------------------------------------------------------------
Guidant Corp. 22,500 1,912,500
- ---------------------------------------------------------------------
Hillenbrand Industries, Inc. 26,200 1,244,500
- ---------------------------------------------------------------------
Omnicare, Inc. 113,000 3,545,375
- ---------------------------------------------------------------------
Physician Sales & Service, Inc.(a) 20,000 380,000
- ---------------------------------------------------------------------
Quintiles Transnational Corp.(a) 26,800 1,865,950
- ---------------------------------------------------------------------
Sybron International Corp.(a) 61,800 2,464,275
- ---------------------------------------------------------------------
US Surgical Corp. 34,100 1,270,225
- ---------------------------------------------------------------------
13,221,825
- ---------------------------------------------------------------------
OFFICE AUTOMATION - 1.17%
Danka Business Systems PLC-ADR (United Kingdom) 67,800 2,771,325
- ---------------------------------------------------------------------
Xerox Corp. 37,100 2,926,263
- ---------------------------------------------------------------------
5,697,588
- ---------------------------------------------------------------------
OFFICE PRODUCTS - 0.25%
Avery Dennison Corp. 20,000 802,500
- ---------------------------------------------------------------------
Reynolds & Reynolds Co. - Class A 25,000 393,750
- ---------------------------------------------------------------------
1,196,250
- ---------------------------------------------------------------------
OIL & GAS (DRILLING) - 0.35%
Precision Drilling Corp. (Canada)(a) 25,000 1,209,375
- ---------------------------------------------------------------------
Santa Fe International Corp.(a) 14,100 479,400
- ---------------------------------------------------------------------
1,688,775
- ---------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.55%
Apache Corp.(a) 30,000 975,000
- ---------------------------------------------------------------------
Burlington Resources, Inc. 22,000 970,750
- ---------------------------------------------------------------------
Sante Fe Energy Resources, Inc.(a) 50,000 734,375
- ---------------------------------------------------------------------
2,680,125
- ---------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
7
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (SERVICES) - 1.28%
Camco International, Inc. 40,000 $ 2,190,000
- ------------------------------------------------------------
EVI, Inc.(a) 21,200 890,400
- ------------------------------------------------------------
Global Marine, Inc.(a) 37,500 871,875
- ------------------------------------------------------------
Halliburton Co. 20,000 1,585,000
- ------------------------------------------------------------
Veritas DGC, Inc.(a) 30,800 700,700
- ------------------------------------------------------------
6,237,975
- ------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 3.80%
Baker Hughes, Inc. 73,500 2,843,531
- ------------------------------------------------------------
BJ Services Co.(a) 26,000 1,394,250
- ------------------------------------------------------------
Cooper Cameron Corp.(a) 44,000 2,057,000
- ------------------------------------------------------------
Diamond Offshore Drilling, Inc.(a) 12,500 976,563
- ------------------------------------------------------------
ENSCO International, Inc.(a) 20,000 1,055,000
- ------------------------------------------------------------
Falcon Drilling Co., Inc.(a) 29,500 1,699,938
- ------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 62,300 1,222,638
- ------------------------------------------------------------
Nabors Industries, Inc.(a) 59,100 1,477,500
- ------------------------------------------------------------
Pride Petroleum Services, Inc.(a) 54,500 1,308,000
- ------------------------------------------------------------
Rowan Companies, Inc.(a) 25,000 704,688
- ------------------------------------------------------------
Smith International, Inc.(a) 35,300 2,144,475
- ------------------------------------------------------------
Varco International, Inc.(a) 51,000 1,644,750
- ------------------------------------------------------------
18,528,333
- ------------------------------------------------------------
POLLUTION CONTROL - 0.74%
United Waste Services, Inc.(a) 29,000 1,189,000
- ------------------------------------------------------------
US Filter Corp.(a) 40,500 1,103,625
- ------------------------------------------------------------
USA Waste Services, Inc.(a) 34,000 1,313,250
- ------------------------------------------------------------
3,605,875
- ------------------------------------------------------------
PUBLISHING - 0.23%
Gartner Group, Inc.(a) 18,000 646,875
- ------------------------------------------------------------
Times Mirror Co. 9,000 497,250
- ------------------------------------------------------------
1,144,125
- ------------------------------------------------------------
RESTAURANTS - 1.24%
Apple South, Inc. 30,000 457,500
- ------------------------------------------------------------
Applebee's International, Inc. 53,600 1,433,800
- ------------------------------------------------------------
Cracker Barrel Old Country Store, Inc. 40,000 1,060,000
- ------------------------------------------------------------
Lone Star Steakhouse & Saloon(a) 38,100 990,600
- ------------------------------------------------------------
Outback Steakhouse, Inc.(a) 8,200 198,338
- ------------------------------------------------------------
Starbucks Corp.(a) 18,200 708,663
- ------------------------------------------------------------
Wendy's International, Inc. 46,400 1,203,500
- ------------------------------------------------------------
6,052,401
- ------------------------------------------------------------
RETAIL (FOOD & DRUG) - 2.15%
American Stores Co. 52,100 2,572,438
- ------------------------------------------------------------
CVS Corp. 15,473 792,991
- ------------------------------------------------------------
Kroger Co.(a) 82,600 2,395,400
- ------------------------------------------------------------
Quality Food Centers, Inc.(a) 27,600 1,048,800
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (FOOD & DRUG) - (CONTINUED)
Rite Aid Corp. 25,480 $ 1,270,815
- ----------------------------------------------------------
Safeway, Inc.(a) 52,300 2,412,338
- ----------------------------------------------------------
10,492,782
- ----------------------------------------------------------
RETAIL (STORES) - 7.60%
Bed Bath & Beyond, Inc.(a) 34,400 1,044,900
- ----------------------------------------------------------
CompUSA, Inc.(a) 104,700 2,251,050
- ----------------------------------------------------------
Consolidated Stores Corp.(a) 86,562 3,008,047
- ----------------------------------------------------------
Costco Companies, Inc.(a) 17,400 572,025
- ----------------------------------------------------------
Dayton Hudson Corp. 61,000 3,244,438
- ----------------------------------------------------------
Dollar General Corp. 24,202 907,575
- ----------------------------------------------------------
Dollar Tree Stores, Inc.(a) 25,100 1,264,413
- ----------------------------------------------------------
Finish Line, Inc. (The) - Class A(a) 20,000 292,500
- ----------------------------------------------------------
Gap, Inc. (The) 14,700 571,463
- ----------------------------------------------------------
Hollywood Entertainment Corp.(a) 17,800 407,175
- ----------------------------------------------------------
Home Depot, Inc. 7,300 503,244
- ----------------------------------------------------------
Jones Apparel Group, Inc.(a) 45,000 2,148,750
- ----------------------------------------------------------
Kohl's Corp.(a) 20,900 1,106,394
- ----------------------------------------------------------
Lowe's Companies, Inc. 55,200 2,049,300
- ----------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 42,250 1,330,875
- ----------------------------------------------------------
Meyer (Fred), Inc.(a) 25,800 1,333,538
- ----------------------------------------------------------
Nordstrom, Inc. 30,000 1,471,875
- ----------------------------------------------------------
Pep Boys - Manny, Moe & Jack 9,000 306,563
- ----------------------------------------------------------
Petco Animal Supplies, Inc.(a) 25,600 768,000
- ----------------------------------------------------------
Ross Stores, Inc. 24,600 804,113
- ----------------------------------------------------------
Sports Authority, Inc. (The)(a) 36,450 708,497
- ----------------------------------------------------------
Staples, Inc.(a) 121,425 2,823,131
- ----------------------------------------------------------
Tech Data Corp.(a) 64,900 2,040,294
- ----------------------------------------------------------
Tiffany & Co. 18,000 831,375
- ----------------------------------------------------------
TJX Companies, Inc. 58,600 1,545,575
- ----------------------------------------------------------
Toys "R" Us, Inc.(a) 52,000 1,820,000
- ----------------------------------------------------------
Viking Office Products, Inc.(a) 71,100 1,350,900
- ----------------------------------------------------------
Williams-Sonoma, Inc.(a) 13,000 555,750
- ----------------------------------------------------------
37,061,760
- ----------------------------------------------------------
SCIENTIFIC INSTRUMENTS - 0.59%
Perkin-Elmer Corp. 36,200 2,880,163
- ----------------------------------------------------------
SECURITY & SAFETY SERVICES - 0.00%
Rural/Metro Corp.(a) 300 8,710
- ----------------------------------------------------------
SEMICONDUCTORS - 7.50%
Altera Corp.(a) 61,600 3,110,800
- ----------------------------------------------------------
Analog Devices, Inc.(a) 52,300 1,389,219
- ----------------------------------------------------------
Applied Materials, Inc.(a) 49,500 3,505,219
- ----------------------------------------------------------
Atmel Corp.(a) 37,500 1,050,000
- ----------------------------------------------------------
Dallas Semiconductor Corp. 20,000 785,000
- ----------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
8
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SEMICONDUCTORS - (CONTINUED)
Kemet Corp.(a) 9,400 $ 233,825
- ----------------------------------------------------------------------------
KLA - Tencor Corp.(a) 73,800 3,597,750
- ----------------------------------------------------------------------------
Lam Research Corp.(a) 20,100 744,956
- ----------------------------------------------------------------------------
Linear Technology Corp. 50,100 2,592,675
- ----------------------------------------------------------------------------
LSI Logic Corp.(a) 69,700 2,230,400
- ----------------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 52,200 2,968,875
- ----------------------------------------------------------------------------
Motorola, Inc. 34,100 2,591,600
- ----------------------------------------------------------------------------
National Semiconductor Corp.(a) 103,000 3,154,375
- ----------------------------------------------------------------------------
Novellus Systems, Inc.(a) 10,500 908,250
- ----------------------------------------------------------------------------
PMC-Sierra, Inc.(a) 25,000 656,250
- ----------------------------------------------------------------------------
Sanmina Corp.(a) 22,500 1,428,750
- ----------------------------------------------------------------------------
Solectron Corp.(a) 13,400 938,000
- ----------------------------------------------------------------------------
Texas Instruments, Inc. 24,400 2,051,125
- ----------------------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 6,000 196,125
- ----------------------------------------------------------------------------
Xilinx, Inc.(a) 50,000 2,453,125
- ----------------------------------------------------------------------------
36,586,319
- ----------------------------------------------------------------------------
SHOES & RELATED APPAREL - 0.14%
Wolverine World Wide, Inc. 22,800 692,550
- ----------------------------------------------------------------------------
TELECOMMUNICATIONS - 4.72%
ADC Telecommunications, Inc.(a) 103,000 3,437,625
- ----------------------------------------------------------------------------
Andrew Corp.(a) 18,893 531,366
- ----------------------------------------------------------------------------
Aspect Telecommunications Corp.(a) 23,500 522,875
- ----------------------------------------------------------------------------
Billing Information Concepts(a) 31,000 1,081,125
- ----------------------------------------------------------------------------
DSC Communications Corp.(a) 76,100 1,693,225
- ----------------------------------------------------------------------------
LCI International, Inc.(a) 50,000 1,093,750
- ----------------------------------------------------------------------------
Lucent Technologies, Inc. 34,500 2,486,156
- ----------------------------------------------------------------------------
MasTec, Inc.(a) 4,700 222,369
- ----------------------------------------------------------------------------
Nokia Oy A.B. - Class A (Finland) 4,300 324,606
- ----------------------------------------------------------------------------
Nokia Oy A.B - Class A - ADR (Finland) 33,000 2,433,750
- ----------------------------------------------------------------------------
Northern Telecom Ltd. (Canada) 22,000 2,002,000
- ----------------------------------------------------------------------------
PairGain Technologies, Inc.(a) 25,500 395,250
- ----------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson - ADR (Sweden) 65,280 2,591,662
- ----------------------------------------------------------------------------
Tellabs, Inc.(a) 72,700 4,062,112
- ----------------------------------------------------------------------------
U.S. Long Distance Corp.(a) 9,300 160,425
- ----------------------------------------------------------------------------
23,038,296
- ----------------------------------------------------------------------------
TELEPHONE - 0.43%
Cincinnati Bell, Inc. 30,000 945,000
- ----------------------------------------------------------------------------
WorldCom, Inc.(a) 35,800 1,145,600
- ----------------------------------------------------------------------------
2,090,600
- ----------------------------------------------------------------------------
TEXTILES - 1.35%
Gucci Group N.V. - ADR - New York Shares (Netherlands) 14,800 952,750
- ----------------------------------------------------------------------------
Liz Claiborne, Inc. 42,000 1,958,250
- ----------------------------------------------------------------------------
Nautica Enterprises, Inc.(a) 36,000 951,750
- ----------------------------------------------------------------------------
Tommy Hilfiger Corp.(a) 22,300 896,181
- ----------------------------------------------------------------------------
Unifi, Inc. 49,500 1,850,063
- ----------------------------------------------------------------------------
6,608,994
- ----------------------------------------------------------------------------
TRANSPORTATION - 0.07%
AirNet Systems, Inc.(a) 20,000 327,500
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TRUCKING - 0.24%
CNF Transportation Inc. 36,700 $ 1,183,575
- ----------------------------------------------------------------------------
Total Common Stocks 415,189,874
- ----------------------------------------------------------------------------
PREFERRED STOCK - 0.06%
INSURANCE (MULTI-LINE PROPERTY) - 0.06%
MGIC Investment Corp. - $3.12 Conv. Pfd. 3,500 288,750
- ----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE BONDS - 0.23%
COMPUTER SOFTWARE/SERVICES - 0.23%
Baan Co., N.V. (Netherlands), Conv. Sub. Notes,
4.50%, 12/15/01 (Acquired 01/13/97-01/24/97;
Cost $495,213)(b) $ 430,000 686,916
- ----------------------------------------------------------------------------
Cityscape Financial Corp., Conv. Sub. Deb.,
6.00%, 05/01/06 510,000 455,813
- ----------------------------------------------------------------------------
Total Convertible Bonds 1,142,729
- ----------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 5.84%
U.S. TREASURY BILLS - 5.84%(c)
4.96%, 09/25/97 28,800,000(d) 28,461,600
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 8.95%(e)
HSBC Securities, Inc., 6.10%, 07/01/97(f) 20,622,356 20,622,356
- ----------------------------------------------------------------------------
Smith Barney Inc., 6.05%, 07/01/97(g) 23,028,927 23,028,927
- ----------------------------------------------------------------------------
Total Repurchase Agreements 43,651,283
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.18% 488,734,236
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (0.18%) (960,933)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $487,773,303
============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of this security has been determined in
accordance with procedures established by the Board of Directors. The
market value of this security at 06/30/97 represented 0.14% of the Fund's
net assets.
(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) A portion of the principal amount was pledged as collateral for open
futures contracts at 06/30/97. See Note 7.
(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% of the sales
price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(f) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$100,016,944. Collateralized by $97,880,000 U.S. Government obligations,
7.50% due 10/31/99 with a market value at 06/30/97 of $102,002,909.
(g) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$200,033,611. Collateralized by $369,338,000 U.S. Government obligations,
0% to 10.70% due 03/15/98 to 04/15/30 with an aggregate market value at
06/30/97 of $204,000,115.
Investment Abbreviations:
ADR - American Depository Receipt
Conv.- Convertible
Deb. - Debentures
Pfd. - Preferred
Sub. - Subordinated
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $379,243,586) $488,734,236
- ----------------------------------------------------------------------
Foreign currencies, at market value (cost $2,505) 2,463
- ----------------------------------------------------------------------
Receivables for:
Investments sold 1,673,111
- ----------------------------------------------------------------------
Capital stock sold 109,989
- ----------------------------------------------------------------------
Dividends and interest 101,804
- ----------------------------------------------------------------------
Investment for deferred compensation plan 13,818
- ----------------------------------------------------------------------
Organizational costs, net 2,410
- ----------------------------------------------------------------------
Other assets 1,952
- ----------------------------------------------------------------------
Total assets 490,639,783
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,326,270
- ----------------------------------------------------------------------
Capital stock reacquired 500
- ----------------------------------------------------------------------
Variation margin 212,800
- ----------------------------------------------------------------------
Deferred compensation plan 13,818
- ----------------------------------------------------------------------
Accrued advisory fees 244,683
- ----------------------------------------------------------------------
Accrued directors' fees 1,877
- ----------------------------------------------------------------------
Accrued administrative services fees 3,801
- ----------------------------------------------------------------------
Accrued operating expenses 62,731
- ----------------------------------------------------------------------
Total liabilities 2,866,480
- ----------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $487,773,303
======================================================================
Capital shares, $.001 par value per share:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 23,173,752
======================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 21.05
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $12,862 foreign withholding tax) $ 532,449
- ------------------------------------------------------------------------------
Interest 1,611,188
- ------------------------------------------------------------------------------
Total investment income 2,143,637
- ------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,326,507
- ------------------------------------------------------------------------------
Custodian fees 37,651
- ------------------------------------------------------------------------------
Administrative services fees 22,718
- ------------------------------------------------------------------------------
Directors' fees and expenses 4,317
- ------------------------------------------------------------------------------
Organizational costs 1,446
- ------------------------------------------------------------------------------
Other 66,558
- ------------------------------------------------------------------------------
Total expenses 1,459,197
- ------------------------------------------------------------------------------
Less:Expenses paid indirectly (1,884)
- ------------------------------------------------------------------------------
Net expenses 1,457,313
- ------------------------------------------------------------------------------
Net investment income 686,324
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FUTURES CONTRACTS:
NET REALIZED GAIN (LOSS) FROM:
Investment securities (3,460,347)
- ------------------------------------------------------------------------------
Foreign currencies (30)
- ------------------------------------------------------------------------------
Futures contracts 4,411,122
- ------------------------------------------------------------------------------
950,745
- ------------------------------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities 33,924,153
- ------------------------------------------------------------------------------
Foreign currencies (41)
- ------------------------------------------------------------------------------
Futures contracts (570,606)
- ------------------------------------------------------------------------------
33,353,506
- ------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies, and
futures contracts 34,304,251
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations $34,990,575
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 686,324 $ 521,505
- ------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and futures contracts 950,745 6,958,471
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies and futures
contracts 33,353,506 36,611,035
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 34,990,575 44,091,011
- ------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (546,109)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 82,719,563 114,365,840
- ------------------------------------------------------------------------------
Net increase in net assets 117,710,138 157,910,742
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 370,063,165 212,152,423
- ------------------------------------------------------------------------------
End of period $487,773,303 $370,063,165
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $369,995,486 $287,275,923
- ------------------------------------------------------------------------------
Undistributed net investment income 1,177,731 491,407
- ------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and futures
contracts 7,418,193 6,467,448
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and futures contracts 109,181,893 75,828,387
- ------------------------------------------------------------------------------
$487,773,303 $370,063,165
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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 and variable life
insurance policies.
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 (except
convertible bonds) is valued at its last 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. 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. 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. Debt
obligations (including convertible bonds) 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 quotations 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 of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which
AIM V.I. CAPITAL APPRECIATION FUND
11
<PAGE>
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. Realized gains or
losses on sales 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 the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
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 or cash 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.
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 six months ended June 30, 1997, AIM was reimbursed $22,718 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 six months ended June 30, 1997, the Fund incurred legal fees of
$2,327 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997, the Fund's expenses were reduced by $186 and the
Fund received reductions in custodian fees of $1,698 under an expense offset
arrangement. The effect of the above arrangements resulted in reductions of
the Fund's total expenses of $1,884 during the six months ended June 30, 1997.
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the six months ended June
30, 1997 was $189,123,669 and $127,297,771, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $113,251,611
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,879,537)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $109,372,074
===========================================================================
</TABLE>
Cost of investments for tax purposes is $379,362,162.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1997 and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Sold 5,920,101 $116,293,010 7,080,357 $129,652,839
- -----------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 28,864 546,109
- -----------------------------------------------------------------------------
Reacquired (1,790,178) (33,573,447) (887,800) (15,833,108)
- -----------------------------------------------------------------------------
4,129,923 $82,719,563 6,221,421 $114,365,840
=============================================================================
</TABLE>
NOTE 7 - OPEN FUTURES CONTRACTS
On June 30, 1997, $1,068,000 principal amount of U.S. Treasury bills were
pledged as collateral to cover margin requirements for open futures contracts:
Open futures contracts at June 30, 1997 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF APPRECIATION
CONTRACT CONTRACTS MONTH COMMITMENT (DEPRECIATION)
<S> <C> <C> <C> <C>
S&P 500 Index 64 Sept. 97 Buy $(308,716)
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
12
<PAGE>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
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>
DECEMBER 31, JANUARY 31,
JUNE 30, ------------------ -----------------
1997 1996 1995 1995 1994
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 19.43 $ 16.55 $ 12.05 $ 12.58 $ 10.00
- ------------------------ -------- -------- -------- ------- -------
Income from investment
operations:
Net investment income 0.03 0.02 0.04 0.05 --
- ------------------------ -------- -------- -------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) 1.59 2.89 4.46 (0.54) 2.59
- ------------------------ -------- -------- -------- ------- -------
Total from investment
operations 1.62 2.91 4.50 (0.49) 2.59
- ------------------------ -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income -- (0.03) -- (0.04) (0.01)
- ------------------------ -------- -------- -------- ------- -------
Net asset value, end of
period $ 21.05 $ 19.43 $ 16.55 $ 12.05 $ 12.58
======================== ======== ======== ======== ======= =======
Total return(a) 8.34% 17.58% 37.38% (3.91)% 25.90%
======================== ======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $487,773 $370,063 $212,152 $88,177 $35,354
======================== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets 0.69%(b)(c) 0.73% 0.75%(d) 0.84% 1.06%(d)
======================== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets 0.33%(b) 0.18% 0.39%(d) 0.46% 0.07%(d)
======================== ======== ======== ======== ======= =======
Portfolio turnover rate 35% 59% 37% 81% 34%
======================== ======== ======== ======== ======= =======
Average broker
commission rate(e) $ 0.0580 $ 0.0592 N/A N/A N/A
======================== ======== ======== ======== ======= =======
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $425,000,147.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been the
same.
(d) Annualized.
(e) Disclosure requirement beginning with the Fund's fiscal year ended
December 31, 1996.
AIM V.I. CAPITAL APPRECIATION FUND
13
<PAGE>
SUPPLEMENTAL PROXY INFORMATION--SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES WITHHOLD/
DIRECTOR/MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------- --------- ------- -----------
<S> <C> <C> <C>
(1)Charles T. Bauer.......................... 138,450,525 N/A 3,241,923
Bruce L. Crockett............................ 138,630,018 N/A 3,062,431
Owen Daly II................................. 138,241,309 N/A 3,451,139
Carl Frischling.............................. 138,615,279 N/A 3,077,169
Robert H. Graham............................. 138,641,752 N/A 3,050,695
John F. Kroeger.............................. 138,250,777 N/A 3,441,671
Lewis F. Pennock............................. 138,618,633 N/A 3,073,814
Ian W. Robinson.............................. 138,281,116 N/A 3,411,332
Louis S. Sklar............................... 138,611,786 N/A 3,080,663
(2) Approval of new Investment Advisory
Agreement................................ 17,851,585 260,572 588,759
(3) Elimination of policy restricting
investments in other
investment companies..................... 17,382,683 702,682 615,550
(4) Tait, Weller & Baker..................... 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
14
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
LATE RALLY BOOSTS BOND MARKET
A roundtable discussion with the Fund management team for AIM V.I. Diversified
Income Fund for the six-month period ended June 30, 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. BOND INVESTORS EXPERIENCED Q. WHAT ABOUT HIGH-YIELD BONDS? In Europe, the solid performance can
A DIFFICULT MARKET IN THE FIRST A. High-yield bonds were the top- be attributed mainly to the efforts of
HALF OF THE YEAR. performing segment of the portfolio. the various governments to reduce budget
HOW DID AIM V.I. DIVERSIFIED Unlike investment-grade bonds, high-yield deficits and outstanding indebtedness to
INCOME FUND PERFORM? bonds usually benefit from healthy economic comply with European Monetary Union
A. It was a trying period for bond expansion. Improving cash flows can have a admission standards. The Fund took
investors, but the Fund maintained a positive impact on the credit situation
positive total return: 2.81% for of many corporate borrowers. High-yield
the six months ended June 30, 1997. bonds performed well throughout most
The Fund's one-year performance of the period because of healthy
remains attractive--total return was economic grow High-yield bonds
10.96% for the one-year period ended performed well throughout most of the
June 30, 1997. That bested the 8.15% period because of healthy economic
total return of the Lehman Brothers growth.
Aggregate Bond Index and the 10.15%
total return of the Lipper General Q. HOW DID FOREIGN BONDS PERFORM?
Bond Fund Index. A. In local currency terms, most of
the foreign markets where the Fund invests
Q. WHAT WERE CONDITIONS LIKE IN THE performed well during the reporting
DOMESTIC INVESTMENT-GRADE BOND MARKET? period. The Fund benefited from exposure
A. Rapid economic growth in the first to such markets as the United Kingdom,
quarter of 1997 raised concerns that the Canada, Australia, and New Zealand.
Federal Reserve Board would tighten
monetary policy to forestall inflation.
Bond prices were already falling--and
yields rising--when the Fed raised
interest rates on March 25, 1997.
The decline continued until the end of
April when mounting evidence that
economic growth was slowing, combined
with improved prospects for a federal
balanced-budget agreement, ignited a
market rally. Bonds recouped most of their
earlier losses as reflected in the yield
of the 10-year U.S. Treasury note which
ranged from a low of 6.26% in February
to a high of 6.97% in April before
ending the period at 6.50%.
Top Five Holdings
As of 6/30/97, based on total net assets
Coupon Maturity %
<S> <C> <C> <C> <C>
1. LKB Global, Gtd. Notes 6.00% 01/2006 2.38%
2. Queensland Treasury Corp., Gtd. Bonds 6.50% 06/2005 1.98
3. New Zealand Government, Bonds 10.00% 03/2002 1.87
4. KFW International Finance Inc.,
Gtd. Eurobonds 11.625% 11/1998 1.53
5. New Zealand Government, Bonds 8.00% 02/2001 1.46
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
</TABLE>
----------------
High-yield bonds
performed well throughout
most of the period because of
healthy economic growth.
----------------
AIM V.I. DIVERSIFIED INCOME FUND
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
advantage of these efforts by holding V.I. DIVERSIFIED INCOME DIVERSIFIES WITH A
Swedish and Italian securities. "3-LEGGED STOOL" INVESTMENT APPROACH
However, the U.S. dollar appreciated
against most major currencies and that The Fund holds securities in three distinct segments:
adversely affected returns for U.S. domestic investment-grade bonds, high-yield securities,
investors. The Fund mitigated the effect and foreign bonds--three asset classes that tend
of a rising dollar by selectively hedging to perform differently because the factors that influence
some of its currency exposure. them vary. Holding all three diversifies the investment risk
associated with any one class, and that may lower the Fund's
Q. HOW WAS THE FUND STRUCTURED volatility and enhance its potential return.
AT THE END OF THE REPORTING PERIOD?
A. The Fund's weighted average maturity Domestic investment-grade bonds 32.58%
was 10 years and the Fund had an High-yield bonds 30.05%
average portfolio quality rating of A Foreign bonds 34.35%
as measured by Standard & Poor's Cash/cash equivalents 2.97%
Corporation (S&P) and Moody's Investor Other 0.05%
Service (Moody's), two widely known
credit rating agencies. These ratings Based on total net assets as of 6/30/97
are historical and are based on
analysis of the credit quality of Growth of a $10,000 Investment
the individual securities in the From 5/5/93-6/30/97
Fund's portfolio.
AIM V.I. Diversified Income Fund Lehman Brothers Aggregate Bond Index
Q. WHAT IS YOUR MARKET OUTLOOK? (In thousands)
A. Conditions in the U.S. are particularly 5/5/93 $10,000 $10,000
favorable for bond investments. Economic 6/30/93 10,160 10,184
growth is slowing to a moderate pace, 10,622 10,460
inflation continues to be astonishingly 10,605 10,466
low, and there is progress toward a 10,270 10,185
balanced budget agreement that 6/30/94 10,122 10,060
could include tax cuts for investors. 10,176 10,122
Interest rates should remain stable 10,068 10,160
given the absence of inflation. Indeed, 10,602 10,673
the Federal Reserve has indicated that 6/30/95 11,190 11,323
further tightening of monetary policy 11,563 11,548
may be unnecessary the rest 11,982 12,037
of the year. 11,982 11,823
We continue to be optimistic about 6/30/96 12,234 11,690
foreign bonds. Governments around the 12,582 12,109
globe continue to target lower fiscal 13,204 12,472
spending and government debt levels. 12,987 12,403
That should help contain interest 6/30/97 13,575 12,861
rates and continue the favorable
environment for bonds. AVERAGE ANNUAL TOTAL RETURN Past performance cannot guarantee comparable
The Fund remains committed to As of 6/30/97 future results.
maintaining exposure in the three 1 Year 10.96%
key bond-market sectors-- Inception (5/5/93) 7.64
investment-grade bonds, foreign
bonds, and high-yield bonds--to The performance figures shown represent the AIM V.I. Diversified Income Fund and
reduce volatility and enhance are not intended to reflect actual annuity values, and do not reflect charges at
opportunities for attractive returns. 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--Registered Trademark--.
The Lehman Brothers Aggregate Bond Index is an unmanaged index generally
considered representative of treasury, agency, corporate, and mortgage-backed
debt securities. Results shown are for the period 4/30/93 through 6/30/97.
Source: Lehman Brothers.
An investment cannot be made in any index listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
16
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS &
NOTES - 58.19%
ADVERTISING/BROADCASTING - 3.88%
Echostar DBS Corp., Sr. Sec. Gtd. Notes, 12.50%,
07/01/02 (acquired 06/20/97; cost $430,000)(b) $ 430,000 $ 427,850
- -------------------------------------------------------------------------------
ESAT Holdings Ltd., Sr. Notes, 12.50%, 02/01/07
(acquired 02/21/97-03/05/97; cost $274,950)(b)(c) 470,000 284,350
- -------------------------------------------------------------------------------
Time Warner, Inc.,
Deb., 9.125%, 01/15/13 500,000 553,010
- -------------------------------------------------------------------------------
Notes, 8.18%, 08/15/07 750,000 787,267
- -------------------------------------------------------------------------------
Unsec. Deb., 6.85%, 01/15/26 500,000 494,510
- -------------------------------------------------------------------------------
United International Holdings, Inc., Sr. Sec. Disc.
Notes, 12.78%, 11/15/99(d) 400,000 311,000
- -------------------------------------------------------------------------------
2,857,987
- -------------------------------------------------------------------------------
AIRLINES - 2.40%
Airplanes Pass Through Trust, Sub. Bonds, 10.875%,
03/15/19 300,000 348,189
- -------------------------------------------------------------------------------
Delta Air Lines, Inc., Deb., 9.00%, 05/15/16 825,000 927,094
- -------------------------------------------------------------------------------
United Air Lines, Inc., Pass Through Certificates,
9.56%, 10/19/18 425,000 488,593
- -------------------------------------------------------------------------------
1,763,876
- -------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS) - 0.62%
General Motors Corp., Deb., 8.80%, 03/01/21 400,000 455,920
- -------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES - 1.24%
Blue Bird Body Co., Series B Sr. Sub. Notes, 10.75%,
11/15/06 110,000 117,700
- -------------------------------------------------------------------------------
CSK Auto Inc., Sr. Sub. Notes, 11.00%, 11/01/06
(acquired 10/23/96; cost $100,000)(b) 100,000 105,000
- -------------------------------------------------------------------------------
Lear Seating, Sr. Gtd. Sub. Notes, 11.25%, 07/15/00 680,000 686,800
- -------------------------------------------------------------------------------
909,500
- -------------------------------------------------------------------------------
BANKING - 3.85%
Bankers Trust New York Corp., Gtd. Notes, 7.875%,
02/25/27 600,000 581,484
- -------------------------------------------------------------------------------
Deutsche Bank Financial, Gtd. Unsec. Sub. Deb., 6.70%,
12/13/06 750,000 730,800
- -------------------------------------------------------------------------------
First Union Bancorp, Sub. Deb., 7.50%, 04/15/35 800,000 824,928
- -------------------------------------------------------------------------------
Mercantile Bank, Sub. Notes, 6.375%, 01/15/04 300,000 289,695
- -------------------------------------------------------------------------------
Sovereign Bancorp, Inc., Sub. Notes, 8.00%, 03/15/03 400,000 409,692
- -------------------------------------------------------------------------------
2,836,599
- -------------------------------------------------------------------------------
BEVERAGES (SOFT DRINKS) - 1.27%
Coca-Cola Enterprises, Inc., Putable Notes, 7.24%,
06/20/20(d) 5,000,000 933,800
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CABLE TELEVISION - 3.72%
Comcast Cable Communications, Notes, 8.50%, 05/01/27
(acquired 04/24/97; cost $499,145)(b) $ 500,000 $ 534,320
- -------------------------------------------------------------------------------
Diamond Cable Communications PLC (United Kingdom), Sr.
Yankee Disc. Notes, 10.75%, 02/15/07 (acquired
02/21/97; cost $689,597)(b)(c) 1,160,000 672,800
- -------------------------------------------------------------------------------
Fundy Cable Ltd. (Canada), Sr. Yankee Sec. Second
Priority Notes, 11.00%, 11/15/05 60,000 65,100
- -------------------------------------------------------------------------------
Marcus Cable Operating Co., Sr. Disc. Notes, 13.50%,
08/01/04(c) 700,000 608,125
- -------------------------------------------------------------------------------
Rifkin Acquisition Partners L.L.P., Sr. Sub. Notes,
11.125%, 01/15/06 100,000 106,750
- -------------------------------------------------------------------------------
TeleWest Communications PLC, (United Kingdom), Sr.
Yankee Disc. Deb., 11.00%, 10/01/07(c) 170,000 124,100
- -------------------------------------------------------------------------------
Viacom, Inc., Sr. Notes, 7.75%, 06/01/05 500,000 501,620
- -------------------------------------------------------------------------------
Wireless One, Inc., Sr. Notes, 13.00%, 10/15/03 200,000 128,000
- -------------------------------------------------------------------------------
2,740,815
- -------------------------------------------------------------------------------
CHEMICALS - 0.75%
Crain Industries, Inc., Sr. Sub. Notes, 13.50%,
08/15/05 180,000 206,100
- -------------------------------------------------------------------------------
LaRoche Industries, Inc., Sr. Sub. Notes, 13.00%,
08/15/04 100,000 110,500
- -------------------------------------------------------------------------------
Sterling Chemicals, Inc., Sr. Unsec. Sub. Notes,
11.75%, 08/15/06 220,000 238,700
- -------------------------------------------------------------------------------
555,300
- -------------------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.20%
Hines Horticulture, Inc., Series B Sr. Gtd. Sub.
Notes, 11.75%, 10/15/05 140,000 148,750
- -------------------------------------------------------------------------------
CONTAINERS - 1.28%
Ivex Packaging Corp., Sr. Sub. Notes, 12.50%, 12/15/02 390,000 422,175
- -------------------------------------------------------------------------------
MVE Inc., Sr. Sec. Notes, 12.50%, 02/15/02 190,000 194,750
- -------------------------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes, 11.25%, 04/01/07
(acquired 04/01/97; cost $300,000)(b) 300,000 325,500
- -------------------------------------------------------------------------------
942,425
- -------------------------------------------------------------------------------
ELECTRIC POWER - 1.51%
AES China Generating Co. (Bermuda), Sr. Yankee Unsec.
Notes, 10.125%, 12/15/06 40,000 42,500
- -------------------------------------------------------------------------------
El Paso Electric Co.,
Series D Sec. 1st Mortgage Bonds, 8.90%, 02/01/06 500,000 536,585
- -------------------------------------------------------------------------------
Series E Sec. 1st Mortgage Bonds, 9.40%, 05/01/11 150,000 166,048
- -------------------------------------------------------------------------------
Panda Global Energy Co. (China), Sr. Yankee Sec.
Notes, 12.50%, 04/15/04 (acquired 04/11/97; cost
$355,087)(b) 380,000 370,500
- -------------------------------------------------------------------------------
1,115,633
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
17
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.52%
Electronic Retailing Systems International, Inc., Sr.
Disc. Notes, 13.25%, 02/01/04 (acquired 01/21/97;
cost $400,510)(b)(c) $ 590,000 $ 384,975
- ------------------------------------------------------------------------------
ENERGY (ALTERNATE SOURCES) - 0.72%
Gulf Canada Resources, Ltd. (Canada), Sr. Yankee
Unsec. Notes, 8.35%, 08/01/06 500,000 530,625
- ------------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 0.55%
MMI Products Inc., Sr. Sub. Notes, 11.25%, 04/15/07
(acquired 04/11/97; cost $380,000)(b) 380,000 404,700
- ------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 3.56%
Associates Corp. of North America, Series B Sr. Deb.,
7.95%, 02/15/10 750,000 802,312
- ------------------------------------------------------------------------------
GMAC, Notes, 9.00%, 10/15/02 750,000 820,305
- ------------------------------------------------------------------------------
Household Finance Corp., Notes, 7.125%, 09/01/05 1,000,000 995,920
- ------------------------------------------------------------------------------
2,618,537
- ------------------------------------------------------------------------------
FINANCE (LEASING COMPANIES) - 0.61%
Sea Containers, Ltd. (Bermuda), Series B Sr. Yankee
Sub. Deb., 12.50%, 12/01/04 400,000 450,000
- ------------------------------------------------------------------------------
FOOD/PROCESSING - 1.58%
ConAgra Inc., Sr. Unsec. Notes, 7.125%, 10/01/26 600,000 607,038
- ------------------------------------------------------------------------------
Del Monte Corp., Sr. Sub. Notes, 12.25%, 04/15/07
(acquired 04/15/97; cost $372,020)(b) 380,000 414,200
- ------------------------------------------------------------------------------
International Home Foods, Inc., Sr. Gtd. Sub. Notes,
10.375%, 11/01/06 80,000 82,600
- ------------------------------------------------------------------------------
Pilgrim's Pride Corp., Sr. Sub. Notes, 10.875%,
08/01/03 60,000 62,400
- ------------------------------------------------------------------------------
1,166,238
- ------------------------------------------------------------------------------
FOREIGN GOVERNMENT SECURITIES - 1.00%
Province of Manitoba (Canada), Yankee Bonds, 7.75%,
07/17/16 700,000 734,937
- ------------------------------------------------------------------------------
FURNITURE - 0.43%
Simmons Co., Sr. Sub. Notes, 10.75%, 04/15/06 300,000 318,000
- ------------------------------------------------------------------------------
GAMING - 0.49%
Coast Hotels & Casinos Inc., Series B Sec. First
Mortgage Gtd. Notes, 13.00%, 12/15/02 180,000 201,150
- ------------------------------------------------------------------------------
Trump Atlantic City Associates, Sec. First Mortgage
Gtd. Notes, 11.25%, 05/01/06 165,000 161,287
- ------------------------------------------------------------------------------
362,437
- ------------------------------------------------------------------------------
GAS DISTRIBUTION - 0.74%
Ferrellgas Partners, Series B Sr. Sec. Gtd. Notes,
9.375%, 06/15/06 525,000 543,375
- ------------------------------------------------------------------------------
HOTELS/MOTELS - 1.73%
ITT Corp., Unsec. Gtd. Deb., 7.375%, 11/15/15 750,000 696,143
- ------------------------------------------------------------------------------
John Q. Hammons Hotels Inc., Sec. First Mortgage
Notes, 9.75%, 10/01/05 550,000 574,750
- ------------------------------------------------------------------------------
1,270,893
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
INSURANCE (LIFE & HEALTH) - 1.11%
Americo Life Inc., Sr. Sub. Notes, 9.25%, 06/01/05 $ 75,000 $ 76,875
- -------------------------------------------------------------------------------
Torchmark Corp., Notes, 7.875%, 05/15/23 750,000 739,560
- -------------------------------------------------------------------------------
816,435
- -------------------------------------------------------------------------------
LEISURE & RECREATION - 0.78%
Booth Creek Ski Holdings Inc., Sr. Notes, 12.50%,
03/15/07 (acquired 03/31/97; cost $390,000)(b) 390,000 403,650
- -------------------------------------------------------------------------------
Icon Health & Fitness, Series B Sr. Sub. Notes,
13.00%, 07/15/02 150,000 169,500
- -------------------------------------------------------------------------------
573,150
- -------------------------------------------------------------------------------
MACHINERY (HEAVY) - 0.42%
Fairfield Manufacturing Co., Inc., Sr. Sub. Notes,
11.375%, 07/01/01 100,000 107,000
- -------------------------------------------------------------------------------
PrimeCo. Inc., Sr. Sub. Notes, 12.75%, 03/01/05 167,000 198,730
- -------------------------------------------------------------------------------
305,730
- -------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 0.30%
Interlake Corp., Sr. Notes, 12.00%, 11/15/01 200,000 223,000
- -------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 1.03%
Tenet Healthcare Corp., Sr. Notes, 8.00%, 01/15/05 750,000 757,500
- -------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCT - 1.01%
Dade International Inc., Series B Sr. Sub. Notes,
11.125%, 05/01/06 80,000 89,600
- -------------------------------------------------------------------------------
Dynacare Inc. (Canada), Sr. Yankee Notes, 10.75%,
01/15/06 170,000 177,650
- -------------------------------------------------------------------------------
Graphic Controls Corp., Series A Sr. Sub. Notes,
12.00%, 09/15/05 150,000 168,000
- -------------------------------------------------------------------------------
IMED Corp., Sr. Sub. Notes, 9.75%, 12/01/06 (acquired
11/19/96-04/01/97; cost $296,913)(b) 300,000 306,750
- -------------------------------------------------------------------------------
742,000
- -------------------------------------------------------------------------------
METALS - 0.76%
GS Industries, Inc., Sr. Gtd. Notes, 12.00%, 09/01/04 185,000 199,800
- -------------------------------------------------------------------------------
Rio Algom Ltd. (Canada), Yankee Unsec. Deb., 7.05%,
11/01/05 370,000 358,223
- -------------------------------------------------------------------------------
558,023
- -------------------------------------------------------------------------------
NATURAL GAS PIPELINE - 0.60%
Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05 450,000 440,833
- -------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 1.15%
Abraxas Petroleum Corp., Series B Sr. Notes, 11.50%,
11/01/04 160,000 174,800
- -------------------------------------------------------------------------------
Mariner Energy Corp., Series B Sr. Sub. Notes, 10.50%,
08/01/06 170,000 178,925
- -------------------------------------------------------------------------------
Talisman Energy, Inc. (Canada), Yankee Deb., 7.125%,
06/01/07 500,000 491,525
- -------------------------------------------------------------------------------
845,250
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
18
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
OIL & GAS (INTEGRATED) - 0.11%
Wainoco Oil Corp., Sr. Notes, 12.00%, 08/01/02 $ 80,000 $ 82,600
- -------------------------------------------------------------------------------
OIL & GAS (SPECIALTY) - 1.02%
Nova Chemicals Ltd. (Canada), Yankee Deb., 7.00%,
08/15/26 750,000 751,845
- -------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 0.08%
Falcon Drilling Co., Inc., Series B Sr. Notes, 9.75%,
01/15/01 60,000 62,400
- -------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 1.39%
Indah Kiat Fin Mauritius, Sr. Gtd. Unsec. Notes,
10.00%, 07/01/07 (acquired 06/26/97; cost
$635,821)(b) 640,000 637,600
- -------------------------------------------------------------------------------
RAPP International Finance (Indonesia), Gtd. Yankee
Sec. Notes, 11.50%, 12/15/00 150,000 153,750
- -------------------------------------------------------------------------------
Uniforet Inc. (Canada), Sr. Yankee Gtd. Notes,
11.125%, 10/15/06 115,000 108,100
- -------------------------------------------------------------------------------
United Stationer Supply, Sr. Sub. Notes, 12.75%,
05/01/05 110,000 125,538
- -------------------------------------------------------------------------------
1,024,988
- -------------------------------------------------------------------------------
POLLUTION CONTROL - 1.94%
Allied Waste Industries, Inc., Sr. Disc. Notes,
11.30%, 06/01/07 (acquired 05/01/97; cost
$516,924)(b)(c) 900,000 569,250
- -------------------------------------------------------------------------------
WMX Technologies, Inc., Unsec. Notes, 7.10%, 08/01/26 850,000 858,610
- -------------------------------------------------------------------------------
1,427,860
- -------------------------------------------------------------------------------
PUBLISHING - 1.56%
MDC Communications Corp. (Canada), Sr. Yankee Unsec.
Sub. Notes, 10.50%, 12/01/06 300,000 319,500
- -------------------------------------------------------------------------------
News America Holdings, Inc., Sr. Gtd. Deb., 9.25%,
02/01/13 750,000 831,458
- -------------------------------------------------------------------------------
1,150,958
- -------------------------------------------------------------------------------
RAILROADS - 0.90%
Norfolk Southern Corp., Putable Bonds, 7.05%, 05/01/37 650,000 661,863
- -------------------------------------------------------------------------------
REAL ESTATE - 1.03%
Finova Capital Corp., Unsec. Notes, 7.40%, 05/06/06 750,000 759,345
- -------------------------------------------------------------------------------
RETAIL (FOOD & DRUG) - 1.15%
Great Atlantic & Pacific Tea Co., Inc. (Canada),
Yankee Gtd. Notes, 7.78%, 11/01/00 (acquired
10/18/95; cost $500,000)(b) 500,000 512,440
- -------------------------------------------------------------------------------
Jitney-Jungle Stores of America Inc., Sr. Gtd. Notes,
12.00%, 03/01/06 300,000 336,000
- -------------------------------------------------------------------------------
848,440
- -------------------------------------------------------------------------------
RETAIL (STORES) - 0.27%
Loehmann's Holdings, Inc., Sr. Unsec. Notes, 11.875%,
05/15/03 200,000 201,000
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
SCHOOLS - 0.24%
Commemorative Brands, Sr. Sub. Notes, 11.00%, 01/15/07 $ 115,000 $ 121,037
- -------------------------------------------------------------------------------
Herff Jones Inc., Sr. Sub. Notes, 11.00%, 08/15/05 50,000 54,250
- -------------------------------------------------------------------------------
175,287
- -------------------------------------------------------------------------------
SEMICONDUCTORS - 0.26%
Advanced Micro Devices, Inc., Sr. Sec. Notes, 11.00%,
08/01/03 170,000 189,975
- -------------------------------------------------------------------------------
STEEL - 0.32%
Gulf States Steel Corp., First Mortgage Notes, 13.50%,
04/15/03 230,000 232,300
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS - 6.21%
Bell Canada (Canada), Yankee Deb., 9.50%, 10/15/10 350,000 417,064
- -------------------------------------------------------------------------------
Capstar Broadcasting Partners, Sr. Disc. Notes,
12.75%, 02/01/09 (acquired 02/14/97-02/19/97; cost
$268,016)(b)(c) 490,000 317,888
- -------------------------------------------------------------------------------
Clearnet Communications Inc. (Canada), Sr. Yankee
Unsec. Disc. Notes, 14.75%, 12/15/05(c) 110,000 73,425
- -------------------------------------------------------------------------------
Dial Call Communications, Sr. Disc. Notes, 12.25%,
04/15/04(c) 180,000 148,725
- -------------------------------------------------------------------------------
GST Equipment Funding, Sr. Sec. Notes, 13.25%,
05/01/07 (acquired 05/08/97; cost $300,000)(b) 300,000 322,500
- -------------------------------------------------------------------------------
ICG Holdings, Inc., Sr. Disc. Notes, 11.625%, 03/15/07
(acquired 03/06/97; cost $306,536)(b)(c) 540,000 327,391
- -------------------------------------------------------------------------------
MCI Communications Corp., Putable Sr. Unsec. Deb.,
7.125%, 06/15/27 650,000 674,251
- -------------------------------------------------------------------------------
Nextel Communications, Inc., Sr. Disc. Notes, 11.50%,
09/01/03(c) 300,000 262,500
- -------------------------------------------------------------------------------
Northern Telecom (Canada), Yankee Notes, 6.00%,
09/01/03 100,000 95,918
- -------------------------------------------------------------------------------
Orion Network Systems, Inc., Units, 11.25%,
01/15/07(e) 580,000 609,000
- -------------------------------------------------------------------------------
PriCellular Wireless Corp., Sr. Notes, 10.75%,
11/01/04 230,000 239,200
- -------------------------------------------------------------------------------
Sygnet Wireless Inc., Sr. Unsec. Notes, 11.50%,
10/01/06 220,000 221,100
- -------------------------------------------------------------------------------
TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05 850,000 865,147
- -------------------------------------------------------------------------------
4,574,109
- -------------------------------------------------------------------------------
TELEPHONE - 0.17%
PhoneTel Technologies, Inc., Sr. Unsec. Gtd. Notes,
12.00%, 12/15/06 120,000 122,100
- -------------------------------------------------------------------------------
TRANSPORTATION - 1.31%
Stena A.B. (Sweden), Sr. Yankee Unsec. Notes, 10.50%,
12/15/05 230,000 252,425
- -------------------------------------------------------------------------------
Transportacion Maritima Mexicana S.A. de C.V.
(Mexico), Sr. Yankee Unsec. Notes, 10.00%, 11/15/06 300,000 303,000
- -------------------------------------------------------------------------------
Travelcenters of America, Sr. Sub. Notes, 10.25%,
04/01/07 (acquired 03/24/97; cost $397,900)(b) 400,000 412,000
- -------------------------------------------------------------------------------
967,425
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
19
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TRUCKING - 0.42%
AmeriTruck Distribution Corp., Series B Sr.
Sub. Notes, 12.25%, 11/15/05 $ 300,000 $ 306,750
- -------------------------------------------------------------------------------
Total U.S. Dollar Denominated Non-Convertible
Bonds & Notes 42,846,488
- -------------------------------------------------------------------------------
U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES - 0.56%
TRANSPORTATION - 0.56%
Laidlaw, Inc., (Canada) Yankee Unsec. Conv.
Deb., 6.00%, 01/15/99 (acquired 08/19/96; cost
$397,500)(b) 300,000 409,626
- -------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED NON-
CONVERTIBLE BONDS & NOTES - 11.43%(f)
CANADA - 5.03%
Bank of Montreal (Banking), Sub. Deb., 7.92%,
07/31/12 CAD 850,000 671,346
- -------------------------------------------------------------------------------
Canadian Oil Debco Inc. (Oil & Gas), Deb.,
11.00%, 10/31/00 450,000 373,895
- -------------------------------------------------------------------------------
NAV Canada (Transportation), Bonds, 7.40%,
06/01/27 1,000,000 748,296
- -------------------------------------------------------------------------------
Rogers Cablesystems (Cable Television), Sr.
Sec. Second Priority Deb., 9.65%, 01/15/14 250,000 181,404
- -------------------------------------------------------------------------------
Teleglobe Canada Inc. (Telecommunications),
Unsec. Deb., 8.35%, 06/20/03 850,000 677,464
- -------------------------------------------------------------------------------
Trans-Canada Pipelines (Oil & Gas),
Series Q Deb., 10.625%, 10/20/09 500,000 227,877
- -------------------------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 280,000 469,706
- -------------------------------------------------------------------------------
Westcoast Energy Inc. (Electric Power), Deb.,
6.45%, 12/18/06 (acquired 12/03/96; cost
$369,585)(b) 500,000 356,675
- -------------------------------------------------------------------------------
3,706,663
- -------------------------------------------------------------------------------
GERMANY - 3.60%
Diamler - Benz A.G. (Finance -- Consumer
Credit), Gtd. Unsub. Eurobonds, 4.50%,
07/05/03 DEM 500,000 431,096
- -------------------------------------------------------------------------------
International Bank for Reconstruction &
Development (Supranational Organization),
Unsec. Global Bonds, 7.125%, 04/12/05 725,000 458,607
- -------------------------------------------------------------------------------
LKB Global (Banking), Gtd. Notes, 6.00%,
01/25/06 3,000,000 1,758,271
- -------------------------------------------------------------------------------
2,647,974
- -------------------------------------------------------------------------------
ITALY - 1.53%
KFW International Finance Inc. (Finance -
Consumer Credit), Gtd. Eurobonds, 11.625%,
11/27/98 ITL 1,800,000,000 1,128,991
- -------------------------------------------------------------------------------
SWEDEN - 0.26%
Swedish Export Credit (Finance - Consumer
Credit), Unsec. Unsub. Eurobonds, 11.70%,
12/04/98 SEK 300,000,000 188,659
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
UNITED KINGDOM - 1.01%
Sutton Bridge Financing Ltd. (Finance - Consumer
Credit), Gtd. Bonds, 8.625%, 06/30/22 GBP 450,000 $ 746,107
- --------------------------------------------------------------------------------
Total Non U.S. Dollar Denominated Non-Convertible
Bonds & Notes 8,418,394
- --------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES - 4.84%(f)
FRANCE - 0.39%
Societe Generale (Banking), Conv. Deb., 3.50%,
01/01/00 FRF 1,419,000 289,730
- --------------------------------------------------------------------------------
JAPAN - 2.43%
JUSCO Co. Ltd. (Consumer Non-Durables), Conv. Bonds,
1.20%, 02/20/01 JPY40,000,000 625,301
- --------------------------------------------------------------------------------
Matsushita Electric Industrial Co. Ltd. (Electronic
Components/Miscellaneous), Conv. Bonds, 1.30%,
03/29/02 50,000,000 621,619
- --------------------------------------------------------------------------------
Sony Corp. (Electronic Components/Miscellaneous),
Conv. Deb., 1.40%, 03/31/05 8,000,000 89,339
- --------------------------------------------------------------------------------
Toyota Motor Corp. (Automobile - Manufacturers),
Conv. Bonds, 1.20%, 01/28/98 30,000,000 449,529
- --------------------------------------------------------------------------------
1,785,788
- --------------------------------------------------------------------------------
UNITED KINGDOM - 2.02%
J. Sainsbury (C.I.) Ltd. (Finance - Asset
Management), Conv. Gtd. Bonds, 8.50%, 11/19/05 GBP 500,000 997,099
- --------------------------------------------------------------------------------
LASMO PLC (Oil Equipment & Supplies), Conv. Bonds,
7.75%, 10/04/05 300,000 492,096
- --------------------------------------------------------------------------------
1,489,195
- --------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Convertible Bonds
& Notes 3,564,713
- --------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
GOVERNMENT BONDS & NOTES - 18.83%(f)
AUSTRALIA - 1.98%
Queensland Treasury Corp., Gtd. Bonds, 6.50%,
06/14/05 AUD 2,000,000 1,460,131
- --------------------------------------------------------------------------------
CANADA - 3.53%
Canadian Government Bonds, 7.00%, 12/01/06 CAD 1,000,000 759,984
- --------------------------------------------------------------------------------
Municipal Finance Authority of British Columbia,
Unsec. Bonds, 7.75%, 12/01/05 500,000 393,161
- --------------------------------------------------------------------------------
Ontario Province,
Sr. Unsec. Unsub. Deb., 6.875%, 09/15/00 GBP 465,000 763,021
- --------------------------------------------------------------------------------
Sr. Unsec. Unsub. Global Bonds, 8.00%, 03/11/03 CAD 750,000 595,041
- --------------------------------------------------------------------------------
Quebec (Province of), Deb., 9.375%, 01/16/23 100,000 90,029
- --------------------------------------------------------------------------------
2,601,236
- --------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
20
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
GERMANY - 0.85%
Bundesrepublic Deutschland, Bonds, 6.875%, 05/12/05 DEM 1,000,000 $ 623,989
- -------------------------------------------------------------------------------
NEW ZEALAND - 5.24%
Fannie Mae, Notes, 7.25%, 06/20/02 NZD 1,250,000 858,827
- -------------------------------------------------------------------------------
New Zealand Government,
Bonds, 10.00%, 07/15/97 800,000 544,063
- -------------------------------------------------------------------------------
Bonds, 8.00%, 02/15/01 1,500,000 1,076,823
- -------------------------------------------------------------------------------
Bonds, 10.00%, 03/15/02 1,800,000 1,378,844
- -------------------------------------------------------------------------------
3,858,557
- -------------------------------------------------------------------------------
SWEDEN - 3.35%
Swedish Government,
Bonds, 10.25%, 05/05/03 SEK 6,000,000 934,691
- -------------------------------------------------------------------------------
Bonds, 6.00%, 02/09/05 6,000,000 758,270
- -------------------------------------------------------------------------------
Bonds, 6.50%, 10/25/06 6,000,000 770,758
- -------------------------------------------------------------------------------
2,463,719
- -------------------------------------------------------------------------------
UNITED KINGDOM - 3.88%
Federal National Mortgage Association, Sr. Unsec.
Notes, 6.875%, 06/07/02 GBP 450,000 739,756
- -------------------------------------------------------------------------------
United Kingdom Treasury,
Bonds, 8.00%, 12/07/00 400,000 685,871
- -------------------------------------------------------------------------------
Bonds, 7.50%, 12/07/06 450,000 768,941
- -------------------------------------------------------------------------------
Gtd. Notes, 7.00%, 11/06/01 400,000 665,121
- -------------------------------------------------------------------------------
2,859,689
- -------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Government Bonds
& Notes 13,867,321
- -------------------------------------------------------------------------------
SHARES
CONVERTIBLE PREFERRED STOCKS - 1.69%
ADVERTISING/BROADCASTING - 0.00%
Time Warner Inc. - Series M, $102.50 PIK Conv. Pfd. 1 1,108
- -------------------------------------------------------------------------------
ELECTRIC POWER - 0.28%
Citizens Utilities Co. - $2.50 Conv. Pfd. 4,700 205,625
- -------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 1.41%
Conseco Inc. - $4.278 Conv. Pfd. PRIDES 8,000 1,038,000
- -------------------------------------------------------------------------------
Total Convertible Preferred Stocks 1,244,733
- -------------------------------------------------------------------------------
WARRANTS - 0.06%
CABLE TELEVISION - 0.00%
Wireless One, Inc. - expiring 10/19/00(g) 420 --
- -------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.03%
Electronic Retailing Systems - expiring 01/24/98(g) 590 23,747
- -------------------------------------------------------------------------------
ESAT Holdings Ltd - expiring 02/07/01(g) 470 1,057
- -------------------------------------------------------------------------------
24,804
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GAMING - 0.00%
Boomtown, Inc. - expiring 11/01/98 (acquired
11/03/93; cost $150)(b)(g) 150 $ 2
- ------------------------------------------------------------------------------
LEISURE & RECREATION - 0.01%
IHF Capital Inc. - expiring 11/14/99 (acquired
11/04/94; cost $150)(b)(g) 50 7,500
- ------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 0.01%
MVE Inc. - expiring 02/15/02(g) 190 5,700
- ------------------------------------------------------------------------------
STEEL - 0.00%
Gulf States Steel Inc. - expiring 04/15/03(g) 230 1,035
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.01%
Clearnet Communications Inc. - expiring 09/15/05(g) 891 4,455
- ------------------------------------------------------------------------------
Total Warrants 43,496
- ------------------------------------------------------------------------------
PRINCIPAL
U.S. TREASURY SECURITIES - 1.38% AMOUNT
Notes, 6.50%, 05/31/01 $ 800,000 804,552
- ------------------------------------------------------------------------------
Notes, 7.50%, 02/15/05 200,000 211,674
- ------------------------------------------------------------------------------
Total U.S. Treasury Securities 1,016,226
- ------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES - 0.82%
Tennessee Valley Authority, Bonds, 5.98%, 04/01/36 600,000 602,334
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENT(h) - 2.07%
HSBC Securities Inc., 6.10%, 07/01/97(i) 1,528,303 1,528,303
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.87% 73,541,634
- ------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.13% 92,499
- ------------------------------------------------------------------------------
NET ASSETS - 100.00% $73,634,133
==============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Principal amount is in U.S. Dollars, except as indicated by note (f).
(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 06/30/97 was $8,507,467 which
represented 11.55% of the Fund's net assets.
(c) Discounted bond at purchase. Interest rate represents coupon rate at which
the bond will accrue at a specified future date.
(d) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(e) Issued as a unit. Each unit includes one Sr. Note plus warrants to purchase
0.8444 shares of common stock per warrant.
(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, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(i) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$100,016,944. Collateralized by $97,880,000 U.S. Government obligations,
7.50%, due 10/31/99 with a market value at 06/30/97 of $102,002,909.
Abbreviations:
AUD - Australian Dollar NZD - New Zealand Dollar
CAD - Canadian Dollar Pfd. - Preferred
Conv.- Convertible PIK - Payment in Kind
Deb. - Debentures PRIDES - Preferred Redeemable Increased
DEM - German Deutschemark Dividend Equity Securities
Disc.- Discounted Sec. - Secured
FRF - French Franc SEK - Swedish Krona
GBP - British Pound Sterling Sr. - Senior
Gtd. - Guaranteed Sub. - Subordinated
ITL - Italian Lire Unsec. - Unsecured
JPY - Japanese Yen Unsub. - Unsubordinated
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
21
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $72,030,680) $73,541,634
- ---------------------------------------------------------------------
Receivables for:
Forward currency contracts 52,928
- ---------------------------------------------------------------------
Capital stock sold 20,042
- ---------------------------------------------------------------------
Interest 1,364,126
- ---------------------------------------------------------------------
Investment for deferred compensation plan 12,553
- ---------------------------------------------------------------------
Organizational costs, net 2,411
- ---------------------------------------------------------------------
Other assets 23,084
- ---------------------------------------------------------------------
Total assets 75,016,778
- ---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,188,233
- ---------------------------------------------------------------------
Capital stock purchased 42,468
- ---------------------------------------------------------------------
Deferred compensation plan 12,553
- ---------------------------------------------------------------------
Accrued advisory fees 35,991
- ---------------------------------------------------------------------
Accrued administrative service fees 4,300
- ---------------------------------------------------------------------
Accrued directors' fees 1,732
- ---------------------------------------------------------------------
Accrued operating expenses 97,368
- ---------------------------------------------------------------------
Total liabilities 1,382,645
- ---------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $73,634,133
=====================================================================
Capital shares, $.001 par value per share:
Authorized 250,000,000
=====================================================================
Outstanding 6,933,182
=====================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $ 10.62
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,609,584
- ------------------------------------------------------------------------------
Dividends 26,304
- ------------------------------------------------------------------------------
Total investment income 2,635,888
- ------------------------------------------------------------------------------
EXPENSES:
Advisory fees 202,222
- ------------------------------------------------------------------------------
Custodian fees 16,910
- ------------------------------------------------------------------------------
Administrative services fees 25,540
- ------------------------------------------------------------------------------
Directors' fees and expenses 3,081
- ------------------------------------------------------------------------------
Organizational costs 1,446
- ------------------------------------------------------------------------------
Other 24,121
- ------------------------------------------------------------------------------
Total expenses 273,320
- ------------------------------------------------------------------------------
Less: Expenses paid indirectly (1,008)
- ------------------------------------------------------------------------------
Net expenses 272,312
- ------------------------------------------------------------------------------
Net investment income 2,363,576
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (74,224)
- ------------------------------------------------------------------------------
Foreign currencies (281,223)
- ------------------------------------------------------------------------------
Forward currency contracts 561,402
- ------------------------------------------------------------------------------
205,955
- ------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities (525,004)
- ------------------------------------------------------------------------------
Foreign currencies (33,690)
- ------------------------------------------------------------------------------
Forward currency contracts (724)
- ------------------------------------------------------------------------------
(559,418)
- ------------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign currencies and
forward currency contracts (353,463)
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations $2,010,113
==============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
22
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,363,576 $ 3,620,192
- -----------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and forward currency contracts 205,955 967,204
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities, foreign currencies and
forward currency contracts (559,418) 685,218
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 2,010,113 5,272,614
- -----------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (3,857,482)
- -----------------------------------------------------------------------------
Net equalization credits 378,483 905,775
- -----------------------------------------------------------------------------
Net increase from capital stock transactions 7,621,766 16,672,719
- -----------------------------------------------------------------------------
Net increase in net assets 10,010,362 18,993,626
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 63,623,771 44,630,145
- -----------------------------------------------------------------------------
End of period $73,634,133 $63,623,771
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $67,375,011 $59,753,245
- -----------------------------------------------------------------------------
Undistributed net investment income 4,397,954 1,655,895
- -----------------------------------------------------------------------------
Undistributed net realized gain on investment
securities, foreign currencies and forward
currency contracts 301,764 95,809
- -----------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and forward currency contracts 1,559,404 2,118,822
- -----------------------------------------------------------------------------
$73,634,133 $63,623,771
=============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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 and variable life insurance policies.
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--Debt obligations 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-
AIM V.I. DIVERSIFIED INCOME FUND
23
<PAGE>
the-counter quotations more closely reflect the current market value of the
security. Securities traded in the over-the-counter market, except (i)
securities priced by the pricing service, (ii) securities for which
representative exchange prices are available, and (iii) securities reported
in the NASDAQ National Market System, are valued at the mean between
representative last bid and asked prices obtained from an electronic
quotation reporting system, if such prices are available, or from established
market makers. Each security reported in the NASDAQ National Market System is
valued at the last sales price on the valuation date 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 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 as well as corporate bonds
and U.S. Government 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. 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 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.
Outstanding contracts at June 30, 1997 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO UNREALIZED
SETTLEMENT ---------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- ---------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
7/14/97 JPY 5,000,000 $ 39,887 $ 43,623 $ (3,736)
7/28/97 DEM 3,100,000 1,817,116 1,781,310 35,806
7/29/97 SEK 16,500,000 2,128,483 2,135,572 (7,089)
8/06/97 JPY 38,000,000 306,452 331,549 (25,097)
8/20/97 DEM 2,400,000 1,426,025 1,381,334 44,691
9/05/97 JPY 100,000,000 871,232 872,534 (1,302)
9/19/97 NZD 1,200,000 825,600 815,945 9,655
---------- ---------- --------
$7,414,795 $7,361,867 $ 52,928
========== ========== ========
</TABLE>
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 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 $259,399, which expires, if
not previously utilized, through the year 2003. The Fund cannot distribute
capital gains to shareholders until the tax loss carryforwards have been
utilized.
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.
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 six months ended June 30, 1997, AIM was reimbursed $25,540 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 for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the six months ended June 30, 1997, the Fund incurred legal fees of
$1,065 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of
the Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997, the Fund's expenses were reduced by $32 and the
Fund received reductions in custodian fees of $976 under an expense offset
arrangement. The effect of the above arrangements resulted in a reduction of
the Fund's total expenses of $1,008 during the six months ended June 30, 1997.
AIM V.I. DIVERSIFIED INCOME FUND
24
<PAGE>
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the six months ended June 30,
1997 was $31,941,318 and $19,980,846, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,849,857
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,339,841)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,510,016
=========================================================================
</TABLE>
Cost of investments for tax purposes is $72,031,618.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during six months ended June 30, 1997 and
the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold 1,513,779 $14,933,025 2,366,508 $ 22,865,918
- ------------------------- --------- ----------- ---------- ------------
Issued as reinvestment of
distributions -- -- 377,444 3,857,482
- ------------------------- --------- ----------- ---------- ------------
Reacquired (742,068) (7,311,259) (1,044,208) (10,050,681)
- ------------------------- --------- ----------- ---------- ------------
771,711 $ 7,621,766 1,699,744 $ 16,672,719
========= =========== ========== ============
</TABLE>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
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>
DECEMBER 31, JANUARY 31,
JUNE 30, ---------------- -----------------
1997 1996 1995 1995 1994
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.33 $ 10.00 $ 9.12 $ 10.46 $ 10.00
- ------------------------ ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.37 0.73 0.69 0.76 0.54
- ------------------------ ------- ------- ------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) (0.08) 0.28 0.94 (1.42) 0.29
- ------------------------ ------- ------- ------- ------- -------
Total from investment
operations 0.29 1.01 1.63 (0.66) 0.83
- ------------------------ ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income -- (0.68) (0.75) (0.68) (0.35)
- ------------------------ ------- ------- ------- ------- -------
Distributions from net
realized capital
gains -- -- -- -- (0.02)
- ------------------------ ------- ------- ------- ------- -------
Total distributions -- (0.68) (0.75) (0.68) (0.37)
- ------------------------ ------- ------- ------- ------- -------
Net asset value, end of
period $ 10.62 $ 10.33 $ 10.00 $ 9.12 $ 10.46
- ------------------------ ======= ======= ======= ======= =======
Total return(a) 2.81% 10.19% 18.11% (6.35)% 8.33%
- ------------------------ ======= ======= ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $73,634 $63,624 $44,630 $25,271 $14,530
- ------------------------ ======= ======= ======= ======= =======
Ratio of expenses to
average net assets(b) 0.81%(c)(d) 0.86% 0.88%(e) 0.91% 1.05%(e)
- ------------------------ ======= ======= ======= ======= =======
Ratio of net investment
income to average net
assets(f) 7.02%(c) 7.09% 7.65%(e) 8.07% 6.78%(e)
- ------------------------ ======= ======= ======= ======= =======
Portfolio turnover rate 30% 76% 72% 100% 57%
- ------------------------ ======= ======= ======= ======= =======
</TABLE>
(a) Total returns for periods less than one year are not annualized.
(b) After fee waivers and/or expense reimbursement. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.03% and 1.69% (annualized) for January 31, 1995 and 1994, respectively.
(c) Ratios are annualized and based on average net assets of $67,995,310.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have remained
the same.
(e) Annualized.
(f) After fee waivers and/or expense reimbursement. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 7.95% and 6.14% (annualized) for January 31, 1995 and
1994, respectively.
AIM V.I. DIVERSIFIED INCOME FUND
25
<PAGE>
SUPPLEMENTAL PROXY INFORMATION - SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES WITHHOLD/
DIRECTOR/MATTER VOTES FOR AGAINST ABSTENTIONS
--------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1) Charles T. Bauer....................... 138,450,525 N/A 3,241,923
Bruce L. Crockett...................... 138,630,018 N/A 3,062,431
Owen Daly II........................... 138,241,309 N/A 3,451,139
Carl Frischling........................ 138,615,279 N/A 3,077,169
Robert H. Graham....................... 138,641,752 N/A 3,050,695
John F. Kroeger........................ 138,250,777 N/A 3,441,671
Lewis F. Pennock....................... 138,618,633 N/A 3,073,814
Ian W. Robinson........................ 138,281,116 N/A 3,411,332
Louis S. Sklar......................... 138,611,786 N/A 3,080,663
(2) Approval of new Investment Advisory
Agreement............................. 5,363,641 12,246 193,448
(3) Elimination of policy restricting
investments in other investment
companies............................. 5,279,421 96,040 193,873
(4) Tait, Weller & Baker................... 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
26
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
FOREIGN UTILITIES, TELECOMMUNICATIONS
SECTOR DRIVE STRONG RETURNS
A roundtable discussion with the Fund management team
for AIM V.I. Global Utilities Fund for the six-month reporting period ended June 30, 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID AIM V.I. GLOBAL Q. WHAT FACTORS HAVE CAUSED THE DOMESTIC Top 10 Holdings
UTILITIES FUND PERFORM DURING ELECTRIC UTILITIES TO STRUGGLE THIS As of 6/30/97,
THE SIX-MONTH REPORTING PERIOD? YEAR? based on total net assets
A. We are pleased to report the A. The domestic electric utility sector
Fund's total return was 8.13% for has been shadowed by the debate over 1. El Paso Natural Gas Co. 2.64%
the six-month reporting period ended deregulation. Domestic electric companies 2. Cincinnati Bell, Inc. 2.52
June 30, 1997. The Fund outperformed have been forced to become much more 3. Williams Cos., Inc. (The) 2.37
the Lipper Utility Funds Index total competitive, and many are struggling to 4. Pinnacle West Capital Corp. 2.07
return of 7.80% during the same period, adapt. 5. Ameritech Corp. 1.63
and far exceeded the Dow Jones Average of Nonetheless, domestic electric utility 6. BellSouth Corp. 1.51
15 Utilities' total return of -0.04%. companies continue to provide attractive 7. FPL Group, Inc. 1.50
dividends. Electric companies such as 8. Sonat Inc. 1.45
Q. HOW WAS THE FUND ABLE TO Pinnacle West Capital and FPL Group Inc., 9. SBC Communications, Inc. 1.45
OUTPERFORM THESE INDEXES DURING A PERIOD both among the portfolio's top ten holdings 10. Enron Corp. 1.43
WHEN DOMESTIC UTILITIES PERFORMED at the end of the reporting period,
POORLY? are companies that provide attractive Please keep in mind that the Fund's
A. The Fund's global allocations had current income. Domestic electric portfolio composition is subject
a lot to do with it. Since 1995, we have companies commanded the largest industrial to change and there is no assurance
invested in utilities around the world sector in the Fund at just over 17% the Fund will continue to hold any
because we believe there is greater of the portfolio. particular security.
growth potential for foreign utilities
than for domestic utilities. The foreign Q. WHAT'S BEHIND THE EXPLOSION Q. WHAT IS YOUR OPINION OF THE REAL
holdings also help cushion the Fund IN TELECOMMUNICATIONS? ESTATE SECTOR?
when the domestic market turns down, as A. New technologies are reinventing A. Historically, REITs have been a
happened during the first quarter. On telecommunications: wireless very attractive investment as they
the domestic side, our holdings in the communications, modems, the Internet, provide average returns of 12% to 15%
telecommunications industry continued just to name a few. There are new with very low volatility. They are
to appreciate. companies coming into the marketplace, becoming a larger part of various
and older companies are taking greater indexes and are quite liquid. We
Q. WHAT PERCENTAGE OF THE FUND'S advantage of this exploding industry. believe that with increasing
HOLDINGS ARE NOW OVERSEAS? Some familiar names in the Fund's competition worldwide in the electric,
A. We finished the six-month reporting top ten holdings at the end of the telecommunication, and gas sectors,
period with 26% of the Fund's holdings reporting period were Cincinnati Bell, REITs may have a more stabilizing
in the foreign sector, the same percentage Inc., Ameritech Corp. BellSouth Corp. and effect on the Fund than even electric
we had at the start of the year. We SBC Communications, Inc. both enjoyed utilities have.
expect that figure to continue to rise double-digit percentage increases in
as we identify more foreign utilities their stock value during the six-month Q. WHAT OTHER UTILITY-RELATED
with attractive earnings, and as more reporting period. POSITIONS DOES THE FUND HAVE?
companies continue to go public around the A. Just over 16% of the portfolio
world. is in companies that provide services or
equipment
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
27
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
to the utility area. For instance, we Growth of a $10,000 Investment
own independent power producers From 5/2/94-6/30/97
like California Energy and AES Corp. AIM V.I. Global S&P 500 Lipper Utility
They can produce electricity more cheaply Utilities Fund Stock Fund Funds Index
than electric companies--their largest (In thousands)
clients. 5/2/94 $10,000 $10,000 $10,000
Other positions in the Fund are 7/94 9,920 10,193 9,848
companies that provide telephone 10/94 9,921 10,581 9,777
equipment, such as Ericsson and Nokia. 1/95 9,944 10,615 9,938
4/95 10,259 11,687 10,241
Q. WHAT IS YOUR MARKET OUTLOOK FOR 7/95 11,015 12,847 10,815
UTILITIES IN THE NEAR FUTURE? 10/95 11,626 13,370 11,509
A. The utilities industry, both foreign 1/96 12,441 14,708 12,409
and domestic, is changing rapidly. 4/96 12,420 15,209 12,171
That's exciting. We anticipate continuing 7/96 12,282 14,962 12,012
breakthroughs in telecommunications, 10/96 13,138 16,582 12,724
and the prospects in the foreign utilities 12/96 13,789 17,506 13,322
markets are enticing. Those two segments 6/97 14,909 21,110 14,357
offer the Fund the best growth potential,
while the U.S. electric utilities continue AVERAGE ANNUAL TOTAL RETURN Past performance cannot guarantee comparable
to offer attractive dividends. As of 6/30/97 future results.
Competition continues to be the 1 Year 17.06%
driving force within U.S. utilities. This Inception (5/2/94) 13.46
new competitive environment in the U.S.
may be the biggest change many utilities The performance figures shown represent the AIM V.I. Global Utilities Fund and
have gone through in their long history. are not intended to reflect actual annuity values, and do not reflect charges at
While many companies will prosper, some the separate account level which, if applied, would lower the performance
will fail. There will be many mergers and results. The Fund's performance figures are historical and reflect reinvestment
acquisitions, and there will be many of all distributions and changes in the net asset value. The Fund's investment
growth opportunities. return and principal value will fluctuate so that Fund shares, when redeemed,
The new, competitive marketplace means may be worth more or less than their original cost.
utility stocks will be more volatile Source: Towers Data Systems HYPO--Registered Trademark--.
than ever before. However, we expect Lipper Analytical Services Inc., is an independent mutual fund performance
utilities to have the lowest volatility of monitor. The unmanaged Lipper Utility Funds Index represents an average of the
any stock in any country. Given the global 30 largest utilities funds. Results shown are for the period 4/30/94
outlook for stable interest rates and through 6/30/97.
healthy, moderate growth in most areas in The Dow Jones Average of 15 Utilities is a weighted average of the performance
which the Fund invests, the market of 15 large publicly traded utility stocks.
conditions seem favorable for utility The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group of
companies and the Fund for the second half unmanaged securities widely regarded by investors to be representative of the
of 1997. stock market in general. Source: Towers Data Systems HYPO--Registered Trademark--.
An investment cannot be made in any index listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
28
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 45.65%
ADVERTISING/BROADCASTING - 0.41%
Univision Communications, Inc.(a) 1,700 $ 66,513
- -------------------------------------------------------------------
COMPUTER NETWORKING - 0.85%
Ascend Communications, Inc.(a) 1,000 27,625
- -------------------------------------------------------------------
Cascade Communications Corp.(a) 700 31,500
- -------------------------------------------------------------------
3Com Corp.(a) 2,000 78,750
- -------------------------------------------------------------------
137,875
- -------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.11%
Puma Technology, Inc.(a) 2,100 17,588
- -------------------------------------------------------------------
ELECTRIC POWER - 14.84%
AES Corp.(a) 1,000 70,750
- -------------------------------------------------------------------
Allegheny Power System, Inc. 7,800 208,162
- -------------------------------------------------------------------
Carolina Power & Light Co. 3,900 139,913
- -------------------------------------------------------------------
CINergy Corp. 2,100 73,106
- -------------------------------------------------------------------
DQE, Inc. 6,200 175,150
- -------------------------------------------------------------------
Duke Power Co. 4,386 210,277
- -------------------------------------------------------------------
Edison International 3,300 82,088
- -------------------------------------------------------------------
FPL Group, Inc. 5,300 244,131
- -------------------------------------------------------------------
Houston Industries, Inc. 3,700 79,319
- -------------------------------------------------------------------
IPALCO Enterprises, Inc. 2,000 62,500
- -------------------------------------------------------------------
NIPSCO Industries, Inc. 5,600 231,350
- -------------------------------------------------------------------
Pinnacle West Capital Corp. 11,200 336,700
- -------------------------------------------------------------------
Public Service Company of New Mexico 3,600 64,350
- -------------------------------------------------------------------
Sierra Pacific Resources 2,700 86,400
- -------------------------------------------------------------------
Southern Co. 10,300 225,312
- -------------------------------------------------------------------
Texas Utilities Co. 3,500 120,531
- -------------------------------------------------------------------
2,410,039
- -------------------------------------------------------------------
ENERGY (ALTERNATE SOURCES) - 1.51%
CalEnergy, Inc.(a) 2,900 110,200
- -------------------------------------------------------------------
Teco Energy, Inc. 5,300 135,481
- -------------------------------------------------------------------
245,681
- -------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 0.07%
Ocwen Asset Investment Corp. 600 12,150
- -------------------------------------------------------------------
GAS DISTRIBUTION - 1.77%
KN Energy, Inc. 1,500 63,188
- -------------------------------------------------------------------
Public Service Co. of Colorado 4,000 166,000
- -------------------------------------------------------------------
Public Service Company of North Carolina, Inc. 3,000 57,563
- -------------------------------------------------------------------
286,751
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS PIPELINE - 8.58%
Columbia Gas System, Inc. 1,700 $ 110,925
- ---------------------------------------------------------------------
El Paso Natural Gas Co. 7,800 429,000
- ---------------------------------------------------------------------
Enron Corp. 5,700 232,630
- ---------------------------------------------------------------------
Sonat, Inc. 4,600 235,750
- ---------------------------------------------------------------------
Williams Companies, Inc. (The) 8,800 385,000
- ---------------------------------------------------------------------
1,393,305
- ---------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.21%
Energen Corp. 1,000 33,688
- ---------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 0.37%
Coastal Corp. (The) 1,100 58,506
- ---------------------------------------------------------------------
REAL ESTATE - 1.34%
Boston Properties, Inc.(a) 2,800 77,000
- ---------------------------------------------------------------------
Cali Realty Corp. 2,600 88,400
- ---------------------------------------------------------------------
Golf Trust of America, Inc. 800 22,250
- ---------------------------------------------------------------------
Kilroy Realty Corp. 1,200 30,300
- ---------------------------------------------------------------------
217,950
- ---------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 2.24%
Alexandria Real Estate Equities, Inc. 1,700 37,294
- ---------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 1,600 50,800
- ---------------------------------------------------------------------
Meditrust Corp. 1,300 51,838
- ---------------------------------------------------------------------
OMEGA Healthcare Investors, Inc. 1,700 55,569
- ---------------------------------------------------------------------
Patriot American Hospitality, Inc. 3,400 86,700
- ---------------------------------------------------------------------
Public Storage, Inc. 1,500 43,875
- ---------------------------------------------------------------------
Starwood Lodging Trust 900 38,419
- ---------------------------------------------------------------------
364,495
- ---------------------------------------------------------------------
TELECOMMUNICATIONS - 4.40%
ADC Telecommunications, Inc.(a) 3,800 126,825
- ---------------------------------------------------------------------
Brooks Fiber Properties, Inc.(a) 2,500 84,375
- ---------------------------------------------------------------------
CellNet Data Systems Inc.(a) 2,300 28,606
- ---------------------------------------------------------------------
Iridium World Communications Ltd.(a) 1,000 18,125
- ---------------------------------------------------------------------
Lucent Technologies, Inc. 1,700 122,506
- ---------------------------------------------------------------------
McLeod, Inc. - Class A(a) 2,100 70,875
- ---------------------------------------------------------------------
Qwest Communications International Inc.(a) 2,200 59,950
- ---------------------------------------------------------------------
Superior Telecom Inc.(a) 2,500 78,750
- ---------------------------------------------------------------------
Teleport Communications Group Inc. - Class A(a) 1,700 58,013
- ---------------------------------------------------------------------
Tellabs, Inc.(a) 1,200 67,050
- ---------------------------------------------------------------------
715,075
- ---------------------------------------------------------------------
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
29
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE - 8.95%
Ameritech Corp. 3,900 $ 264,955
- -------------------------------------------------------------------------------
BellSouth Corp. 5,300 245,787
- -------------------------------------------------------------------------------
Century Telephone Enterprises 3,700 124,643
- -------------------------------------------------------------------------------
Cincinnati Bell, Inc. 13,000 409,500
- -------------------------------------------------------------------------------
GTE Corp. 2,200 96,525
- -------------------------------------------------------------------------------
SBC Communications, Inc. 3,800 235,124
- -------------------------------------------------------------------------------
WorldCom, Inc.(a) 2,468 78,976
- -------------------------------------------------------------------------------
1,455,510
- -------------------------------------------------------------------------------
Total Domestic Common Stocks 7,415,126
- -------------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 3.65%
ADVERTISING/BROADCASTING - 0.38%
Time Warner Inc. - Series M, $102.50 Conv. PIK Pfd. 56 62,473
- -------------------------------------------------------------------------------
ELECTRIC POWER - 0.51%
CalEnergy Co., Inc. - $3.125 Conv. Pfd.(b)
(Acquired 02/20/97; Cost $50,000) 1,000 56,954
- -------------------------------------------------------------------------------
Citizens Utilities Co. - $2.50 Conv. Pfd. 600 26,250
- -------------------------------------------------------------------------------
83,204
- -------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 1.09%
AES Trust I - $2.69 Conv. Pfd. 3,000 176,625
- -------------------------------------------------------------------------------
GAS UTILITY - 0.48%
MCN Corp. - $2.013 Conv. PRIDES 2,800 78,050
- -------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.26%
Vornado Realty Trust - $3.25 Conv. Pfd. 800 42,400
- -------------------------------------------------------------------------------
TELEPHONE - 0.93%
Salomon Inc. - $3.48 Conv. Pfd. 400 25,550
- -------------------------------------------------------------------------------
WorldCom, Inc. - $2.68 Conv. Pfd. 1,100 124,025
- -------------------------------------------------------------------------------
149,575
- -------------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks 592,327
- -------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 22.64%
ARGENTINA - 0.65%
Central Costanera S.A. - Class B (Electric Services) 1,000 34,625
- -------------------------------------------------------------------------------
Telefonica de Argentina S.A. - ADR (Telecommunications) 20,700 71,426
- -------------------------------------------------------------------------------
106,051
- -------------------------------------------------------------------------------
AUSTRIA - 0.12%
Oesterreichische Elektrizitaetswirtschafts A.G. - Class A
(Electric Power) 270 19,017
- -------------------------------------------------------------------------------
AUSTRALIA - 0.11%
News Corp. Ltd. - $5.00 Conv. Pfd.
(Advertising/Broadcasting)(Acquired 11/04/96; Cost
$20,000)(b) 200 17,700
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BRAZIL - 2.00%
Centrais Electricas de Santa Catarina S.A. (Electric
Power) 34,000 $ 50,532
- -------------------------------------------------------------------------------
Eletricidade de Sao Paulo S.A. (Electric Power)(a) 210 61,444
- -------------------------------------------------------------------------------
Telecomunicacoes Brasileiras S.A. - Telebras - ADR
(Telecommunications) 1,400 212,450
- -------------------------------------------------------------------------------
324,426
- -------------------------------------------------------------------------------
CANADA - 1.66%
Manitoba Telephone System (Telecommunications) 5,000 53,224
- -------------------------------------------------------------------------------
Philip Services Corp. (Pollution Control)(a) 3,500 55,563
- -------------------------------------------------------------------------------
TELUS Corp. (Telecommunications) 4,300 78,935
- -------------------------------------------------------------------------------
Westcoast Energy, Inc. (Natural Gas Pipeline) 4,000 72,750
- -------------------------------------------------------------------------------
Westshore Terminals Inc. (Coal) 2,200 9,638
- -------------------------------------------------------------------------------
270,110
- -------------------------------------------------------------------------------
CHILE - 1.48%
Cia. de Telecomunicaciones de Chile S.A. - ADR
(Telephone) 4,250 140,250
- -------------------------------------------------------------------------------
Enersis S.A. - ADR (Natural Gas Pipeline) 2,800 99,575
- -------------------------------------------------------------------------------
239,825
- -------------------------------------------------------------------------------
DENMARK - 0.26%
Tele Danmark A/S - ADR (Telephone) 1,600 41,800
- -------------------------------------------------------------------------------
FINLAND - 0.27%
Nokia Oy A.B. - Class A - ADR (Telecommunications) 600 44,250
- -------------------------------------------------------------------------------
GERMANY - 1.82%
VEBA A.G. (Electric Power) 2,735 153,678
- -------------------------------------------------------------------------------
Viag A.G. (Electric Power) 150 68,201
- -------------------------------------------------------------------------------
RWE A.G. (Oil & Gas - Integrated) 1,700 73,104
- -------------------------------------------------------------------------------
294,983
- -------------------------------------------------------------------------------
HONG KONG - 0.30%
Asia Satellite Telecommunications Holdings Ltd. - ADR
(Telecommunications) 1,600 48,200
- -------------------------------------------------------------------------------
INDONESIA - 0.24%
PT Indosat - ADR (Telecommunications) 1,300 38,919
- -------------------------------------------------------------------------------
ISRAEL - 0.35%
ECI Telecommunications Ltd. Designs (Computer Networking) 1,500 44,625
- -------------------------------------------------------------------------------
TTI Team Telecom International Ltd.
(Telecommunications)(a) 2,600 12,025
- -------------------------------------------------------------------------------
56,650
- -------------------------------------------------------------------------------
ITALY - 0.85%
Telecom Italia Mobile S.p.A. (Telecommunications) 15,325 49,296
- -------------------------------------------------------------------------------
Telecom Italia S.p.A. (Telecommunications) 27,500 88,264
- -------------------------------------------------------------------------------
137,560
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
30
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN - 0.69%
Nippon Telegraph & Telephone Corp. - ADR (Telephone) 1,300 $ 63,375
- -------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. (Telephone) 5 47,985
- -------------------------------------------------------------------------------
111,360
- -------------------------------------------------------------------------------
NETHERLANDS - 0.32%
Royal PTT Nederland N.V. - ADR (Telephone) 1,020 40,418
- -------------------------------------------------------------------------------
Royal PTT Nederland N.V. (Telephone) 276 10,827
- -------------------------------------------------------------------------------
51,245
- -------------------------------------------------------------------------------
NEW ZEALAND - 1.20%
Telecom Corp. of New Zealand Ltd. - ADR
(Telecommunications) 4,800 195,600
- -------------------------------------------------------------------------------
PERU - 0.54%
Luz Del Sur S.A. (Electric Power)(Acquired 12/11/96; Cost
$30,600)(b) 1,700 29,963
- -------------------------------------------------------------------------------
Telefonica del Peru S.A. - ADR (Telephone) 2,200 57,613
- -------------------------------------------------------------------------------
87,576
- -------------------------------------------------------------------------------
PORTUGAL - 1.19%
Electricidade de Portugal, S.A. - ADR (Electric Power)(a) 1,000 36,000
- -------------------------------------------------------------------------------
Portugal Telecom S.A. - ADR (Telecommunications) 3,500 140,438
- -------------------------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications)(Acquired 12/09/96; Cost
$10,134)(a)(b) 200 16,550
- -------------------------------------------------------------------------------
192,988
- -------------------------------------------------------------------------------
SPAIN - 2.13%
Autopistas Concesionaria Espanola S.A. (Engineering &
Construction) 3,900 52,935
- -------------------------------------------------------------------------------
Iberdrola S.A. (Electric Services) 13,000 164,098
- -------------------------------------------------------------------------------
Telefonica de Espana - ADR (Telecommunications) 1,500 129,375
- -------------------------------------------------------------------------------
346,408
- -------------------------------------------------------------------------------
SWEDEN - 0.63%
Telefonaktiebolaget LM Ericsson - ADR
(Telecommunications) 2,600 102,375
- -------------------------------------------------------------------------------
UNITED KINGDOM - 4.77%
British Sky Broadcasting Group PLC - ADR
(Advertising/Broadcasting) 500 22,343
- -------------------------------------------------------------------------------
Energy Group PLC (Electric Power) 2,000 84,750
- -------------------------------------------------------------------------------
Hyder PLC (Water Supply) 2,510 33,961
- -------------------------------------------------------------------------------
National Grid Group PLC (Electric Power) 4,734 17,304
- -------------------------------------------------------------------------------
National Power PLC - ADR (Electric Power) 11,950 103,880
- -------------------------------------------------------------------------------
National Power PLC (Electric Power) 900 31,669
- -------------------------------------------------------------------------------
PowerGen PLC - ADR (Electric Power) 1,100 53,350
- -------------------------------------------------------------------------------
PowerGen PLC (Electric Power) 9,050 107,756
- -------------------------------------------------------------------------------
Scottish Power PLC (Electric Power) 9,750 63,485
- -------------------------------------------------------------------------------
Southern Electric PLC (Electric Power) 6,306 46,577
- -------------------------------------------------------------------------------
United Utilities PLC (Water Supply) 8,925 98,169
- -------------------------------------------------------------------------------
Wessex Water PLC (Water Supply) 5,450 36,621
- -------------------------------------------------------------------------------
Yorkshire Water PLC (Water Supply) 11,880 77,256
- -------------------------------------------------------------------------------
777,121
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
VENEZUELA - 1.06%
Cia. Anonima Nacional Telefonos de Venezuela (Telephone) 4,000 $ 172,500
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 3,676,664
- -------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC CONVERTIBLE BONDS & NOTES - 0.80%
POLLUTION CONTROL - 0.23%
Thermo Ecotek Corp., Conv. Bonds, 4.875%,
04/15/04(Acquired 04/10/97; Cost $35,000)(b) $ 35,000 36,663
- -------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 0.35%
Capstone Capital Corp., Conv. Sub. Deb., 6.55%, 03/14/02 60,000 57,875
- -------------------------------------------------------------------------------
SEMICONDUCTORS - 0.22%
Analog Devices, Conv. Sub. Notes, 3.50%, 12/01/00 25,000 35,982
- -------------------------------------------------------------------------------
Total Domestic Convertible Bonds & Notes 130,520
- -------------------------------------------------------------------------------
DOMESTIC NON-CONVERTIBLE BONDS & NOTES - 7.97%
ADVERTISING/BROADCASTING - 2.28%
Comcast Corp., Sr. Sub. Deb., 9.50%, 01/15/08 100,000 105,750
- -------------------------------------------------------------------------------
Time Warner, Inc.
Notes, 8.18%, 08/15/07 75,000 78,727
- -------------------------------------------------------------------------------
Deb., 9.125%, 01/15/13 100,000 110,602
- -------------------------------------------------------------------------------
Unsec. Deb., 6.85, 01/15/26 75,000 74,177
- -------------------------------------------------------------------------------
369,256
- -------------------------------------------------------------------------------
ELECTRIC POWER - 1.66%
Arizona Public Service Co., Deb., 8.00%, 02/01/06 75,000 77,782
- -------------------------------------------------------------------------------
El Paso Electric Co., First Mortgage Bonds, 8.90%,
02/01/06 75,000 80,487
- -------------------------------------------------------------------------------
Indiana Michigan Power, Deb., 9.82%, 12/07/22 93,428 111,836
- -------------------------------------------------------------------------------
270,105
- -------------------------------------------------------------------------------
ENERGY (ALTERNATE SOURCES) - 1.17%
AES Corp., Sr. Sub. Notes, 10.25%, 07/15/06 75,000 82,500
- -------------------------------------------------------------------------------
California Energy Co., Notes, 10.25%, 01/15/04 100,000 108,250
- -------------------------------------------------------------------------------
190,750
- -------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 0.51%
GMAC, Notes, 9.00%, 10/15/02 75,000 82,031
- -------------------------------------------------------------------------------
GAS DISTRIBUTION - 1.09%
Ferrellgas Partners, Sr. Notes, 9.375%, 06/15/06 75,000 77,624
- -------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., Bonds, 7.00%, 03/15/27 100,000 99,847
- -------------------------------------------------------------------------------
177,471
- -------------------------------------------------------------------------------
NATURAL GAS PIPELINE - 0.29%
PanEnergy Corp., Notes, 7.875%, 08/15/04 45,000 47,275
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
31
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS - 0.97%
AT&T Corp., Sr. Notes, 7.75%, 03/01/07 $150,000 $ 158,034
- ---------------------------------------------------------------------------
Total Domestic Non-Convertible Bonds & Notes 1,294,922
- ---------------------------------------------------------------------------
FOREIGN NON-CONVERTIBLE BONDS & NOTES - 3.11%
CANADA - 3.11%(c)
Bell Canada (Telecommunications),
Deb., 10.875%, 10/11/04 CAD 50,000 45,000
- ---------------------------------------------------------------------------
Series EW Deb., 8.80%, 08/17/05 50,000 41,460
- ---------------------------------------------------------------------------
Canadian Oil Debco Inc. (Oil & Gas),
Deb., 11.00%, 10/31/00 100,000 83,088
- ---------------------------------------------------------------------------
Ontario Hydro (Electric Power), Global Bonds, 9.00%,
06/24/02 100,000 82,196
- ---------------------------------------------------------------------------
Teleglobe Canada, Inc. (Telecommunications), Deb.,
8.35%, 06/20/03 100,000 79,702
- ---------------------------------------------------------------------------
Trans-Canada Pipelines (Oil & Gas),
Unsec. Notes, 8.55%, 02/01/06 70,000 56,969
- ---------------------------------------------------------------------------
Series Q Deb., 10.625%, 10/20/09 125,000 117,426
- ---------------------------------------------------------------------------
Total Foreign Non-Convertible Bonds & Notes 505,841
- ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES - 1.81%
U.S. TREASURY BONDS - 0.88%
7.625%, 02/15/25 $ 130,000 $ 142,392
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES - 0.93%
6.625%, 06/30/01 150,000 151,476
- --------------------------------------------------------------------------------
Total U.S. Treasury Securities 293,868
- --------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreements) 13,909,268
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 13.87%(d)
UBS Securities LLC Inc., 6.10%, 07/01/97(e) 2,252,576 2,252,576
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES - 99.50% 16,161,844
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.50% 81,119
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $16,242,963
================================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with 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
market value of these securities at 06/30/97 was $157,830 which represented
0.97% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
Canadian dollars.
(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, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$300,050,833. Collateralized by $320,816,334 U.S. Government obligations,
0% to 13.25% due 07/14/97 to 04/01/27 with an aggregate market value at
06/30/97 at $306,003,435.
Abbreviations:
ADR- American Depository Receipt
CAD- Canadian Dollars
Conv.- Convertible
Deb.- Debentures
Gtd.- Guaranteed
Pfd.- Preferred
PIK- Payment in Kind
PRIDES- Preferred Redeemable Increased Dividend Equity Securities
Sec.- Secured
Sr.- Senior
Sub.- Subordinated
Unsec.- Unsecured
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
32
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $11,141,258) $13,909,268
- ---------------------------------------------------------------------
Repurchase agreement (cost $2,252,576) 2,252,576
- ---------------------------------------------------------------------
Foreign currencies, at market value ($9,060) 9,091
- ---------------------------------------------------------------------
Receivables for:
Capital stock sold 6,752
- ---------------------------------------------------------------------
Investments sold 15,798
- ---------------------------------------------------------------------
Dividends and interest 86,617
- ---------------------------------------------------------------------
Investment for deferred compensation plan 9,663
- ---------------------------------------------------------------------
Other assets 26
- ---------------------------------------------------------------------
Total assets 16,289,791
- ---------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 1,585
- ---------------------------------------------------------------------
Deferred compensation plan 9,663
- ---------------------------------------------------------------------
Accrued advisory fees 8,535
- ---------------------------------------------------------------------
Accrued directors' fees 2,435
- ---------------------------------------------------------------------
Accrued administrative services fees 4,198
- ---------------------------------------------------------------------
Accrued operating expenses 20,412
- ---------------------------------------------------------------------
Total liabilities 46,828
- ---------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $16,242,963
- ---------------------------------------------------------------------
Capital shares, $.001 par value per share:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 1,197,359
- ---------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $13.57
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $10,282 foreign withholding tax) $ 188,859
- ------------------------------------------------------------------------
Interest 132,051
- ------------------------------------------------------------------------
Total investment income 320,910
- ------------------------------------------------------------------------
EXPENSES:
Advisory fees 47,414
- ------------------------------------------------------------------------
Custodian fees 9,902
- ------------------------------------------------------------------------
Administrative services fees 24,758
- ------------------------------------------------------------------------
Directors' fees and expenses 4,087
- ------------------------------------------------------------------------
Professional fees 11,755
- ------------------------------------------------------------------------
Other 7,914
- ------------------------------------------------------------------------
Total expenses 105,830
- ------------------------------------------------------------------------
Less:Expenses paid indirectly (68)
- ------------------------------------------------------------------------
Net expenses 105,762
- ------------------------------------------------------------------------
Net investment income 215,148
- ------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES AND
FOREIGN CURRENCIES:
Net realized gain from:
Investment securities 53,732
- ------------------------------------------------------------------------
Foreign currencies 2,326
- ------------------------------------------------------------------------
56,058
- ------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 924,370
- ------------------------------------------------------------------------
Foreign currencies 67
- ------------------------------------------------------------------------
924,437
- ------------------------------------------------------------------------
Net gain on investment securities and foreign currencies 980,495
- ------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,195,643
========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
33
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 215,148 $ 400,253
- -------------------------------------------------------------------------------
Net realized gain from investment securities and
foreign currencies 56,058 67,729
- -------------------------------------------------------------------------------
Net unrealized appreciation of investment securities
and foreign currencies 924,437 880,598
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,195,643 1,348,580
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 1,471,747 4,317,451
- -------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (410,247)
- -------------------------------------------------------------------------------
Distributions from net realized capital gains -- (74,178)
- -------------------------------------------------------------------------------
Net increase in net assets 2,667,390 5,181,606
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 13,575,573 8,393,967
- -------------------------------------------------------------------------------
End of period $16,242,963 $13,575,573
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $13,212,204 $11,740,457
- -------------------------------------------------------------------------------
Undistributed net investment income 212,125 (3,023)
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign currencies 50,310 (5,748)
- -------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 2,768,324 1,843,887
- -------------------------------------------------------------------------------
$16,242,963 $13,575,573
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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 and variable life insurance policies.
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 (except
convertible bonds) 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. 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. 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. Debt obligations (including convertible bonds) 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. 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
AIM V.I. GLOBAL UTILITIES FUND
34
<PAGE>
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 - 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.
E. 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 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.
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 six months ended June 30, 1997, AIM was reimbursed $24,758 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 six months ended June 30, 1997, the Fund incurred legal fees of
$2,457 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997 the Fund's expenses were reduced by $7 and the Fund
received reductions in custodian fees of $61 under an expense offset
arrangement. The effect of the above arrangements resulted in a reduction of
the Fund's total expenses of $68 during the six months ended June 30, 1997.
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the six months ended June
30, 1997 was $2,619,952 and $1,981,322, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,915,487
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (147,477)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,768,010
=========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1997
and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Sold 199,189 $ 2,543,138 578,877 $6,900,184
- ----------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 39,804 484,425
- ----------------------------------------------------------------------
Reacquired (83,285) (1,071,391) (258,571) (3,067,158)
- ----------------------------------------------------------------------
115,904 $ 1,471,747 360,110 $4,317,451
======================================================================
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
35
<PAGE>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Fund share outstanding during
the six months ended June 30, 1997, the year ended December 31,1996, the
eleven months ended December 31, 1995 and the period May 2, 1994 (date
operations commenced) through January 31, 1995.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ------------------ JANUARY 31,
1997 1996 1995 1995
-------- ------- ------ -----------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 12.55 $11.64 $9.69 $10.00
- -----------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.18 0.40 0.29 0.27
- -----------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 0.84 0.99 1.98 (0.33)
- -----------------------------------------------------------------------------------
Total from investment
operations 1.02 1.39 2.27 (0.06)
- -----------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.41) (0.31) (0.25)
- -----------------------------------------------------------------------------------
Distributions from
capital gain -- (0.07) (0.01) --
- -----------------------------------------------------------------------------------
Total distributions -- (0.48) (0.32) (0.25)
- -----------------------------------------------------------------------------------
Net asset value, end of
period $ 13.57 $12.55 $11.64 $ 9.69
===================================================================================
Total return(a) 8.13% 12.07% 23.73% (0.56)%
===================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $16,243 $13,576 $8,394 $2,958
===================================================================================
Ratio of expenses to
average net assets 1.45%(b)(c) 1.40%(d) 1.47%(d)(f) 1.31%(f)(g)
===================================================================================
Ratio of net investment
income to average net
assets 2.95%(b) 3.56%(e) 3.76%(e)(f) 4.39%(f)(g)
===================================================================================
Portfolio turnover rate 15% 47% 58% 69%
===================================================================================
Average broker
commission rate paid(h) $0.0442 $0.0477 N/A N/A
===================================================================================
</TABLE>
(a) Totals return are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $14,714,241.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have
remained the same.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.55% and 2.44% (annualized) for 1996 and 1995, respectively.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 3.42% and 2.79% (annualized) for 1996 and 1995,
respectively.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average net assets prior to waiver of advisory
fees and/or expense reimbursements were 2.80% and 2.90%, respectively.
(h) Disclosure requirement beginning with the Fund's fiscal year ended
December 31, 1996.
AIM V.I. GLOBAL UTILITIES FUND
36
<PAGE>
SUPPLEMENTAL PROXY INFORMATION - SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES WITHHOLD/
DIRECTOR/MATTER VOTES FOR AGAINST ABSTENTIONS
--------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1) Charles T. Bauer....................... 138,450,525 N/A 3,241,923
Bruce L. Crockett...................... 138,630,018 N/A 3,062,431
Owen Daly II........................... 138,241,309 N/A 3,451,139
Carl Frischling........................ 138,615,279 N/A 3,077,169
Robert H. Graham....................... 138,641,752 N/A 3,050,695
John F. Kroeger........................ 138,250,777 N/A 3,441,671
Lewis F. Pennock....................... 138,618,633 N/A 3,073,814
Ian W. Robinson........................ 138,281,116 N/A 3,411,332
Louis S. Sklar......................... 138,611,786 N/A 3,080,663
(2) Approval of new Investment Advisory
Agreement.............................. 967,340 15,933 8,373
(3) Elimination of policy restricting
investments in other investment
companies.............................. 941,328 40,038 10,280
(4) Tait, Weller & Baker................... 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
37
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
GOVERNMENT SECURITIES FUNDS
FACE CHALLENGES IN VOLATILE MARKET
A roundtable discussion with the Fund management team for AIM V.I. Government
Securities Fund for the six months ended June 30, 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. IT WAS A TUMULTUOUS ENVIRONMENT FOR Portfolio Composition
BONDS. HOW DID THE FUND PERFORM? As of 6/30/97, based on total net assets
A. Most of the reporting period was
particularly trying for bond investors, BREAKDOWN OF MORTGAGE-BACKED OBLIGATIONS
and the Fund made little progress. Total Mortgage-backed Obligations 63.14%
return was 2.63% in the six months ended Cash Equivalents 10.46
June 30, 1997. That compared favorably U.S. Treasury Obligations 5.54
to the 1.86% total return for similar U.S. Agency Obligations 20.01
funds as measured by the Lipper VA U.S.
Government Index (a measure of the BREAKDOWN OF MORTGAGE-BACKED OBLIGATIONS
performance of the 30 largest variable Federal National Mortgage Assn. 52.86%
annuity government funds.) Federal Home Loan Mortgage Corp. 27.39
Improved market conditions during Government National Mortgage Assn. 19.75
the second quarter enabled the Fund to
generate most of its gain for the
reporting period. Please keep in mind that the Fund's portfolio composition is subject to change
and there is no assurance the Fund will continue to hold any particular
Q. CONCERNS OVER THE ECONOMY AND HIGHER security.
INTEREST RATES DOMINATED THE PERIOD. HOW
DID THAT AFFECT BOND INVESTMENTS? Q. HOW DID THESE FACTORS AFFECT THE rates top 8%, homeowners are discouraged
A. The bond market sold off sharply FUND? from refinancing and the rate of
through the end of April, when the A. The Fund lost ground early in the mortgage prepayments slows appreciably.
benchmark 30-year U.S. Treasury bond hit reporting period as fixed-income Continuing the trend from 1996, mortgage-
a peak weekly closing yield of 7.133%, securities were pressured by economic backed securities outperformed U.S.
in reaction to reports of vigorous uncertainty and the resulting increase Treasury securities of equivalent
growth in the economy. Indicators seemed in interest rates. duration.
pointed either to an acceleration in However, the Fund's performance was That advantage diminished somewhat
inflation or to action by the Federal cushioned by its strong participation in as interest rates declined in May and
Reserve to stave off price pressures. the mortgage market. Mortgage-backed bonds rebounded sharply with encouraging
But the market later rebounded securities--which comprised 63% of the economic reports. The Fund's investment
nearly as sharply, owing to, in various Fund as of June 30--tend to benefit from in U.S. Treasury securities gained as
measures, an apparent slowdown in the rising interest rates. When mortgage
economy plus the absence of inflation.
The rally in bonds took the yield on the
benchmark 30-year U.S. Treasury bond to
6.78% by June 30--the lowest level since
late February.
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND
38
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
rates drifted lower. In addition, prices Q. HOW ARE MORTGAGE-BACKED SECURITIES Nonetheless, mortgage analysts have
for U.S. Treasury securities were aided AFFECTED BY DECLINING INTEREST RATES? suggested that there is strong support
by a narrowing of supply during the A. Declining interest rates encourage for mortgage-backed securities from
reporting period as fewer issues were mortgage prepayments. That means bidders who are well-equipped to handle
offered at auction. That also served to investors in mortgage-backed securities periodic prepayment risk and are not
narrow yield spreads of government receive their investment back when likely to reduce their mortgage
securities across maturity levels. reinvestment rates are lower. And portfolios dramatically. Federally
analysts anticipate that homeowners may chartered agencies like Federal National
Growth of a $10,000 Investment be able to refinance their mortgages Mortgage Association and Federal Home
From 5/5/936/30/97 more cheaply in the coming months than Loan Mortgage Corporation, who buy
last December. mortgages from banks and thrifts, play a
key role as a strong and continuing
AIM V.I. Government Lehman Brothers Intermediate source of demand for mortgage-backed
Securities Fund Government Bond Index securities.
(in thousands)
5/5/93 $10,000 $10,000
7/30/93 10,180 10,138 Q. WHAT IS YOUR OUTLOOK FOR THE FIXED-
10/29/93 10,393 10,356 INCOME MARKET?
1/31/94 10,478 10,449 A. Fixed-income funds should fare well
4/29/94 9,939 10,089 as long as the economy grows in a 2% to
7/29/94 10,069 10,231 3% range. And indications are that the
10/31/94 9,947 10,177 fair weather should continue--the
1/31/95 10,120 10,330 Federal Reserve has described the
4/28/95 10,487 10,710 current economic environment as ideal.
7/31/95 10,870 11,089 Inflation--bond investors' worst enemy--
10/31/95 11,219 11,397 is showing no signs of a resurgence and
1/31/96 11,599 11,730 the supply of U.S. Treasury bonds is
4/30/96 11,225 11,519 growing slowly, which tightens demand
7/31/96 11,350 11,666 and helps cushion the price of those
10/31/96 11,713 12,024 securities.
12/31/96 11,784 12,104 Interest rates should remain stable--
6/97 12,094 12,437 long-term rates have even declined
slightly. However, market watchers don't
AVERAGE ANNUAL TOTAL RETURN Past performance cannot guarantee anticipate substantially lower rates for
As of 6/30/97 comparable future results. U.S. Treasury bonds from current levels.
1 Year 6.88% That lessens the likelihood of
Inception (5/5/93) 4.68 significant prepayment risk for mortgage-
backed securities.
The performance figures shown represent the AIM V.I. Government Securities Fund Key factors we see driving the
and are not intended to reflect actual annuity values, and do not reflect government securities market in coming
charges at the separate account level which, if applied, would lower the months include:
performance results. The Fund's performance figures are historical and reflect * The Fed has recently indicated that
reinvestment of all distributions and changes in the net asset value. The Fund's no further monetary policy changes
investment return and principal value will fluctuate so that Fund shares, when may be necessary in 1997.
redeemed, may be worth more or less than their original cost. Source: Towers * Foreign demand for government issues
Data Systems HYPO--Registered Trademark-- is up sharply.
The Lehman Bros. Intermediate Government Bond Index is an unmanaged composite * Recently passed legislation for a
generally considered representative of intermediate U.S. Treasury and U.S. balanced budget should contribute to
government agency securities. Results shown here are for the period 4/30/93 a further reduction in the supply of
through 6/30/97. Source: Lipper Analytical Services, Inc. U.S. Treasury debt issues.
An investment cannot be made in any index listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND
39
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCIES - 83.21%
FEDERAL FARM CREDIT BANK - 0.70%
Medium term notes
5.96%, 07/14/03 $ 200,000 $ 193,892
- ------------------------------------------------------------------------
FEDERAL HOME LOAN BANK - 4.89%
Debentures
8.375%, 10/25/99 150,000 157,014
- ------------------------------------------------------------------------
6.00%, 06/27/00 250,000 247,958
- ------------------------------------------------------------------------
7.31%, 07/06/01 500,000 515,545
- ------------------------------------------------------------------------
8.17%, 12/16/04 400,000 435,595
- ------------------------------------------------------------------------
1,356,112
- ------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. - 17.23%
Debentures
6.13%, 08/19/99 150,000 149,969
- ------------------------------------------------------------------------
Pass through certificates
6.00%, 11/01/08 to 08/01/10 885,484 859,194
- ------------------------------------------------------------------------
6.50%, 12/01/08 to 07/01/23 487,684 473,494
- ------------------------------------------------------------------------
7.00%, 11/01/10 to 01/01/26 2,779,262 2,761,230
- ------------------------------------------------------------------------
10.50%, 08/01/19 282,631 312,482
- ------------------------------------------------------------------------
8.50%, 08/01/24 216,620 226,097
- ------------------------------------------------------------------------
4,782,466
- ------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 39.25%
Debentures
7.55%, 04/22/02 400,000 417,380
- ------------------------------------------------------------------------
8.50%, 02/01/05 500,000 520,665
- ------------------------------------------------------------------------
Medium term notes
7.375%, 03/28/05 300,000 312,780
- ------------------------------------------------------------------------
Pass through certificates
5.25%, 06/02/99 500,000 498,750
- ------------------------------------------------------------------------
6.24%, 02/01/06 493,550 472,722
- ------------------------------------------------------------------------
6.625%, 02/01/07 668,024 656,461
- ------------------------------------------------------------------------
7.50%, 11/01/09 to 06/01/27 4,028,531 4,066,803
- ------------------------------------------------------------------------
6.50%, 10/01/10 to 06/01/23 611,019 598,107
- ------------------------------------------------------------------------
7.00%, 07/01/11 to 09/01/25 2,849,702 2,839,026
- ------------------------------------------------------------------------
8.50%, 09/01/24 330,622 344,465
- ------------------------------------------------------------------------
STRIPS(a)
7.37%, 10/09/19 800,000 164,976
- ------------------------------------------------------------------------
10,892,135
- ------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 12.30%
Pass through certificates
9.50%, 08/15/03 to 09/15/16 93,433 101,270
- ------------------------------------------------------------------------
9.00%, 09/15/08 to 10/15/16 214,079 229,386
- ------------------------------------------------------------------------
11.00%, 10/15/15 50,925 56,638
- ------------------------------------------------------------------------
10.50%, 09/15/17 to 11/15/19 51,351 56,936
- ------------------------------------------------------------------------
6.50%, 12/15/23 479,392 462,163
- ------------------------------------------------------------------------
8.00%, 07/15/26 1,457,274 1,492,788
- ------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - (CONTINUED)
7.50%, 05/15/27 $1,008,846 $ 1,012,629
- ------------------------------------------------------------------------
3,411,810
- ------------------------------------------------------------------------
PRIVATE EXPORT FUNDING COMPANY - 1.12%
Debentures
7.30%, 01/31/02 300,000 309,627
- ------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION - 2.87%
Debentures
5.27%, 02/22/99 500,000 499,550
- ------------------------------------------------------------------------
5.55%, 12/15/99 150,000 147,821
- ------------------------------------------------------------------------
6.50%, 08/01/02 150,000 150,027
- ------------------------------------------------------------------------
797,398
- ------------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY - 4.85%
Debentures
6.375%, 06/15/05 500,000 491,260
- ------------------------------------------------------------------------
5.98%, 04/01/36 850,000 854,941
- ------------------------------------------------------------------------
1,346,201
- ------------------------------------------------------------------------
Total U.S. Government Agencies
23,089,641
- ------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 5.54%
U.S. TREASURY BONDS - 5.34%
6.875%, 08/15/25 500,000 501,955
- ------------------------------------------------------------------------
6.625%, 02/15/27 1,000,000 978,770
- ------------------------------------------------------------------------
1,480,725
- ------------------------------------------------------------------------
U.S. TREASURY STRIPS(a) - 0.20%
6.80%, 11/15/18 250,000 57,138
- ------------------------------------------------------------------------
Total U.S. Treasury Securities
1,537,863
- ------------------------------------------------------------------------
Total Investments
(excluding Repurchase Agreements) 24,627,504
- ------------------------------------------------------------------------
REPURCHASE AGREEMENT - 10.46%(b)
Goldman, Sachs & Co.,
5.875%, 07/01/97(c) 2,902,374 2,902,374
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.21% 27,529,878
- ------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.79% 218,757
- ------------------------------------------------------------------------
NET ASSETS - 100.00% $27,748,635
========================================================================
</TABLE>
Notes to Schedule of Investments:
(a) 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, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$500,081,597. Collateralized by $489,647,000 U.S. Government obligations,
5.875% to 12.00%, due 02/28/99 to 05/15/05 with an aggregate market value
at 06/30/97 of $510,506,061.
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
40
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $24,586,339) $ 24,627,504
- ----------------------------------------------------------------------
Repurchase agreement (cost $2,902,374) 2,902,374
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 14,125
- ----------------------------------------------------------------------
Interest 235,844
- ----------------------------------------------------------------------
Investment for deferred compensation plan 12,363
- ----------------------------------------------------------------------
Organizational costs, net 2,419
- ----------------------------------------------------------------------
Other assets 5,867
- ----------------------------------------------------------------------
Total assets 27,800,496
- ----------------------------------------------------------------------
LIABILITIES:
Deferred compensation payable 12,363
- ----------------------------------------------------------------------
Accrued advisory fees 11,248
- ----------------------------------------------------------------------
Accrued directors' fees 1,601
- ----------------------------------------------------------------------
Accrued administrative service fees 3,318
- ----------------------------------------------------------------------
Accrued operating expenses 23,331
- ----------------------------------------------------------------------
Total liabilities 51,861
- ----------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 27,748,635
======================================================================
Capital shares, $.001 par value per share:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 2,738,028
======================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $10.13
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $856,813
- ------------------------------------------------------------------------
EXPENSES:
Advisory fees 62,671
- ------------------------------------------------------------------------
Custodian fees 5,943
- ------------------------------------------------------------------------
Administrative services fees 19,891
- ------------------------------------------------------------------------
Directors' fees and expenses 3,291
- ------------------------------------------------------------------------
Professional fees 11,545
- ------------------------------------------------------------------------
Organizational costs 1,426
- ------------------------------------------------------------------------
Other 6,670
- ------------------------------------------------------------------------
Total expenses 111,437
- ------------------------------------------------------------------------
Less: Expenses paid indirectly (17)
- ------------------------------------------------------------------------
Net expenses 111,420
- ------------------------------------------------------------------------
Net investment income 745,393
- ------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities (78,115)
- ------------------------------------------------------------------------
Unrealized appreciation of investment securities 32,535
- ------------------------------------------------------------------------
Net gain (loss) on investment securities (45,580)
- ------------------------------------------------------------------------
Net increase in net assets resulting from operations $699,813
========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
41
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 745,393 $ 1,246,854
- ----------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities (78,115) (33,180)
- ----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities 32,535 (626,394)
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 699,813 587,280
- ----------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (1,251,057)
- ----------------------------------------------------------------------------
Net equalization credits 122,679 247,547
- ----------------------------------------------------------------------------
Net increase from capital stock transactions 2,399,627 5,397,355
- ----------------------------------------------------------------------------
Net increase in net assets 3,222,119 4,981,125
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 24,526,516 19,545,391
- ----------------------------------------------------------------------------
End of period $27,748,635 $24,526,516
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $26,748,288 $24,348,661
- ----------------------------------------------------------------------------
Undistributed net investment income 1,521,193 653,121
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (562,011) (483,896)
- ----------------------------------------------------------------------------
Unrealized appreciation of investment securities 41,165 8,630
- ----------------------------------------------------------------------------
$27,748,635 $24,526,516
============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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 and variable life insurance
policies.
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
AIM V.I. GOVERNMENT SECURITIES FUND
42
<PAGE>
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 $387,410, which expires, if
not previously utilized, through the year 2004. The Fund cannot distribute
capital gains to shareholders until the tax loss carryforwards have been
utilized.
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.
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 six months ended June 30, 1997, AIM was reimbursed $19,891 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 six months ended June 30, 1997, the Fund incurred legal fees of
$2,470 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of
the Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997 the Fund's expenses were reduced by $13 and the
Fund received reductions in custodian fees of $4 under an expense offset
arrangement. The effect of the above arrangements resulted in a reduction of
the Fund's total expenses of $17 during the six months ended June 30, 1997.
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the six months ended June
30, 1997 was $10,968,667 and $9,442,030, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 183,074
- ------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (141,909)
- ------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 41,165
========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1997 and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
--------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Sold 558,343 $ 5,323,016 872,793 $8,373,957
- ------------------------- -------- ----------- -------- ----------
Issued as reinvestment of
distributions -- -- 126,754 1,220,637
- ------------------------- -------- ----------- -------- ----------
Reacquired (305,633) (2,923,389) (435,586) (4,197,239)
- ------------------------- -------- ----------- -------- ----------
252,710 $ 2,399,627 563,961 $5,397,355
======== =========== ======== ==========
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND
43
<PAGE>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
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>
JUNE 30, DECEMBER 31, JANUARY 31,
1997 1996 1995 1995 1994
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.87 $ 10.17 $ 9.39 $ 10.24 $ 10.00
- ------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.29 0.58 0.54 0.53 0.38
- ------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.03) (0.35) 0.74 (0.88) 0.10
- ------------------------------------------------------------------------------------------
Total from investment
operations 0.26 0.23 1.28 (0.35) 0.48
- ------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.53) (0.50) (0.50) (0.24)
- ------------------------------------------------------------------------------------------
Total distributions -- (0.53) (0.50) (0.50) (0.24)
- ------------------------------------------------------------------------------------------
Net asset value, end of
period $ 10.13 $ 9.87 $ 10.17 $ 9.39 $ 10.24
==========================================================================================
Total return(a) 2.63% 2.29% 13.84% (3.42)% 4.78%
==========================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $27,749 $24,527 $19,545 $12,887 $10,643
==========================================================================================
Ratio of expenses to
average net assets 0.89%(b)(c) 0.91% 1.19%(d) 0.95%(e) 1.00%(d)(e)
==========================================================================================
Ratio of net investment
income to average net
assets 5.95%(b) 5.80% 5.78%(d) 5.51%(f) 4.74%(d)(f)
==========================================================================================
Portfolio turnover rate 41% 32% 41% 29% 0%
==========================================================================================
</TABLE>
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are annualized and based on average net assets of $25,276,323.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have
remained the same.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.10% and 1.80% (annualized) for January, 1995 and 1994, respectively.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.35% and 3.94% (annualized) for January, 1995 and
1994, respectively.
- -------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION - SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller, & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES WITHHOLD/
DIRECTOR/MATTER VOTES FOR AGAINST ABSTENTIONS
--------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1) Charles T. Bauer....................... 138,450,525 N/A 3,241,923
Bruce L. Crockett...................... 138,630,018 N/A 3,062,431
Owen Daly II........................... 138,241,309 N/A 3,451,139
Carl Frischling........................ 138,615,279 N/A 3,077,169
Robert H. Graham....................... 138,641,752 N/A 3,050,695
John F. Kroeger........................ 138,250,777 N/A 3,441,671
Lewis F. Pennock....................... 138,618,633 N/A 3,073,814
Ian W. Robinson........................ 138,281,116 N/A 3,411,332
Louis S. Sklar......................... 138,611,786 N/A 3,080,663
(2) Approval of new Investment Advisory
Agreement.............................. 2,249,219 36,828 46,202
(3) Elimination of policy restricting
investments in other investment
companies.............................. 2,204,215 85,803 42,230
(4) Tait, Weller, & Baker.................. 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND
44
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
AIM V.I. GROWTH FUND POSTS SOLID
RETURNS IN VOLATILE MARKET
A roundtable discussion with the Fund management team for AIM V.I. Growth Fund
for the six-month period ended June 30, 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. STOCKS FLUCTUATED WIDELY IN THE FIRST pressures were minimal sparked a spirit- We reduced our holdings in
HALF OF 1997. HOW DID AIM V.I. GROWTH ed stock-market rally. The DJIA recouped networking company stocks, when earnings
FUND PERFORM IN THAT ENVIRONMENT? its losses and advanced to record highs fell short of expectations, and
A. We are pleased with the Fund's in June. increased our holdings in semiconductor
performance during that volatile period. makers, whose stocks rose significantly
For the six months ended June 30, 1997, Q. HOW DID THE FUND BENEFIT WHEN STOCKS
the Fund posted a solid total return of RALLIED? Q. WHERE WAS YOUR FOCUS IN HEALTH-CARE
15.51%, besting the 15.40% total return A. The Fund invests in large- and mid- STOCKS?
of the Lipper Growth Fund Index, an cap stocks, which were up sharply during A. Our primary emphasis was on
unmanaged average of the performance of the last couple months of the reporting pharmaceutical companies and patient-
the 30 largest growth mutual funds period when the market rallied. As of care providers, which are bringing new
tracked by Lipper Analytical Services, June 30, the Fund was 66% invested in products to the market and reporting
Inc. For the year ended June 30, 1997, large-cap stocks, 31% in mid-cap stocks, substantial earnings growth.
total return was an impressive 26.02%, and 3% in small-cap stocks. Pharmaceutical manufacturers in the
beating the 25.57% total return of the portfolio included Merck & Co. and
Lipper Growth Fund Index. Q. HOW DID THE FUND TAKE ADVANTAGE OF Bristol-Myers Squibb Co. In the patient-
Much of the Fund's performance THE INVESTMENT CLIMATE? care area, the Fund's holdings included
occurred late in the period when the A. We focus on companies that offer the HealthSouth Corp., the nation's largest
market staged an impressive rally. From most attractive potential for growth. provider of rehabilitative health-care
May 1 to June 30, the Fund's total That strategy doesn't change--even in services.
return was 12.46%, besting the 10.83% volatile markets. The Fund's top equity
total return of the Standard and Poor's holdings were in the following sectors:
Composite Index of 500 Stocks (S&P 500) technology, 23%; health care, 15%; and
and the 10.92% total return of the financial, 13.5%. These sectors were
Lipper Growth Fund Index for the same among the principal growth segments of
period. the economy.
Q. WHAT TOUCHED OFF THE MARKET Q. GIVEN THE VOLATILITY OF TECHNOLOGY
VOLATILITY? STOCKS, WHY DOES THE FUND HAVE SO MUCH
A. The primary cause of the stock INVESTED IN THAT SECTOR?
market's weakness in the first quarter A. Many technology companies reported
was rapid economic expansion which excellent earnings for the first half of
raised concerns that the Federal Reserve 1997, and our stock-selection process
Board would hike interest rates to fore- found a number of technology firms we
stall inflation. Stock prices were consider very promising.
already plunging when the Fed raised Among the Fund's stronger performers
interest rates in March. was Applied Materials, Inc., the world's
From mid-March to mid-April 1997, largest supplier of wafer fabrication
the popular Dow Jones Industrial Average systems and services to the
(DJIA) lost 9.8% of its value--just semiconductor industry. Other technology
short of the 10% decline many market stocks in the portfolio which posted
observers had predicted. solid gains included industry leaders
Later reports showing that economic Microsoft Corp. and Dell Computer Corp.
growth was slowing and inflationary
</TABLE>
_______________________________________
The Fund posted
a solid total return of 15.51%,
besting the 15.40% total return
of the Lipper Growth Fund Index
_______________________________________
AIM V.I. GROWTH FUND
45
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Q. WHY DO YOU THINK FINANCIAL COMPANIES In the consumer-credit field, our growth is slowing to a moderate pace,
HAVE STRONG GROWTH PROSPECTS? leading holdings included the stocks of inflation continues to be astonishingly
A. The relatively long period of stable the Federal National Mortgage Association low, and corporate profits continue to
interest rates and low inflation has and the Federal Home Loan Mortgage outstrip analysts' forecasts.
created a favorable environment for Corporation, among the most important Nonetheless, it is important that
financial companies. The consolidation players in the home mortgage market, investors maintain realistic
taking place in the banking industry is and the Student Loan Marketing expectations. We have enjoyed record-
also giving financial institutions a Association, the nation's leading breaking returns from stocks in recent
boost. For example, NationsBank, one of provider of financial funding services years, but indications are that stock
stocks in the portfolio, merged with for college education loans. performance may be returning to historic
Boatmen's Bancshares and reported a 31% norms closer to 10% per year than 20%.
rise in net income for the first six Q. WHAT IS YOUR MARKET OUTLOOK?
months of 1997. A. Conditions appear to favor continued
strength in the stock market. Economic
Top 10 Holdings Growth of a $10,000 Investment
As of 6/30/97, based on total net assets From 5/5/93-6/30/97
AIM V.I. Growth Fund S&P 500 Stock Index
(In thousands)
1. Philip Morris Companies, Inc. 3.45% 5/5/93 $10,000 $10,000
2. RJR Nabisco Holdings Corp. 1.25 7/30/93 10,420 10,155
3. E.I. Du Pont de Nemours 1.20 10/29/93 11,160 10,675
4. Applied Materials, Inc. 1.20 1/31/94 11,607 11,062
5. American Home Products Corp. 1.19 4/29/94 10,626 10,430
6. BankAmerica Corp. 1.15 7/29/94 10,425 10,681
7. SmithKline Beecham plc 1.10 10/31/94 10,207 11,088
8. Microsoft Corp. 1.07 1/31/95 10,782 11,123
9. Student Loan Marketing Assoc. 1.02 4/28/95 12,060 12,247
10. Exxon Corp. 0.98 7/31/95 14,094 13,462
10/31/95 14,436 14,011
Please keep in mind that the Fund's 1/31/96 14,806 15,412
portfolio composition is subject to 4/30/96 15,712 15,937
change and there is no assurance the 7/31/96 14,887 15,678
Fund will continue to hold any 10/31/96 16,639 17,376
particular security. 12/31/96 17,175 18,344
6/30/97 19,839 22,120
Average Annual Total Return Past performance cannot guarantee
As of 6/30/97 comparable future results.
1 Year 26.02%
Inception (5/5/93) 17.93
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.--Registered Mark--
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.--Registered Mark--
The unmanaged Lipper Growth Fund Index represents an average of the
performance of the 30 largest growth mutual funds.
An investment cannot be made in any index listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. GROWTH FUND
46
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 83.34%
ADVERTISING/BROADCASTING - 0.31%
Interpublic Group of Companies, Inc. 11,500 $ 705,094
- -------------------------------------------------------------
AEROSPACE/DEFENSE - 0.59%
Lockheed Martin Corp. 4,000 414,250
- -------------------------------------------------------------
United Technologies Corp. 11,000 913,000
- -------------------------------------------------------------
1,327,250
- -------------------------------------------------------------
APPLIANCES - 0.21%
Maytag Corp. 18,200 475,475
- -------------------------------------------------------------
BANKING - 0.73%
NationsBank Corp. 25,500 1,644,750
- -------------------------------------------------------------
BANKING (MONEY CENTER) - 1.41%
BankAmerica Corp. 40,000 2,582,500
- -------------------------------------------------------------
Chase Manhattan Corp. 6,000 582,375
- -------------------------------------------------------------
3,164,875
- -------------------------------------------------------------
BEVERAGES (SOFT DRINKS) - 0.87%
PepsiCo, Inc. 52,000 1,953,250
- -------------------------------------------------------------
BIOTECHNOLOGY - 0.45%
AMGEN, Inc.(a) 6,000 348,750
- -------------------------------------------------------------
Biogen, Inc.(a) 19,500 660,563
- -------------------------------------------------------------
1,009,313
- -------------------------------------------------------------
BUILDING MATERIALS - 0.23%
Georgia Pacific Corp. 6,000 512,250
- -------------------------------------------------------------
BUSINESS SERVICES - 2.08%
AccuStaff, Inc.(a) 29,700 703,518
- -------------------------------------------------------------
Diebold, Inc. 15,650 610,350
- -------------------------------------------------------------
Ecolab, Inc. 26,300 1,255,825
- -------------------------------------------------------------
Equifax, Inc. 35,000 1,301,562
- -------------------------------------------------------------
Ingram Micro, Inc. - Class A(a) 33,000 796,125
- -------------------------------------------------------------
4,667,380
- -------------------------------------------------------------
CHEMICALS - 1.45%
Du Pont (E.I.) de Nemours & Co. 43,000 2,703,625
- -------------------------------------------------------------
Monsanto Co. 12,700 546,893
- -------------------------------------------------------------
3,250,518
- -------------------------------------------------------------
CHEMICALS (SPECIALTY)- 0.19%
Crompton & Knowles Corp. 18,900 420,525
- -------------------------------------------------------------
COMPUTER MAINFRAMES - 0.56%
International Business Machines Corp. 14,000 1,262,625
- -------------------------------------------------------------
COMPUTER MINI/PCS - 2.28%
Compaq Computer Corp.(a) 18,500 1,836,125
- -------------------------------------------------------------
Dell Computer Corp.(a) 13,000 1,526,687
- -------------------------------------------------------------
Stratus Computer, Inc.(a) 11,400 570,000
- -------------------------------------------------------------
Sun Microsystems, Inc.(a) 32,000 $ 1,191,000
- ------------------------------------------------------------------
5,123,812
- ------------------------------------------------------------------
COMPUTER NETWORKING - 1.12%
Bay Networks, Inc.(a) 30,000 796,875
- ------------------------------------------------------------------
Belden, Inc. 2,100 71,531
- ------------------------------------------------------------------
Cisco Systems, Inc.(a) 16,000 1,074,000
- ------------------------------------------------------------------
3Com Corp.(a) 12,500 562,500
- ------------------------------------------------------------------
2,504,906
- ------------------------------------------------------------------
COMPUTER PERIPHERALS - 0.60%
Adaptec, Inc.(a) 12,500 434,375
- ------------------------------------------------------------------
American Power Conversion Corp.(a) 20,000 380,000
- ------------------------------------------------------------------
EMC Corp.(a) 13,500 526,500
- ------------------------------------------------------------------
1,340,875
- ------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 5.20%
America Online, Inc.(a) 5,000 278,125
- ------------------------------------------------------------------
BMC Software, Inc.(a) 11,000 609,125
- ------------------------------------------------------------------
Cadence Design Systems, Inc.(a) 19,500 653,250
- ------------------------------------------------------------------
Computer Associates International, Inc. 23,000 1,280,812
- ------------------------------------------------------------------
Compuware Corp.(a) 20,000 955,000
- ------------------------------------------------------------------
First Data Corp. 30,000 1,318,125
- ------------------------------------------------------------------
Fiserv, Inc.(a) 26,000 1,160,250
- ------------------------------------------------------------------
HBO & Co. 13,000 895,375
- ------------------------------------------------------------------
Microsoft Corp.(a) 19,000 2,401,125
- ------------------------------------------------------------------
National Data Corp. 13,000 563,062
- ------------------------------------------------------------------
Oracle Corp.(a) 13,500 680,062
- ------------------------------------------------------------------
Parametric Technology Co.(a) 2,400 102,147
- ------------------------------------------------------------------
Shared Medical Systems Corp. 5,000 270,000
- ------------------------------------------------------------------
Sterling Commerce, Inc.(a) 16,000 526,000
- ------------------------------------------------------------------
11,692,458
- ------------------------------------------------------------------
CONGLOMERATES - 2.95%
AlliedSignal Inc. 7,000 588,000
- ------------------------------------------------------------------
Corning Inc. 15,000 834,375
- ------------------------------------------------------------------
General Electric Co. 21,000 1,372,875
- ------------------------------------------------------------------
ITT Corp.(a) 10,500 641,156
- ------------------------------------------------------------------
Loews Corp. 12,400 1,241,550
- ------------------------------------------------------------------
Tyco International Ltd. 18,000 1,252,125
- ------------------------------------------------------------------
U.S. Industries, Inc.(a) 20,000 712,500
- ------------------------------------------------------------------
6,642,581
- ------------------------------------------------------------------
CONTAINERS - 0.22%
Sealed Air Corp.(a) 10,400 494,000
- ------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH FUND
47
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COSMETICS & TOILETRIES - 1.92%
Dial Corp. 40,000 $ 625,000
- -------------------------------------------------------------------
General Nutrition Companies, Inc.(a) 23,000 644,000
- -------------------------------------------------------------------
Kimberly-Clark Corp. 10,000 497,500
- -------------------------------------------------------------------
McKesson Corp. 2,400 186,000
- -------------------------------------------------------------------
Procter & Gamble Co. (The) 8,000 1,130,000
- -------------------------------------------------------------------
Warner-Lambert Co. 10,000 1,242,500
- -------------------------------------------------------------------
4,325,000
- -------------------------------------------------------------------
ELECTRIC POWER - 0.28%
AES Corp.(a) 9,000 636,750
- -------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 1.66%
Honeywell, Inc. 12,400 940,850
- -------------------------------------------------------------------
Symbol Technologies, Inc. 21,200 712,850
- -------------------------------------------------------------------
Teradyne, Inc.(a) 21,000 824,250
- -------------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 1,700 52,063
- -------------------------------------------------------------------
Waters Corp.(a) 33,600 1,205,400
- -------------------------------------------------------------------
3,735,413
- -------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 0.04%
Crane Co. 2,000 83,625
- -------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 0.82%
Franklin Resources, Inc. 12,750 925,171
- -------------------------------------------------------------------
T. Rowe Price Associates 18,000 929,250
- -------------------------------------------------------------------
1,854,421
- -------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 4.06%
American Express Co. 17,000 1,266,500
- -------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 48,700 1,674,063
- -------------------------------------------------------------------
Federal National Mortgage Association 42,100 1,836,612
- -------------------------------------------------------------------
Green Tree Financial Corp. 17,000 605,625
- -------------------------------------------------------------------
Household International, Inc. 5,500 645,906
- -------------------------------------------------------------------
Imperial Credit Industries, Inc.(a) 4,600 94,588
- -------------------------------------------------------------------
Money Store, Inc. (The) 25,000 717,188
- -------------------------------------------------------------------
Student Loan Marketing Association 18,000 2,286,000
- -------------------------------------------------------------------
9,126,482
- -------------------------------------------------------------------
FINANCE (SAVINGS & LOAN) - 1.48%
Ahmanson (H.F.) & Co. 28,700 1,234,100
- -------------------------------------------------------------------
ContiFinancial Corp.(a) 13,300 485,450
- -------------------------------------------------------------------
Great Western Financial Corp. 30,000 1,612,500
- -------------------------------------------------------------------
3,332,050
- -------------------------------------------------------------------
FOOD/PROCESSING - 1.04%
ConAgra, Inc. 20,500 1,314,562
- -------------------------------------------------------------------
Dean Foods Co. 18,300 738,863
- -------------------------------------------------------------------
Lancaster Colony Corp. 5,966 $ 288,605
- -------------------------------------------------------------------
2,342,030
- -------------------------------------------------------------------
FUNERAL SERVICES - 0.83%
Service Corp. International 57,000 1,873,875
- -------------------------------------------------------------------
FURNITURE - 0.79%
Furniture Brands International, Inc.(a) 81,000 1,785,375
- -------------------------------------------------------------------
GAMING - 0.22%
International Game Technology 28,000 497,000
- -------------------------------------------------------------------
HOTELS/MOTELS - 1.11%
Doubletree Corp.(a) 7,800 320,775
- -------------------------------------------------------------------
HFS, Inc.(a) 18,000 1,044,000
- -------------------------------------------------------------------
Host Marriott Corp.(a) 7,400 131,812
- -------------------------------------------------------------------
Marriot International, Inc. 16,000 982,000
- -------------------------------------------------------------------
2,478,587
- -------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 0.72%
Conseco Inc. 15,000 555,000
- -------------------------------------------------------------------
Equitable Companies, Inc. 20,000 665,000
- -------------------------------------------------------------------
Fremont General Corp. 9,900 398,475
- -------------------------------------------------------------------
1,618,475
- -------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 3.80%
Ace, Ltd. 14,400 1,063,800
- -------------------------------------------------------------------
Aetna Inc. 16,200 1,658,474
- -------------------------------------------------------------------
Allstate Corp. 19,900 1,452,700
- -------------------------------------------------------------------
American International Group, Inc. 8,000 1,195,000
- -------------------------------------------------------------------
Everest Re Holdings, Inc. 24,400 966,850
- -------------------------------------------------------------------
Exel Ltd. 7,300 385,075
- -------------------------------------------------------------------
MBIA, Inc. 5,000 564,063
- -------------------------------------------------------------------
MGIC Investment Corp. 13,000 623,188
- -------------------------------------------------------------------
Travelers Group, Inc. 10,000 630,625
- -------------------------------------------------------------------
8,539,775
- -------------------------------------------------------------------
LEISURE & RECREATION - 0.78%
Carnival Corp. - Class A 31,000 1,278,750
- -------------------------------------------------------------------
Walt Disney Co. (The) 6,000 481,500
- -------------------------------------------------------------------
1,760,250
- -------------------------------------------------------------------
MACHINERY (HEAVY) - 1.16%
Caterpillar Inc. 7,000 751,625
- -------------------------------------------------------------------
Deere & Co. 20,000 1,097,500
- -------------------------------------------------------------------
Ingersoll-Rand Co. 12,300 759,525
- -------------------------------------------------------------------
2,608,650
- -------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 0.96%
Thermo Electron Corp.(a) 63,600 2,162,400
- -------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH FUND
48
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (DRUGS) - 6.14%
Abbott Laboratories 10,000 $ 667,500
- --------------------------------------------------------------------
American Home Products Corp. 35,000 2,677,500
- --------------------------------------------------------------------
AmeriSource Health Corp. - Class A(a) 15,000 748,125
- --------------------------------------------------------------------
Bristol-Myers Squibb Co. 18,000 1,458,000
- --------------------------------------------------------------------
Cardinal Health, Inc. 9,000 515,250
- --------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 45,000 1,290,938
- --------------------------------------------------------------------
Johnson & Johnson 19,000 1,223,125
- --------------------------------------------------------------------
Merck & Co., Inc. 18,100 1,873,350
- --------------------------------------------------------------------
Pfizer, Inc. 8,200 979,900
- --------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 17,000 590,750
- --------------------------------------------------------------------
Schering-Plough Corp. 15,000 718,125
- --------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 25,000 1,056,250
- --------------------------------------------------------------------
13,798,813
- --------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 3.54%
Columbia\HCA Healthcare Corp. 30,000 1,179,375
- --------------------------------------------------------------------
Health Care and Retirement Corp.(a) 6,700 223,613
- --------------------------------------------------------------------
HEALTHSOUTH Corp.(a) 50,000 1,246,875
- --------------------------------------------------------------------
Lincare Holdings, Inc.(a) 11,400 490,200
- --------------------------------------------------------------------
MedPartners, Inc.(a) 42,500 919,063
- --------------------------------------------------------------------
Oxford Health Plans, Inc.(a) 8,500 609,875
- --------------------------------------------------------------------
Quorum Health Group, Inc.(a) 36,500 1,304,875
- --------------------------------------------------------------------
Tenet Healthcare Corp.(a) 35,000 1,034,688
- --------------------------------------------------------------------
United Healthcare Corp. 11,500 598,000
- --------------------------------------------------------------------
Universal Health Services, Inc. - Class B(a) 9,200 354,200
- --------------------------------------------------------------------
7,960,764
- --------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS - 3.00%
Bard (C.R.), Inc. 16,000 581,000
- --------------------------------------------------------------------
Baxter International Inc. 35,000 1,828,750
- --------------------------------------------------------------------
Becton, Dickinson & Co. 17,000 860,625
- --------------------------------------------------------------------
DePuy, Inc.(a) 16,100 370,300
- --------------------------------------------------------------------
Guidant Corp. 7,500 637,500
- --------------------------------------------------------------------
Stryker Corp.(a) 23,500 819,563
- --------------------------------------------------------------------
Sybron International Corp.(a) 29,400 1,172,325
- --------------------------------------------------------------------
US Surgical Corp. 13,100 484,250
- --------------------------------------------------------------------
6,754,313
- --------------------------------------------------------------------
METALS - 0.28%
MascoTech, Inc. 30,000 626,250
- --------------------------------------------------------------------
OFFICE AUTOMATION - 0.63%
Xerox Corp. 18,000 1,419,750
- --------------------------------------------------------------------
OFFICE PRODUCTS - 0.13%
Reynolds & Reynolds Co. - Class A 18,700 294,525
- --------------------------------------------------------------------
OIL & GAS (DRILLING) - 0.10%
Santa Fe International Corp.(a) 6,500 221,000
- --------------------------------------------------------------------
OIL & GAS (SERVICES) - 1.31%
Exxon Corp. 35,800 $ 2,201,700
- --------------------------------------------------------------------
Halliburton Co. 6,000 475,500
- --------------------------------------------------------------------
Newpark Resources, Inc.(a) 7,800 263,250
- --------------------------------------------------------------------
2,940,450
- --------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 1.58%
BJ Services Co.(a) 11,000 589,875
- --------------------------------------------------------------------
Coastal Corp. (The) 12,000 638,250
- --------------------------------------------------------------------
Cooper Cameron Corp.(a) 5,600 261,800
- --------------------------------------------------------------------
Rowan Companies, Inc.(a) 26,700 752,606
- --------------------------------------------------------------------
Schlumberger Ltd. 5,500 687,500
- --------------------------------------------------------------------
Tidewater, Inc. 14,000 616,000
- --------------------------------------------------------------------
3,546,031
- --------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.76%
Bowater, Inc. 8,800 407,000
- --------------------------------------------------------------------
Fort Howard Corp.(a) 16,900 855,562
- --------------------------------------------------------------------
Mead Corp. 7,100 441,975
- --------------------------------------------------------------------
1,704,537
- --------------------------------------------------------------------
POLLUTION CONTROL - 0.72%
US Filter Corp.(a) 17,000 463,250
- --------------------------------------------------------------------
USA Waste Services, Inc.(a) 30,000 1,158,750
- --------------------------------------------------------------------
1,622,000
- --------------------------------------------------------------------
PUBLISHING - 0.64%
Gannett Co., Inc. 7,000 691,250
- --------------------------------------------------------------------
New York Times Co. - Class A 11,700 579,150
- --------------------------------------------------------------------
Times Mirror Co. 3,000 165,750
- --------------------------------------------------------------------
1,436,150
- --------------------------------------------------------------------
RESTAURANTS - 0.04%
Applebee's International, Inc. 3,500 93,625
- --------------------------------------------------------------------
RETAIL (FOOD & DRUGS) - 1.69%
American Stores Co. 12,000 592,500
- --------------------------------------------------------------------
CVS Corp. 18,000 922,500
- --------------------------------------------------------------------
Kroger Co.(a) 35,800 1,038,200
- --------------------------------------------------------------------
Rite Aid Corp. 25,000 1,246,875
- --------------------------------------------------------------------
3,800,075
- --------------------------------------------------------------------
RETAIL (STORES) - 6.58%
Barnes & Noble, Inc.(a) 10,800 464,400
- --------------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 20,400 619,650
- --------------------------------------------------------------------
CompUSA, Inc.(a) 25,000 537,500
- --------------------------------------------------------------------
Consolidated Stores Corp.(a) 31,250 1,085,938
- --------------------------------------------------------------------
Costco Companies, Inc.(a) 38,000 1,249,250
- --------------------------------------------------------------------
Dayton Hudson Corp. 24,500 1,303,093
- --------------------------------------------------------------------
Federated Department Stores, Inc.(a) 15,000 521,250
- --------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH FUND
49
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL STORES - (CONTINUED)
Home Depot, Inc. 9,300 $ 641,119
- ------------------------------------------------------------------------
Jones Apparel Group, Inc.(a) 7,500 358,125
- ------------------------------------------------------------------------
Lowe's Companies, Inc. 35,000 1,299,375
- ------------------------------------------------------------------------
Meyer (Fred), Inc.(a) 5,400 279,114
- ------------------------------------------------------------------------
Pep Boys - Manny, Moe & Jack 35,000 1,192,188
- ------------------------------------------------------------------------
Proffitt's, Inc.(a) 14,000 614,250
- ------------------------------------------------------------------------
Ross Stores, Inc. 23,000 751,813
- ------------------------------------------------------------------------
Sysco Corp. 10,400 379,600
- ------------------------------------------------------------------------
Tech Data Corp.(a) 39,900 1,254,356
- ------------------------------------------------------------------------
TJX Companies, Inc. 24,000 633,000
- ------------------------------------------------------------------------
Toys "R" Us, Inc.(a) 23,000 805,000
- ------------------------------------------------------------------------
Wal-Mart Stores, Inc. 24,100 814,881
- ------------------------------------------------------------------------
14,803,902
- ------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS - 0.25%
Perkin-Elmer Corp. 7,100 564,894
- ------------------------------------------------------------------------
SEMICONDUCTORS - 4.78%
Analog Devices, Inc.(a) 21,000 557,813
- ------------------------------------------------------------------------
Applied Materials, Inc.(a) 38,000 2,690,875
- ------------------------------------------------------------------------
KLA - Tencor Corp.(a) 25,000 1,218,750
- ------------------------------------------------------------------------
Linear Technology Corp. 12,000 621,000
- ------------------------------------------------------------------------
LSI Logic Corp.(a) 17,500 560,000
- ------------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 11,500 654,062
- ------------------------------------------------------------------------
Motorola, Inc. 16,500 1,254,000
- ------------------------------------------------------------------------
National Semiconductor Corp.(a) 27,000 826,875
- ------------------------------------------------------------------------
Solectron Corp.(a) 10,000 700,000
- ------------------------------------------------------------------------
Texas Instruments, Inc. 14,000 1,176,875
- ------------------------------------------------------------------------
Xilinx, Inc. (a) 10,000 490,625
- ------------------------------------------------------------------------
10,750,875
- ------------------------------------------------------------------------
SHOES & RELATED APPAREL - 0.19%
Payless ShoeSource, Inc.(a) 8,000 437,500
- ------------------------------------------------------------------------
TELECOMMUNICATIONS - 1.82%
DSC Communications Corp.(a) 27,500 611,875
- ------------------------------------------------------------------------
Lucent Technologies, Inc. 22,000 1,585,375
- ------------------------------------------------------------------------
Tellabs, Inc.(a) 34,000 1,899,750
- ------------------------------------------------------------------------
4,097,000
- ------------------------------------------------------------------------
TELEPHONE - 0.78%
Cincinnati Bell, Inc. 18,000 567,000
- ------------------------------------------------------------------------
WorldCom, Inc.(a) 37,000 1,184,000
- ------------------------------------------------------------------------
1,751,000
- ------------------------------------------------------------------------
TOBACCO - 5.26%
DIMON, Inc. 17,300 $ 458,450
- ------------------------------------------------------------------------
Philip Morris
Companies, Inc. 175,000 7,765,625
- ------------------------------------------------------------------------
RJR Nabisco Holdings
Corp. 85,000 2,805,000
- ------------------------------------------------------------------------
Universal Corp. 25,000 793,750
- ------------------------------------------------------------------------
11,822,825
- ------------------------------------------------------------------------
Total Domestic Common Stocks 187,398,374
- ------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 0.90%
FINANCE (CONSUMER CREDIT) - 0.23%
SunAmerica, Inc.-
Series E, $3.10 Dep. Conv. Pfd. 4,900 525,525
- ------------------------------------------------------------------------
HOTEL/MOTELS - 0.28%
Host Marriott Financial Trust -
$3.375 Conv. Pfd. (Acquired 02/12/97 -
02/19/97; Cost $635,455)(b) 10,950 635,220
- ------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 0.39%
MGIC Investment Corp. -
$3.12 Conv. Pfd. 10,500 866,250
- ------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks 2,026,995
- ------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC CONVERTIBLE CORPORATE NOTES - 0.86%
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.59%
SCI Systems, Inc., Conv. Sub. Notes, 5.00%,
05/01/06 (Acquired 11/04/96 - 12/06/96; Cost
$1,166,399)(b) $923,000 1,330,117
- ------------------------------------------------------------------------
SEMICONDUCTORS - 0.27%
Altera Corp., Conv. Sub. Notes, 5.75%,
06/15/02(b) (Acquired 01/17/97; Cost
$508,542) 300,000 613,512
- ------------------------------------------------------------------------
Total Domestic Convertible Corporate Notes 1,943,629
- ------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 6.88%
CANADA - 1.55%
Cognos, Inc. (Computer Software/Services)(a) 6,600 205,425
- ------------------------------------------------------------------------
Newbridge Networks Corp.
(Computer Networking)(a) 21,000 913,500
- ------------------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 12,000 1,092,000
- ------------------------------------------------------------------------
Philip Services Corp.
(Pollution Control)(a) 80,000 1,270,000
- ------------------------------------------------------------------------
3,480,925
- ------------------------------------------------------------------------
FINLAND - 0.28%
Nokia Oy A.B. - Class A-ADR
(Telecommunications) 8,650 637,938
- ------------------------------------------------------------------------
FRANCE - 0.53%
Elf Aquitaine S.A. (Oil & Gas Services) 11,000 1,186,720
- ------------------------------------------------------------------------
GERMANY - 0.15%
Adidas A.G. (Shoes & Related Apparel) 2,950 326,443
- ------------------------------------------------------------------------
IRELAND - 0.25%
Elan Corp. PLC-ADR (Medical - Drugs)(a) 12,500 565,625
- ------------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH FUND
50
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ISRAEL - 0.41%
Teva Pharmaceutical Industries Ltd.-ADR (Medical -
Drugs) 14,100 $ 912,975
- -------------------------------------------------------------------------------
MEXICO - 0.24%
Coca-Cola Femsa S.A.-ADR (Beverages-Soft Drinks) 2,600 134,225
- -------------------------------------------------------------------------------
Panamerican Beverages, Inc. - Class A (Beverages-Soft
Drinks) 12,500 410,938
- -------------------------------------------------------------------------------
545,163
- -------------------------------------------------------------------------------
NETHERLANDS - 0.89%
Philips Electronics N.V.-ADR - New York Shares
(Electronic Components/Miscellaneous) 18,000 1,293,750
- -------------------------------------------------------------------------------
Royal Dutch Petroleum Co.-ADR - New York Shares (Oil &
Gas Services) 12,800 696,000
- -------------------------------------------------------------------------------
1,989,750
- -------------------------------------------------------------------------------
SINGAPORE - 0.27%
Asia Pulp & Paper Co. Ltd. - ADR (Paper & Forest
Products)(a) 40,000 605,000
- -------------------------------------------------------------------------------
SWEDEN - 0.56%
Telefonaktiebolaget LM Ericsson-ADR
(Telecommunications) 32,000 1,260,000
- -------------------------------------------------------------------------------
SWITZERLAND - 0.41%
Novartis A.G. (Medical-Drugs)(a) 570 911,219
- -------------------------------------------------------------------------------
UNITED KINGDOM - 1.34%
Danka Business Systems PLC-ADR (Office Automation) 13,000 531,375
- -------------------------------------------------------------------------------
SmithKline Beecham PLC-ADR (Medical - Drugs) 27,000 2,473,875
- -------------------------------------------------------------------------------
3,005,250
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 15,427,008
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FOREIGN CONVERTIBLE BONDS - 0.38%
SWITZERLAND - 0.38%
Sandoz Capital BVI Ltd., Sr. Conv. Deb., 2.00%,
10/06/02 (acquired 11/04/96 - 11/08/96; cost
$612,162)(b) $ 550,000 $ 844,250
- -------------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 5.47%
U.S. Treasury Bills - 5.47%(c)
4.96%, 09/25/97(d) 12,440,000 12,293,830
- -------------------------------------------------------------------------------
Total U.S. Treasury Securities 12,293,830
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.66%(e)
HSBC Securities, Inc., 6.10%, 07/01/97(f) 5,991,061 5,991,061
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.49% 225,925,147
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (0.49%) (1,104,980)
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $224,820,168
===============================================================================
</TABLE>
Investment Abbreviations:
ADR- American Depository Receipt
Conv.- Convertible
Deb.- Debentures
Dep.- Depository
Pfd.- Preferred
Sr.- Senior
Sub.- Subordinated
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 06/30/97 are $3,423,099
which represented 1.52% of the Fund's net assets.
(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) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 8.
(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% of the sales
price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(f) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$100,016,944. Collateralized by $97,880,000 U.S. Government obligations,
7.50% due 10/31/99 with an aggregate market value at 06/30/97 of
$102,002,909.
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
51
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $182,918,811) $225,925,147
- ----------------------------------------------------------------------
Foreign currencies, at market value (cost $22,488) 22,275
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 89,576
- ----------------------------------------------------------------------
Investments sold 4,548,369
- ----------------------------------------------------------------------
Dividends and interest 191,007
- ----------------------------------------------------------------------
Variation margin 3,000
- ----------------------------------------------------------------------
Organizational costs, net 2,410
- ----------------------------------------------------------------------
Investment for deferred compensation plan 13,013
- ----------------------------------------------------------------------
Other assets 2,441
- ----------------------------------------------------------------------
Total assets 230,797,238
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 5,714,593
- ----------------------------------------------------------------------
Capital stock reacquired 83,617
- ----------------------------------------------------------------------
Deferred compensation plan 13,013
- ----------------------------------------------------------------------
Accrued advisory fees 117,928
- ----------------------------------------------------------------------
Accrued directors' fees 1,586
- ----------------------------------------------------------------------
Accrued administrative services fees 4,417
- ----------------------------------------------------------------------
Accrued operating expenses 41,916
- ----------------------------------------------------------------------
Total liabilities 5,977,070
- ----------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $224,820,168
======================================================================
Capital shares, $.001 par value per share:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 11,978,649
======================================================================
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $18.77
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $15,013 foreign withholding tax) $ 890,006
- -----------------------------------------------------------------------------
Interest 443,705
- -----------------------------------------------------------------------------
Total investment income 1,333,711
- -----------------------------------------------------------------------------
EXPENSES:
Advisory fees 641,024
- -----------------------------------------------------------------------------
Custodian fees 27,951
- -----------------------------------------------------------------------------
Administrative services fees 25,566
- -----------------------------------------------------------------------------
Directors' fees and expenses 3,733
- -----------------------------------------------------------------------------
Organizational costs 1,446
- -----------------------------------------------------------------------------
Other 35,044
- -----------------------------------------------------------------------------
Total expenses 734,764
- -----------------------------------------------------------------------------
Less: Expenses paid indirectly (553)
- -----------------------------------------------------------------------------
Net expenses 734,211
- -----------------------------------------------------------------------------
Net investment income 599,500
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FUTURES AND OPTIONS CONTRACTS:
NET REALIZED GAIN (LOSS) FROM:
Investment securities 7,504,253
- -----------------------------------------------------------------------------
Foreign currencies (59,322)
- -----------------------------------------------------------------------------
Futures contracts 1,763,293
- -----------------------------------------------------------------------------
Options contracts 225,344
- -----------------------------------------------------------------------------
9,433,568
- -----------------------------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities 19,145,456
- -----------------------------------------------------------------------------
Foreign currencies (798)
- -----------------------------------------------------------------------------
Futures contracts 30,122
- -----------------------------------------------------------------------------
Options contracts (35,948)
- -----------------------------------------------------------------------------
19,138,832
- -----------------------------------------------------------------------------
Net gain on investment securities, foreign currencies, futures
and options contracts 28,572,400
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations $29,171,900
=============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
52
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 599,500 $ 1,113,772
- ------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and options contracts 9,433,568 8,362,709
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies, futures and
options contracts 19,138,832 13,695,426
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 29,171,900 23,171,907
- ------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (662,515)
- ------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (7,442,940)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 17,010,376 60,971,328
- ------------------------------------------------------------------------------
Net increase in net assets 46,182,276 76,037,780
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 178,637,892 102,600,112
- ------------------------------------------------------------------------------
End of period $224,820,168 $178,637,892
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $162,601,491 $145,591,115
- ------------------------------------------------------------------------------
Undistributed net investment income 1,689,673 1,090,173
- ------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and
options contracts 17,410,259 7,976,691
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and options contracts 43,118,745 23,979,913
- ------------------------------------------------------------------------------
$224,820,168 $178,637,892
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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
and variable life insurance policies.
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 (except
convertible bonds) 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. If no mean is
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. 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. Debt obligations (including convertible bonds) 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. 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.
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.
AIM V.I. GROWTH FUND
53
<PAGE>
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. Realized gains or
losses on sales 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 the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
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 or cash 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.
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 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.
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 currency 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 currency
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.
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 six months ended June 30, 1997, AIM was reimbursed $25,566 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 six months ended June 30, 1997, the Fund incurred legal fees of
$2,828 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
AIM V.I. GROWTH FUND
54
<PAGE>
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997, the Fund's expenses were reduced by $90 and the
Fund received reductions in custodian fees of $463 under an expense offset
arrangement. The effect of the above arrangements resulted in reductions of the
Fund's total expenses of $553 during the six months ended June 30, 1997.
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the six months ended June 30,
1997 was $136,876,662 and $126,146,452, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $44,036,694
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,264,174)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $42,772,520
==========================================================================
</TABLE>
Cost of investments for tax purposes is $183,152,627.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1997
and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold 1,373,433 $23,543,616 3,676,649 $57,637,947
- --------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 511,063 8,105,455
- --------------------------------------------------------------------------
Reacquired (384,784) (6,533,240) (304,826) (4,772,074)
- --------------------------------------------------------------------------
988,649 $17,010,376 3,882,886 $60,971,328
==========================================================================
</TABLE>
NOTE 7 - OPEN COVERED CALL OPTIONS CONTRACTS WRITTEN
Transactions in call options written during the six months ended June 30, 1997
are summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Beginning of period* 824 $ 342,973
- ------------------------------------------
Written 2,359 833,206
- ------------------------------------------
Exercised (1,251) (372,509)
- ------------------------------------------
Expired (283) (142,568)
- ------------------------------------------
Closed (1,649) (661,102)
- ------------------------------------------
End of period 0 $ 0
==========================================
</TABLE>
* Number of contracts beginning of period have been adjusted for a 4 for 1
stock split on Federal Home Loan Mortgage Association.
NOTE 8 - FUTURES CONTRACTS
On June 30, 1997, $441,000 par value U.S. Treasury bills were pledged as
collateral to cover margin requirements for futures contracts.
Futures contracts outstanding at June 30, 1997:
<TABLE>
<CAPTION>
NO. OF UNREALIZED
CONTRACT CONTRACTS MONTH COMMITMENT APPRECIATION
<S> <C> <C> <C> <C>
S&P 400
Midcap Index 18 Sept. 97 Buy $ 30,600
Russell 2000
Index 15 Sept. 97 Buy 82,958
--------
$113,558
========
</TABLE>
AIM V.I. GROWTH FUND
55
<PAGE>
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
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>
DECEMBER 31, JANUARY 31,
JUNE 30, ------------------ -----------------
1997 1996 1995 1995 1994
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 16.25 $ 14.44 $ 10.71 $ 11.59 $ 10.00
- ------------------------ -------- -------- -------- ------- -------
Income from investment
operations:
Net investment income 0.04 0.07 0.09 0.06 0.02
- ------------------------ -------- -------- -------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) 2.48 2.52 3.65 (0.88) 1.59
- ------------------------ -------- -------- -------- ------- -------
Total from investment
operations 2.52 2.59 3.74 (0.82) 1.61
- ------------------------ -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income -- (0.06) (0.01) (0.06) (0.02)
- ------------------------ -------- -------- -------- ------- -------
Distributions from
capital gains -- (0.72) -- -- --
- ------------------------ -------- -------- -------- ------- -------
Total distributions -- (0.78) (0.01) (0.06) (0.02)
- ------------------------ -------- -------- -------- ------- -------
Net asset value, end of
period $ 18.77 $ 16.25 $ 14.44 $ 10.71 $ 11.59
======================== ======== ======== ======== ======= =======
Total return(a) 15.51% 18.09% 34.89% (7.11)% 16.07%
======================== ======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $224,820 $178,638 $102,600 $45,497 $25,115
======================== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets 0.75%(b)(c) 0.78% 0.84%(d) 0.95% 0.85%(d)(e)
======================== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets 0.61%(b) 0.79% 0.95%(d) 0.71% 0.51%(d)(e)
======================== ======== ======== ======== ======= =======
Portfolio turnover rate 69% 143% 125% 179% 99%
======================== ======== ======== ======== ======= =======
Average broker
commission rate paid(f) $ 0.0610 $ 0.0629 N/A N/A N/A
======================== ======== ======== ======== ======= =======
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $199,021,283.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been 0.74%
(annualized).
(d) Annualized.
(e) 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.
(f) Disclosure requirement beginning with the Fund's fiscal year ended December
31, 1996.
AIM V.I. GROWTH FUND
56
<PAGE>
SUPPLEMENTAL PROXY INFORMATION--SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES
DIRECTOR/MATTER VOTES FOR AGAINST WITHHOLD/ABSTENTIONS
- --------------- --------- ------- --------------------
<S> <C> <C> <C>
(1) Charles T. Bauer................. 138,450,525 N/A 3,241,923
Bruce L. Crockett................ 138,630,018 N/A 3,062,431
Owen Daly II..................... 138,241,309 N/A 3,451,139
Carl Frischling.................. 138,615,279 N/A 3,077,169
Robert H. Graham................. 138,641,752 N/A 3,050,695
John F. Kroeger.................. 138,250,777 N/A 3,441,671
Lewis F. Pennock................. 138,618,633 N/A 3,073,814
Ian W. Robinson.................. 138,281,116 N/A 3,411,332
Louis S. Sklar................... 138,611,786 N/A 3,080,663
(2) Approval of new Investment
Advisory Agreement............... 9,817,967 120,450 349,119
(3) Elimination of policy restricting
investments in other investment
companies........................ 9,685,430 227,671 374,433
(4) Tait, Weller & Baker............. 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. GROWTH FUND
57
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
AIM V.I. GROWTH AND INCOME
FUND DELIVERS ATTRACTIVE RETURN
IN A VOLATILE MARKET
A roundtable discussion with the Fund management team for the AIM V.I. Growth
and Income Fund for the six months ended June 30, 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. IT HAS BEEN A DIFFICULT ENVIRONMENT The portfolio also includes some of Q. FINALLY, HEALTH-CARE. WHY DO YOU
FOR INVESTORS. HOW DID THE FUND PERFORM the best-known names in banking: CONTINUE TO HAVE SIZABLE HOLDINGS IN
DURING THE REPORTING PERIOD? BankAmerica, Chase Manhattan, Citibank, THIS SECTOR?
A. We are pleased with the performance all of which are trading at relatively A. Health-care companies are bringing a
of the Fund during a particularly trying low price/earnings ratios in this steady stream of new products to market
period. Total return for the six months market. In addition, asset managers such and reporting very healthy earnings
ended 6/30/97, including reinvested as Merrill Lynch and Franklin Resources growth. And the pace of change in health-
quarterly distributions, was a solid have been very good performers, care shows no signs of letting up.
16.70%. benefiting from the current bull market. These stocks remain among our
largest positions, especially
Q. WHAT TOUCHED OFF THE MARKET Q. YOU STILL OWN A LARGE NUMBER OF pharmaceutical companies, which
VOLATILITY EARLY IN THE YEAR? TECHNOLOGY STOCKS. HAS THAT SECTOR represented more than 11% of the
A. Ongoing uncertainty about interest RECOVERED FROM WEAKNESS EXHIBITED LAST portfolio as the reporting period
rates, corporate earnings, and the FALL? closed, up from about 10% six months
economy's strength kept markets volatile A. While this sector has had its earlier. The pharmaceutical companies in
even as the popular Dow Jones Industrial difficulties, technology stocks have led the portfolio tend to be very well-known
Average continued to climb. There was the rally that began in May. The reason names: SmithKline Beecham,
one troubling period, from mid-March to for their recovery is strong profits.
mid-April 1997, during which the Dow Many tech companies have reported
lost 9.8% of its value. But the markets excellent earnings compared to last
recovered during May and reached record year.
levels by June. For example, we increased our
holdings of Texas Instruments, whose
Q. WHAT KINDS OF COMPANIES DID YOU FIND operating profit was up significantly
ATTRACTIVE IN THIS VOLATILE MARKET? this year. Texas Instruments illustrates
A. We focused most on stocks of the competitive advantage of high-value,
financial, technology, and health-care non-commodity semiconductor products.
companies. Texas Instruments' revenue and profit
growth came mainly from differentiated
Q. WHY ARE YOU DRAWN TO FINAN- products used for data communications, a
CIAL STOCKS? flourishing industry.
A. The consolidation and restructuring Approximately 13% of the portfolio's
occurring in the financial sector has common stock holdings are in computer-
created considerable opportunity. For oriented companies, including service
example, we have a substantial holding providers, personal computer makers, and
in Washington Mutual, Inc., a savings semiconductor manufacturers.
and loan operating in western states
that has expanded its customer base
through a series of successful mergers.
Washington Mutual announced record
earnings for the first quarter of 1997.
</TABLE>
________________________________________
Health-care companies
are bringing a steady stream of
new products to market and
reporting very healthy
earnings growth.
________________________________________
AIM V.I. GROWTH AND INCOME FUND
58
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<CAPTION>
<S> <C> <C>
Bristol-Myers Squibb, American Home Q. WHAT IS YOUR MARKET OUTLOOK FOR THE forecasts. The unanswerable questions
Products, among others. NEAR TERM? are whether this can continue and, if
We also increased our holdings in A. In the U.S., the economic so, for how long?
the patient-care area, another industry underpinnings for a strong market remain After two extraordinary years in the
where change is generating opportunity. in place. The Federal Reserve Board held equity markets in 1995 and 1996, the
For example, one of our holdings, Med- interest rates steady when it met in May greatest challenge for investors may be
Partners, Inc., the nation's largest and again in July after the reporting to temper their expectations. Despite
physician practice management company, period closed. Economic growth may have the continued impressive rise of the
recently contracted to deliver medical slowed from the dramatic 4.9% annual Dow, the consensus expectation remains
services for another holding, hospital rate logged during the first quarter of that stock performance may be returning
operator Tenet Healthcare. 1997, but there are no signs of a to its historical norm of 9% or 10%
serious downturn. And finally, corporate total returns.
earnings continue to outstrip analysts'
Top 10 Holdings
As of 6/30/97
1. Philip Morris Companies, Inc. 3.33% Growth of a $10,000 Investment
2. WorldCom, Inc. Conv. Pfd. 2.77 From 5/2/94-6/30/97
3. Bristol-Myers Squibb Co. 2.58 AIM V.I. Growth & Income Fund S&P 500 Stock Index
4. SmithKline Beecham plc-ADR 1.80 5/2/94 $10,000 $10,000
5. Texas Instruments, Inc. 1.65 7/94 10,030 10,193
6. Washington Mutual, Inc. 1.63 10/94 10,344 10,581
7. Federal National Mortgage 1/95 10,090 10,615
Association 1.61 4/95 11,201 11,687
8. Allstate Corp. 1.43 7/95 12,559 12,847
9. Cincinnati Bell, Inc. 1.39 10/95 13,056 13,370
10. RJR Nabisco Holdings Corp. 1.38 1/96 13,680 14,708
4/96 14,398 15,209
Please keep in mind that the Fund's 7/96 13,881 14,962
portfolio composition is subject to 10/96 15,274 16,582
change and there is no assurance the 1/97 16,994 18,579
Fund will continue to hold any 4/97 16,717 19,028
particular security. 6/97 18,735 21,110
Q. DOES THE FUND CONTINUE TO INVEST IN Average Annual Total Return Past performance cannot guarantee
CONVERTIBLE SECURITIES? As of 6/30/97 comparable future results.
A. Convertible securities still offer 1 Year 27.97%
real growth and income opportunities for Inception (5/2/94) 21.96
the Fund, and thus remain important in
fulfilling the Fund's objectives. The performance figures shown represent the AIM V.I. Growth and Income Fund and
However, we reduced our allocation to are not intended to reflect actual annuity values, and do not reflect charges at
convertible bonds during the reporting the separate account level which, if applied, would lower the performance
period because of the relative results. The Fund's performance figures are historical and reflect reinvestment
attractiveness of common stocks. of all distributions and changes in the net asset value. The Fund's investment
In addition, many new issues that return and principal value will fluctuate so that Fund shares, when redeemed,
came to market during the reporting may be worth more or less than their original cost. Source: Towers Data Systems
period did not meet our investment HYPO.--Registered Mark--
criteria. We have kept up our regular The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group of
dividends and the income component of unmanaged securities widely regarded by investors to be representative of the
our investment strategy by keeping at stock market in general. Source: Towers Data Systems HYPO.--Registered Mark--
least 80% of the portfolio in securities The Dow Jones Industrial Average (DJIA) is an unmanaged composite of the
which pay income to the Fund. performance of 30 large-company stocks.
An investment cannot be made in any indexes listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. GROWTH AND INCOME FUND
59
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS - 85.17%
AEROSPACE/DEFENSE - 0.66%
Rockwell International Corp. 20,000 $ 1,180,000
- -------------------------------------------------------------------------
United Technologies Corp. 18,000 1,494,000
- -------------------------------------------------------------------------
2,674,000
- -------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES - 0.71%
Lear Corp.(a) 65,500 2,906,562
- -------------------------------------------------------------------------
BANKING - 1.71%
Marshall & Ilsley Corp. 30,000 1,218,750
- -------------------------------------------------------------------------
NationsBank Corp. 30,000 1,935,000
- -------------------------------------------------------------------------
Uniao de Banco Brasiliero S.A. - GDR (Brazil)(a) 45,000 1,670,625
- -------------------------------------------------------------------------
Wells Fargo & Co. 8,000 2,156,000
- -------------------------------------------------------------------------
6,980,375
- -------------------------------------------------------------------------
BANKING (MONEY CENTER) - 2.49%
BankAmerica Corp. 60,000 3,873,750
- -------------------------------------------------------------------------
Chase Manhattan Corp. 30,000 2,911,875
- -------------------------------------------------------------------------
Citicorp 28,000 3,375,750
- -------------------------------------------------------------------------
10,161,375
- -------------------------------------------------------------------------
BUSINESS SERVICES - 1.11%
Diebold, Inc.(b) 30,000 1,170,000
- -------------------------------------------------------------------------
Equifax, Inc. 60,000 2,231,250
- -------------------------------------------------------------------------
Paychex, Inc. 30,000 1,140,000
- -------------------------------------------------------------------------
4,541,250
- -------------------------------------------------------------------------
CHEMICALS - 0.55%
Dow Chemical Co. 24,000 2,091,000
- -------------------------------------------------------------------------
Du Pont (E.I.) de Nemours & Co. 2,300 144,612
- -------------------------------------------------------------------------
2,235,612
- -------------------------------------------------------------------------
COMPUTER MAINFRAMES - 1.06%
International Business Machines Corp. 48,000 4,329,000
- -------------------------------------------------------------------------
COMPUTER MINI/PCS - 2.86%
Compaq Computer Corp.(a) 30,000 2,978,000
- -------------------------------------------------------------------------
Dell Computer Corp.(a) 20,000 2,348,750
- -------------------------------------------------------------------------
Hewlett-Packard Co. 60,000 3,360,000
- -------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 80,000 2,977,500
- -------------------------------------------------------------------------
11,664,250
- -------------------------------------------------------------------------
COMPUTER NETWORKING - 2.46%
Ascend Communications, Inc.(a) 53,600 2,110,500
- -------------------------------------------------------------------------
Bay Networks, Inc.(a) 120,000 3,187,500
- -------------------------------------------------------------------------
MARKET
SHARES VALUE
COMPUTER NETWORKING - (CONTINUED)
<S> <C> <C>
Cisco Systems, Inc.(a) 28,000 $ 1,879,500
- -------------------------------------------------------------------------
ECI Telecommunications Ltd. Designs (Israel) 50,000 1,487,500
- -------------------------------------------------------------------------
3Com Corp.(a) 30,000 1,350,000
- -------------------------------------------------------------------------
10,015,000
- -------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 4.25%
Computer Associates International, Inc. 60,000 3,341,250
- -------------------------------------------------------------------------
Compuware Corp.(a) 30,000 1,432,500
- -------------------------------------------------------------------------
Fiserv, Inc.(a) 45,000 2,008,125
- -------------------------------------------------------------------------
HBO & Co. 24,000 1,653,000
- -------------------------------------------------------------------------
Microsoft Corp.(a) 25,000 3,159,375
- -------------------------------------------------------------------------
Sterling Commerce, Inc.(a) 100,000 3,287,500
- -------------------------------------------------------------------------
Wallace Computer Services, Inc. 80,500 2,420,031
- -------------------------------------------------------------------------
17,301,781
- -------------------------------------------------------------------------
CONGLOMERATES - 1.52%
AlliedSignal Inc. 26,000 2,184,000
- -------------------------------------------------------------------------
Loews Corp. 40,000 4,005,000
- -------------------------------------------------------------------------
6,189,000
- -------------------------------------------------------------------------
CONSUMER NON-DURABLES - 0.20%
American Greetings Corp. - Class A 22,300 827,888
- -------------------------------------------------------------------------
COSMETICS & TOILETRIES - 3.09%
Avon Products, Inc. 28,000 1,975,750
- -------------------------------------------------------------------------
Gillette Co. 10,000 947,500
- -------------------------------------------------------------------------
Kimberly-Clark Corp. 100,000 4,975,000
- -------------------------------------------------------------------------
Procter & Gamble Co. (The) 14,000 1,977,500
- -------------------------------------------------------------------------
Warner-Lambert Co. 22,000 2,733,500
- -------------------------------------------------------------------------
12,609,250
- -------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 1.42%
General Electric Co. 41,400 2,704,500
- -------------------------------------------------------------------------
Honeywell, Inc. 12,000 910,500
- -------------------------------------------------------------------------
Philips Electronics N.V. - ADR - New York Shares
(Netherlands) 30,000 2,156,250
- -------------------------------------------------------------------------
5,771,250
- -------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 2.58%
Franklin Resources, Inc. 30,000 2,176,875
- -------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 80,000 4,770,000
- -------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 60,000 2,583,750
- -------------------------------------------------------------------------
United Assets Management Corp. 35,000 990,938
- -------------------------------------------------------------------------
10,521,563
- -------------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH AND INCOME FUND
60
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCE (CONSUMER CREDIT) - 5.88%
American Express Co. 54,000 $ 4,023,000
- ---------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 90,000 3,093,750
- ---------------------------------------------------------------------
Federal National Mortgage Association 150,000 6,543,750
- ---------------------------------------------------------------------
Green Tree Financial Corp. 40,000 1,425,000
- ---------------------------------------------------------------------
Household International, Inc. 30,000 3,523,125
- ---------------------------------------------------------------------
MBNA Corp. 42,800 1,567,550
- ---------------------------------------------------------------------
Student Loan Marketing Association 30,000 3,810,000
- ---------------------------------------------------------------------
23,986,175
- ---------------------------------------------------------------------
FINANCE (SAVINGS & LOAN) - 1.63%
Washington Mutual, Inc. 111,400 6,656,150
- ---------------------------------------------------------------------
FUNERAL SERVICES - 1.74%
Service Corp. International(b) 170,000 5,588,756
- ---------------------------------------------------------------------
Stewart Enterprises, Inc. - Class A 36,000 1,512,000
- ---------------------------------------------------------------------
7,100,756
- ---------------------------------------------------------------------
GAMING - 0.50%
Mirage Resorts, Inc.(a) 80,000 2,020,000
- ---------------------------------------------------------------------
HOTELS/MOTELS - 0.43%
HFS, Inc.(a) 30,000 1,740,000
- ---------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 0.46%
Provident Companies, Inc. 35,000 1,872,500
- ---------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 4.97%
Allstate Corp. 80,000 5,840,000
- ---------------------------------------------------------------------
American International Group, Inc. 30,000 4,481,250
- ---------------------------------------------------------------------
CIGNA Corp. 14,000 2,485,000
- ---------------------------------------------------------------------
Hartford Financial Services Group Inc. (The) 14,000 1,158,500
- ---------------------------------------------------------------------
MBIA, Inc. 10,000 1,128,125
- ---------------------------------------------------------------------
Travelers Group, Inc. 50,000 3,153,125
- ---------------------------------------------------------------------
Travelers Property Casualty Corp. - Class A 50,000 1,993,750
- ---------------------------------------------------------------------
20,239,750
- ---------------------------------------------------------------------
LEISURE & RECREATION - 0.78%
Brunswick Corp. 100,000 3,125,000
- ---------------------------------------------------------------------
Carnival Corp. - Class A 1,300 53,625
- ---------------------------------------------------------------------
3,178,625
- ---------------------------------------------------------------------
MACHINERY (HEAVY) - 0.38%
Deere & Co. 28,000 1,536,500
- ---------------------------------------------------------------------
MEDICAL (DRUGS) - 11.67%
Abbott Laboratories 30,000 2,002,500
- ---------------------------------------------------------------------
American Home Products Corp.(b) 55,000 4,207,500
- ---------------------------------------------------------------------
Bergen Brunswig Corp. - Class A 74,800 2,085,050
- ---------------------------------------------------------------------
Bristol-Meyers Squibb Co. 130,000 10,530,000
- ---------------------------------------------------------------------
Cardinal Health, Inc. 24,900 1,425,525
- ---------------------------------------------------------------------
Johnson & Johnson 45,000 2,896,875
- ---------------------------------------------------------------------
MARKET
SHARES VALUE
MEDICAL (DRUGS) - (CONTINUED)
<S> <C> <C>
Lilly (Eli) & Co.(b) 30,000 $ 3,279,375
- ---------------------------------------------------------------------
Merck & Co., Inc. 50,000 5,175,000
- ---------------------------------------------------------------------
Pfizer, Inc. 20,000 2,390,000
- ---------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 120,000 4,170,000
- ---------------------------------------------------------------------
SmithKline Beecham PLC - ADR (United Kingdom) 80,000 7,330,000
- ---------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd. -
ADR (Israel) 32,000 2,072,000
- ---------------------------------------------------------------------
47,563,825
- ---------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 3.62%
Columbia/HCA Healthcare Corp. 100,000 3,931,250
- ---------------------------------------------------------------------
MedPartners, Inc.(a) 200,000 4,325,000
- ---------------------------------------------------------------------
Tenet Healthcare Corp.(a) 150,000 4,434,375
- ---------------------------------------------------------------------
United Healthcare Corp. 40,000 2,080,000
- ---------------------------------------------------------------------
14,770,625
- ---------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS - 1.83%
Bard (C.R.), Inc. 50,800 1,844,675
- ---------------------------------------------------------------------
Baxter International Inc. 55,000 2,873,750
- ---------------------------------------------------------------------
Hillenbrand Industries, Inc. 11,900 565,250
- ---------------------------------------------------------------------
Omnicare, Inc. 70,000 2,196,250
- ---------------------------------------------------------------------
7,479,925
- ---------------------------------------------------------------------
NATURAL GAS PIPELINE - 1.46%
El Paso Natural Gas Co. 48,000 2,640,000
- ---------------------------------------------------------------------
Williams Companies, Inc. (The) 76,000 3,325,000
- ---------------------------------------------------------------------
5,965,000
- ---------------------------------------------------------------------
OFFICE AUTOMATION - 0.77%
Xerox Corp. 40,000 3,155,000
- ---------------------------------------------------------------------
OIL & GAS (REFINING/MARKETING) - 0.43%
Tosco Corp. 58,000 1,736,375
- ---------------------------------------------------------------------
OIL & GAS (SERVICES) - 3.09%
Exxon Corp. 52,500 3,228,125
- ---------------------------------------------------------------------
Halliburton Co. 30,000 2,377,500
- ---------------------------------------------------------------------
Lubrizol Corp. (The) 30,000 1,258,125
- ---------------------------------------------------------------------
Mobil Corp. 24,000 1,677,000
- ---------------------------------------------------------------------
Petroleum Geo-Services ASA - ADR (Norway)(a) 30,000 1,466,250
- ---------------------------------------------------------------------
Royal Dutch Petroleum Co. - ADR - New York Shares
(Netherlands) 48,000 2,610,000
- ---------------------------------------------------------------------
12,617,000
- ---------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 1.82%
Baker Hughes Inc. 50,000 1,934,375
- ---------------------------------------------------------------------
BJ Services Co.(a) 40,000 2,145,000
- ---------------------------------------------------------------------
Coastal Corp. (The) 34,000 1,808,375
- ---------------------------------------------------------------------
Tidewater, Inc. 35,000 1,540,000
- ---------------------------------------------------------------------
7,427,750
- ---------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH AND INCOME FUND
61
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS - 0.27%
James River Corp. of Virginia 30,000 $ 1,110,000
- -----------------------------------------------------------------------
PUBLISHING - 0.45%
R.R. Donnelley & Sons Co. 50,000 1,831,250
- -----------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 1.13%
Crescent Real Estate Equities, Inc. 35,000 1,111,250
- -----------------------------------------------------------------------
FelCor Suite Hotels, Inc. 22,000 819,500
- -----------------------------------------------------------------------
Patriot American Hospitality, Inc. 52,000 1,326,000
- -----------------------------------------------------------------------
Starwood Lodging Trust 32,000 1,366,000
- -----------------------------------------------------------------------
4,622,750
- -----------------------------------------------------------------------
RETAIL (STORES) - 2.34%
Blue Square - Israel Ltd. - ADR (Israel)(a) 50,000 862,500
- -----------------------------------------------------------------------
Boise Cascade Office Products Corp.(a) 60,000 1,020,000
- -----------------------------------------------------------------------
CompUSA, Inc.(a) 175,000 3,762,500
- -----------------------------------------------------------------------
Penney (J.C.) Co., Inc. 10,000 521,875
- -----------------------------------------------------------------------
Sports Authority, Inc. (The)(a) 90,000 1,749,375
- -----------------------------------------------------------------------
Walgreen Co. 30,000 1,608,750
- -----------------------------------------------------------------------
9,525,000
- -----------------------------------------------------------------------
SEMCONDUCTORS - 2.17%
Intel Corp. 15,000 2,127,188
- -----------------------------------------------------------------------
Texas Instruments, Inc. 80,000 6,725,000
- -----------------------------------------------------------------------
8,852,188
- -----------------------------------------------------------------------
TELECOMMUNICATIONS - 3.19%
ADC Telecommunications, Inc.(a) 60,000 2,002,500
- -----------------------------------------------------------------------
DSC Communications Corp.(a) 80,000 1,780,000
- -----------------------------------------------------------------------
Lucent Technologies, Inc. 18,000 1,297,125
- -----------------------------------------------------------------------
Nokia Oy A.B - Class A - ADR (Finland) 40,000 2,950,000
- -----------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson - ADR (Sweden) 55,000 2,165,625
- -----------------------------------------------------------------------
Tellabs, Inc.(a) 50,000 2,793,750
- -----------------------------------------------------------------------
12,989,000
- -----------------------------------------------------------------------
TELEPHONE - 2.45%
Cincinnati Bell, Inc. 180,000 5,670,000
- -----------------------------------------------------------------------
SBC Communications, Inc. 70,000 4,331,250
- -----------------------------------------------------------------------
10,001,250
- -----------------------------------------------------------------------
TOBACCO - 4.71%
Philip Morris Companies, Inc. 306,300 13,591,275
- -----------------------------------------------------------------------
RJR Nabisco Holdings Corp. 170,000 5,610,000
- -----------------------------------------------------------------------
19,201,275
- -----------------------------------------------------------------------
TRANSPORTATION - 0.33%
Hvide Marine, Inc. - Class A(a) 60,000 1,327,500
- -----------------------------------------------------------------------
Total Common Stocks 347,234,325
- -----------------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS - 7.37%
AUTOMOBILE (MANUFACTURERS) - 0.44%
Volkswagen International Finance N.V. (Germany), Conv.
Gtd. Notes, 3.00%, 01/24/02 (acquired 04/30/97 -
06/10/97; cost $1,588,438)(c) $1,250,000 $ 1,809,375
- -------------------------------------------------------------------------------
BUSINESS SERVICES - 1.16%
Career Horizons, Inc., Conv. Bonds, 7.00%,
11/01/02(acquired 11/27/95 - 02/04/97; cost
$1,329,354)(c) 700,000 1,531,348
- -------------------------------------------------------------------------------
CUC International, Inc., Conv. Sub. Notes, 3.00%,
02/15/02(acquired 05/28/97; cost $3,053,750)(c) 3,000,000 3,175,830
- -------------------------------------------------------------------------------
4,707,178
- -------------------------------------------------------------------------------
COMPUTER PERIPHERALS - 0.52%
Quantum Corp., Conv. Sub. Notes, 5.00%,
03/01/03(acquired 03/13/97 - 03/14/97; cost
$2,066,847)(c) 1,100,000 2,133,307
- -------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.77%
Baan Co., N.V. (Netherlands), Conv. Sub. Notes, 4.50%,
12/15/01(acquired 12/12/96 - 01/07/97; cost
$1,154,125)(c) 1,150,000 1,837,102
- -------------------------------------------------------------------------------
Comverse Technology, Inc., Sub. Deb., 5.75%, 10/01/06 1,000,000 1,300,000
- -------------------------------------------------------------------------------
3,137,102
- -------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.21%
SCI Systems, Inc., Conv. Sub. Notes, 5.00%,
05/01/06(acquired 12/24/96 - 01/21/97; cost
$764,033)(c) 600,000 864,648
- -------------------------------------------------------------------------------
HOTELS/MOTELS - 0.33%
Hilton Hotels Corp., Conv. Sub. Notes, 5.00%, 05/15/06 1,250,000 1,345,225
- -------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS) - 0.54%
Thermo Electron Corp., Conv. Sub. Deb., 4.25%,
01/01/03(acquired 06/20/97; cost $2,294,492)(c) 2,000,000 2,203,220
- -------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 0.23%
Tenet Healthcare Corp., Conv. Sub. Notes, 6.00%,
12/01/05 750,000 950,393
- -------------------------------------------------------------------------------
OFFICE AUTOMATION - 0.73%
Danka Business Systems PLC (United Kingdom), Conv.
Sub. Notes, 6.75%, 04/01/02(acquired 05/07/97 -
06/12/97; cost $2,767,717)(c) 2,000,000 2,975,620
- -------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.29%
Apache Corp., Conv. Sub. Deb., 6.00%,
01/15/02(acquired 05/08/97; cost $1,225,400)(c) 1,000,000 1,191,320
- -------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 0.29%
Diamond Offshore Drilling, Inc., Conv. Sub. Notes,
3.75%, 02/15/07 1,000,000 1,155,630
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH AND INCOME FUND
62
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
POLLUTION CONTROL - 0.54%
Sanifill, Inc., Conv. Sub. Deb., 5.00%, 03/01/06 $1,500,000 $ 2,175,810
- -------------------------------------------------------------------------------
RETAIL (STORES) - 0.59%
Federated Department Stores, Inc., Conv. Notes, 5.00%,
10/01/03 2,000,000 2,400,520
- -------------------------------------------------------------------------------
SEMICONDUCTORS - 0.73%
Altera Corp., Conv. Sub. Notes, 5.75%,
06/15/02(acquired 09/16/96 - 01/23/97; cost
$1,255,499)(c) 900,000 1,840,536
- -------------------------------------------------------------------------------
Analog Devices, Conv. Sub. Notes, 3.50%, 12/01/00 800,000 1,151,408
- -------------------------------------------------------------------------------
2,991,944
- -------------------------------------------------------------------------------
Total Convertible Corporate Bonds 30,041,292
- -------------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 7.33%
COSMETICS & TOILETRIES - 0.38% SHARES
McKesson Corp. - $2.50 Conv. Pfd.(c) (acquired
02/14/97 - 06/27/97; cost $1,343,425) 25,000 1,554,700
- -------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 0.26%
AES Trust I - Series A - $2.69 Conv. Pfd. 18,000 1,059,750
- -------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 0.66%
SunAmerica, Inc. - Series E, $3.10 Dep. Conv. Pfd. 25,000 2,681,250
- -------------------------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOTELS/MOTELS - 0.34%
Host Marriott Financial Trust - $3.375 Conv.
Pfd.(acquired 11/25/96 - 03/19/97; cost $1,292,900)(c) 24,000 $ 1,392,264
- -------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 1.11%
Conseco Inc. - $4.278 Conv. PRIDES 35,000 4,541,250
- -------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 1.15%
Aetna Inc. - $4.76 Conv. Pfd. 50,000 4,687,500
- -------------------------------------------------------------------------------
RETAIL (STORES) - 0.50%
TJX Companies, Inc. - Series E - $7.00 Conv. Pfd. 7,000 2,047,500
- -------------------------------------------------------------------------------
TELEPHONE - 2.77%
WorldCom, Inc. - $2.68 Conv. Pfd. 100,000 11,275,000
- -------------------------------------------------------------------------------
TRANSPORTATION - 0.16%
Hvide Capital Trust - $3.25 Conv. Pfd.(acquired 06/24/97;
cost $600,000)(c) 12,000 633,000
- -------------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks 29,872,214
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.87% 407,147,831
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.13% 527,160
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $407,674,991
===============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of these securities are subject to call options written. See
Note 6.
(c) 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 June 30, 1997 was
$23,142,270, which represents 5.68% of the Fund's net assets.
Investment Abbreviations:
ADR--American Depository Receipt
Conv.--Convertible
Deb.--Debentures
Dep.--Depository
GDR--Global Depository Receipt
Gtd.--Guaranteed
Pfd.--Preferred
PRIDES--Preferred Redeemable Increased Dividend Equity Securities
Sub.--Subordinated
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND
63
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $341,302,162) $407,147,831
- ----------------------------------------------------------------------
Cash 1,622,814
- ----------------------------------------------------------------------
Receivables for:
Investments sold 8,845,396
- ----------------------------------------------------------------------
Capital stock sold 1,316,329
- ----------------------------------------------------------------------
Dividends and interest 666,363
- ----------------------------------------------------------------------
Investment for deferred compensation plan 10,025
- ----------------------------------------------------------------------
Other assets 13,148
- ----------------------------------------------------------------------
Total assets 419,621,906
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 11,171,761
- ----------------------------------------------------------------------
Capital stock reacquired 66
- ----------------------------------------------------------------------
Options written 515,125
- ----------------------------------------------------------------------
Deferred compensation plan 10,025
- ----------------------------------------------------------------------
Accrued advisory fees 202,573
- ----------------------------------------------------------------------
Accrued administrative services fees 3,640
- ----------------------------------------------------------------------
Accrued directors' fees 1,828
- ----------------------------------------------------------------------
Accrued operating expenses 41,897
- ----------------------------------------------------------------------
Total liabilities 11,946,915
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $407,674,991
======================================================================
Capital shares, $.001 par value per share:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 23,245,501
======================================================================
Net asset value, offering and redemption price per share $ 17.54
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $16,427 foreign withholding tax) $ 2,098,024
- -------------------------------------------------------------------------
Interest 782,084
- -------------------------------------------------------------------------
Total investment income 2,880,108
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 951,016
- -------------------------------------------------------------------------
Custodian fees 34,690
- -------------------------------------------------------------------------
Administrative services fees 21,726
- -------------------------------------------------------------------------
Directors' fees and expenses 3,870
- -------------------------------------------------------------------------
Other 39,580
- -------------------------------------------------------------------------
Total expenses 1,050,882
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (1,403)
- -------------------------------------------------------------------------
Net expenses 1,049,479
- -------------------------------------------------------------------------
Net investment income 1,830,629
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 1,982,208
- -------------------------------------------------------------------------
Foreign currencies 11
- -------------------------------------------------------------------------
Option contracts (128,179)
- -------------------------------------------------------------------------
1,854,040
- -------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
- -------------------------------------------------------------------------
Investment securities 45,621,446
- -------------------------------------------------------------------------
Foreign currencies 280
- -------------------------------------------------------------------------
Option contracts (284,272)
- -------------------------------------------------------------------------
45,337,454
- -------------------------------------------------------------------------
Net gain from investment securities, foreign currencies and
option contracts 47,191,494
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $49,022,123
=========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND
64
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,830,629 $ 2,140,854
- -------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and option contracts 1,854,040 465,498
- -------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies, futures and option
contracts 45,337,454 17,682,951
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 49,022,123 20,289,303
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 149,321,237 152,726,725
- -------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (1,850,460)
- -------------------------------------------------------------------------------
Distributions from net realized gains -- (401,149)
- -------------------------------------------------------------------------------
Net increase in net assets 198,343,360 170,764,419
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 209,331,631 38,567,212
- -------------------------------------------------------------------------------
End of period $407,674,991 $209,331,631
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $337,842,915 $188,521,678
- -------------------------------------------------------------------------------
Undistributed net investment income 2,160,357 329,728
- -------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currency transactions, futures
and option contracts 2,110,042 256,002
- -------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and option contracts 65,561,677 20,224,223
- -------------------------------------------------------------------------------
$407,674,991 $209,331,631
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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 and
variable life insurance policies.
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 (except
convertible bonds) 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. 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. 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. Debt obligations (including convertible bonds) 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. Securities for which market quotations either
AIM V.I. GROWTH AND INCOME FUND
65
<PAGE>
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.
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 - 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.
E. 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.
F. 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 currency 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 currency
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.
G. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. 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 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 25% of the net assets of the
Fund.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services to the Fund.
During the six months ended June 30, 1997, AIM was reimbursed $21,726 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 six months ended June 30, 1997, the Fund incurred legal fees of
$2,754 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
AIM V.I. GROWTH AND INCOME FUND
66
<PAGE>
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997 the Fund's expenses were reduced by $88 and the Fund
received reductions in custodian fees of $1,315 under an expense offset
arrangement. The effect of the above arrangements resulted in a reduction of
the Fund's total expenses of $1,403 during the six months ended June 30, 1997.
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the six months ended June 30,
1997 was $371,915,619 and $215,321,836, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $66,946,680
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,148,587)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $65,798,093
==========================================================================
</TABLE>
Cost of investments for tax purposes is $341,349,738.
NOTE 6 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended June 30, 1997
are summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period -- --
- ----------------------------------------
Written 950 $289,546
- ----------------------------------------
Closed (310) (58,693)
- ----------------------------------------
Exercised -- --
- ----------------------------------------
Expired -- --
- ----------------------------------------
End of period 640 $230,853
========================================
</TABLE>
Open call option contracts written at June 30, 1997 were as follows:
<TABLE>
<CAPTION>
JUNE 30,
1997 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUM MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
- ----- -------- ------ --------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
American Home Products
Corp Jul $70 50 $ 13,550 $ 34,375 $ (20,825)
- ----------------------------------------------------------------------------------
Diebold, Inc. Aug 35 300 127,169 136,875 (9,706)
- ----------------------------------------------------------------------------------
Lilly (Eli) & Co. Jul 85 120 58,598 294,000 (235,402)
- ----------------------------------------------------------------------------------
Lilly (Eli) & Co. Jul 95 20 6,674 29,250 (22,576)
- ----------------------------------------------------------------------------------
Service Corp.
International Nov 35 150 24,862 20,625 4,237
- ----------------------------------------------------------------------------------
640 $230,853 $515,125 $(284,272)
==================================================================================
</TABLE>
AIM V.I. GROWTH AND INCOME FUND
67
<PAGE>
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1997
and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
----------------------- ------------------------
Shares Amount Shares Amount
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 9,477,991 $151,797,750 10,983,786 $153,919,542
- -----------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 154,220 2,251,608
- -----------------------------------------------------------------------------
Reacquired (155,822) (2,476,513) (255,903) (3,444,425)
- -----------------------------------------------------------------------------
9,322,169 $149,321,237 10,882,103 $152,726,725
=============================================================================
</TABLE>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
the eleven months ended December 31, 1995 and the period May 2, 1994 (date
operations commenced) through January 31, 1995.
<TABLE>
<CAPTION>
December 31,
June 30, ----------------- January 31,
1997 1996 1995 1995
-------- -------- ------- -----------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 15.03 $ 12.68 $ 9.98 $10.00
- -------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.07 0.16 0.14 0.11
- -------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 2.44 2.36 3.11 (0.02)
- -------------------------------------------------------------------------------
Total from investment
operations 2.51 2.52 3.25 0.09
- -------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.14) (0.14) (0.11)
- -------------------------------------------------------------------------------
Distributions from
capital gains -- (0.03) (0.41) --
- -------------------------------------------------------------------------------
Total distributions -- (0.17) (0.55) (0.11)
- -------------------------------------------------------------------------------
Net asset value, end of
period $ 17.54 $ 15.03 $ 12.68 $ 9.98
===============================================================================
Total return(a) 16.70% 19.95% 32.65% 0.90%
===============================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $407,675 $209,332 $38,567 $7,380
===============================================================================
Ratio of expenses to
average net assets 0.71%(b)(c) 0.78% 0.78%(d) 1.07%(d)(e)
===============================================================================
Ratio of net investment
income to average net
assets 1.24%(b) 2.05% 1.92%(d) 1.95%(d)(e)
===============================================================================
Portfolio turnover rate 73% 148% 145% 96%
===============================================================================
Average broker
commission rate paid(f) $ 0.0608 $ 0.0644 N/A N/A
- -------------------------------------------------------------------------------
</TABLE>
(a) Total return is not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $298,799,140.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been the
same.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 1.72% and 1.30%, respectively.
(f) Disclosure requirement beginning with the Fund's fiscal year ended December
31, 1996.
AIM V.I. GROWTH AND INCOME FUND
68
<PAGE>
SUPPLEMENTAL PROXY INFORMATION - SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES
DIRECTOR/MATTER VOTES FOR AGAINST WITHHOLD/ABSTENTIONS
--------------- ----------- --------- --------------------
<C> <S> <C> <C> <C>
(1) Charles T. Bauer............. 138,450,525 N/A 3,241,923
Bruce L. Crockett............ 138,630,018 N/A 3,062,431
Owen Daly II................. 138,241,309 N/A 3,451,139
Carl Frischling.............. 138,615,279 N/A 3,077,169
Robert H. Graham............. 138,641,752 N/A 3,050,695
John F. Kroeger.............. 138,250,777 N/A 3,441,671
Lewis F. Pennock............. 138,618,633 N/A 3,073,814
Ian W. Robinson.............. 138,281,116 N/A 3,411,332
Louis S. Sklar............... 138,611,786 N/A 3,080,663
(2) Approval of new Investment
Advisory Agreement.......... 11,754,557 196,920 594,332
(3) Elimination of policy
restricting investments in
other investment companies.. 11,506,008 348,708 691,094
(4) Tait, Weller & Baker......... 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. GROWTH AND INCOME FUND
69
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
RESTRUCTURING IN EUROPE DRIVES POSITIVE RETURNS
A roundtable discussion with the Fund management team for AIM V.I. International
Equity Fund for the six-month reporting period ended June 30, 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID THE FUND DO DURING THE SIX- Q. THERE SEEMS TO BE THE BEGINNINGS OF Q. IN WHICH INDUSTRIES WAS THE FUND
MONTH REPORTING PERIOD? AN ECONOMIC RECOVERY IN JAPAN. HOW IS LARGELY REPRESENTED?
A. The Fund posted another period of THE PORTFOLIO NOW DISTRIBUTED THERE? A. Banking was the Fund's largest
solid performance, with a total return A. The Fund's largest position in one component with 9.48% of the portfolio's
of 11.67% for the six months ended June country was in Japan, with just over 15% holdings. The current economic
30, 1997. By comparison, the Morgan allocated there. The Japanese economy environment of solid growth with low
Stanley Capital International (MSCI) showed some dramatic improvement in the interest rates has been favorable to
Europe, Australia and Far East Index second quarter, as the Nikkei rose banks all over the world.
(EAFE) of foreign stocks gained 11.21% 14.45% from March 31 to June 30. There The telecommunications sector
during the reporting period. are some positive stories in Japan with represented just over 9% of the Fund's
familiar names like Canon, Inc. and Fuji weighting. There is such a tremendous
Q. WHAT FACTORS INFLUENCED THESE SOLID Photo Film Co., both among the amount
RETURNS DURING THE FIRST HALF OF THE portfolio's top 10 equity holdings,
YEAR? which benefited as the strong U.S.
A. The ongoing economic restructuring in dollar made Japanese exports more
Europe continues to fuel healthy competitive.
business growth in that region, The focus in our Japanese portfolio
particularly in eastern Europe, and the continues to be on the big exporters
Fund has been in an excellent position such as the automakers and the
to take advantage of that growth. electronic companies. Those world-class
The drive to comply with European companies have shown healthy earnings
Monetary Union standards is gaining growth, reasonable valuations and have
momentum, as countries throughout the benefited from this year's weakness of
region nibble away at budget deficits the yen.
and improve profitability. Just as in
the United States, the environment of Q. THERE WAS A LOT OF EXCITEMENT ABOUT
subdued inflation and low interest rates THE RETURN OF HONG KONG TO CHINA. ARE
has provided a very fertile soil for THERE ANY CONCERNS ABOUT HONG KONG'S
European companies, and therefore TURNOVER?
European markets, to flourish. A. We have felt all along that the
The demographic situation in Europe transition will have little affect on
is interesting. They are experiencing a the Hong Kong market or on the Fund's
"baby boom" generation that is about portfolio. The market there is up 10% so
five to 10 years younger than U.S. far this year. Our holdings in banking,
"boomers." Consequently, they are facing construction, and conglomerates have
the same situation we did a decade ago performed quite well there.
of having to create private pension Hong Kong stocks once again
plans like IRAs and 401(k)s. These represented several of the Fund's top 10
retirement funds are fueling the markets equity holdings, including the
and helping to drive investment returns. portfolio's largest single holding,
This, along with the restructuring, are transportation company Cosco Pacific
the catalysts that got the European Ltd. The Fund also maintained
markets really going. significant positions in such major
More than 60% of the Fund's banks as HSBC Holdings plc and Hang Seng
portfolio was invested in Europe with Bank Ltd. In all, Hong Kong companies
just over 14% of the Fund in the United made up over 8% of the portfolio, the
Kingdom. Among the Fund's largest fourth-largest country weighting. We
holdings in the U.K. were Guinness plc, will continue to watch this region very
British Petroleum Co. plc, and the closely.
Ladbroke Group plc.
</TABLE>
_______________________________________
Hong Kong stocks
once again represented
several of the Fund's
top 10 equity holdings
_______________________________________
AIM V.I. INTERNATIONAL EQUITY FUND
70
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
of change occurring in and Latin America also are promising, foreign markets that the U.S. economy
telecommunications right now because of and Japan's economy has begun to show continues to grow at a healthy clip
increasing technology: wireless signs of recovery. without rising inflation.
communications, modems, the Internet, The world markets in many ways take
just to name a few. There are new their lead from the U.S. economy.
companies all over the world coming into Therefore, it is also good news for
the marketplace and taking advantage of
this exploding industry. Telebras, a Growth of a $10,000 Investment
Brazilian company, and Nokia, a Finnish From 5/5/93-6/30/97
company, were two telecommunications
companies among the portfolio's AIM V.I. International Lipper International Europe, Australia, and
holdings. Equity Fund Fund Index Far East Index
(In thousands)
Top 10 Equity Holdings 5/5/93 $10,000 $10,000 $10,000
As of 6/30/97, 7/30/93 9,930 10,347 10,411
based on total net assets 10/29/93 11,240 11,535 11,064
1. Cosco Pacific Ltd. 1.57% 1/31/94 12,490 12,947 11,749
2. Philips Electronics N.V. 1.16 4/29/94 11,930 12,376 11,695
3. Tokyo Electron Ltd. 1.04 7/29/94 12,040 12,538 11,913
4. Nippon Telegraph & 10/31/94 12,430 12,862 12,212
Telephone Corp. 1.02 1/31/95 11,057 11,498 11,257
5. Telecomunicacoes Brasileiras 4/28/95 12,099 12,231 12,383
S.A.-Telebras 1.01 7/31/95 13,382 13,080 12,779
6. Novartis A.G. 1.00 10/31/95 13,272 12,802 12,204
7. Canon, Inc. 1.00 1/31/96 13,714 13,625 13,112
8. Fuji Photo Film Co. 0.96 4/30/96 15,100 14,350 13,837
9. Guinness PLC 0.95 7/31/96 14,738 13,979 13,269
10. Portugal Telecom S.A. 0.93 10/31/96 15,481 14,421 13,522
12/31/96 16,464 15,231 13,886
Please keep in mind that the Fund's 6/30/97 18,387 17,361 15,282
portfolio composition is subject to
change and there is no assurance the Average Annual Total Return Past performance cannot guarantee
Fund will continue to hold any As of 6/30/97 comparable future results.
particular security. 1 Year 18.61%
Inception (5/5/93) 15.79
Q. WHAT IS YOUR SHORT-TERM OUTLOOK FOR The performance figures shown represent the AIM V.I. International Equity Fund
THE FUND? and are not intended to reflect actual annuity values, and do not reflect
A. Conditions seem positive for foreign charges at the separate account level which, if applied, would lower the
stocks in general, particularly in performance results. The Fund's performance figures are historical and reflect
Europe. Investors have waited years for reinvestment of all distributions and changes in the net asset value. The Fund's
real economic improvement in Europe, and investment return and principal value will fluctuate so that Fund shares, when
are taking advantage of the continued redeemed, may be worth more or less than their original cost. Source: Towers
economic restructuring there. The most Data Systems HYPO.--Registered Mark--
recent Morgan Stanley data indicates The Europe, Australia, and Far East Index (EAFE) is a group of unmanaged foreign
that European stocks are a great value-- securities. Source: Towers Data Systems HYPO.--Registered Mark-- Lipper Analytical
two times book value for European Services, Inc., is an independent mutual fund performance monitor. The unmanaged
indices vs. a little over three times Lipper International Equity Fund Index represents an average of the performance of the
book value for the U.S. Outlooks in Asia 30 largest international mutual funds. Source: Lipper Analytical Services, Inc.
Results shown are for the period 4/30/93 to 6/30/97.
An investment cannot be made in the indexes listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
71
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION> MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS - 96.09%
ARGENTINA - 1.50%
Banco de Galicia y Buenos Aires S.A. de C.V. - ADR
(Banking)(a) 35,574 $ 938,264
- -------------------------------------------------------------------------------
Perez Companc S.A. - Class B (Oil & Gas - Services) 98,141 788,194
- -------------------------------------------------------------------------------
YPF Sociedad Anonima-ADR (Oil & Gas - Services) 50,400 1,549,800
- -------------------------------------------------------------------------------
3,276,258
- -------------------------------------------------------------------------------
AUSTRALIA - 3.16%
Boral Ltd. (Building Materials) 279,000 879,262
- -------------------------------------------------------------------------------
Broken Hill Proprietary Co. Ltd. (Metals - Miscellaneous) 72,831 1,072,384
- -------------------------------------------------------------------------------
Coca-Cola Amatil Ltd. (Beverages) 80,241 1,043,045
- -------------------------------------------------------------------------------
National Australia Bank Ltd., Conv. Pfd. (Banking)(b) 24,500 684,469
- -------------------------------------------------------------------------------
QBE Insurance Group Ltd. (Insurance - Multi-Line
Property) 184,815 1,117,392
- -------------------------------------------------------------------------------
QNI Ltd. (Metals - Miscellaneous) 433,723 783,429
- -------------------------------------------------------------------------------
WMC Ltd. (Metals - Miscellaneous) 209,000 1,318,897
- -------------------------------------------------------------------------------
6,898,878
- -------------------------------------------------------------------------------
AUSTRIA - 0.76%
OMV A.G. (Oil & Gas - Integrated) 6,500 832,621
- -------------------------------------------------------------------------------
VA Technologie A.G. (Engineering & Construction) 4,550 832,661
- -------------------------------------------------------------------------------
1,665,282
- -------------------------------------------------------------------------------
BELGIUM - 1.17%
Barco Industries (Electronic Components/Miscellaneous) 4,000 810,450
- -------------------------------------------------------------------------------
COLRUYT S.A. (Retail - Food & Drug) 1,500 731,656
- -------------------------------------------------------------------------------
UCB S.A. (Medical - Drugs) 320 1,013,897
- -------------------------------------------------------------------------------
2,556,003
- -------------------------------------------------------------------------------
BRAZIL - 1.59%
Telecomunicacoes Brasileiras S.A. - Telebras-ADR
(Telephone) 14,500 2,200,375
- -------------------------------------------------------------------------------
Uniao de Bancos Brasileiros S.A. - GDR (Banking)(a) 34,000 1,262,250
- -------------------------------------------------------------------------------
3,462,625
- -------------------------------------------------------------------------------
CANADA - 2.98%
Bank of Montreal (Banking - Money Center) 11,800 460,567
- -------------------------------------------------------------------------------
Canadian National Railway Co. (Railroads) 17,200 752,500
- -------------------------------------------------------------------------------
Canadian Natural Resources Ltd. (Oil & Gas - Exploration
& Production)(a) 33,000 856,693
- -------------------------------------------------------------------------------
Canadian Pacific, Ltd. (Transportation) 30,200 858,813
- -------------------------------------------------------------------------------
Magna International, Inc. - Class A (Automobile/Truck
Parts & Tires) 10,050 604,041
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE
CANADA - (CONTINUED)
Newbridge Networks Corp. (Computer Networking)(a) 19,400 $ 843,900
- -------------------------------------------------------------------------------
Northern Telecom Ltd. (Telecommunications) 12,200 1,110,200
- -------------------------------------------------------------------------------
Suncor, Inc. (Oil & Gas - Exploration & Production) 38,000 1,018,140
- -------------------------------------------------------------------------------
6,504,854
- -------------------------------------------------------------------------------
CHILE - 0.69%
Cia. de Telecomunicaciones de Chile S.A. - ADR (Telephone) 25,500 841,500
- -------------------------------------------------------------------------------
Quinenco S.A. - ADR (Telecommunications)(a) 35,500 656,750
- -------------------------------------------------------------------------------
1,498,250
- -------------------------------------------------------------------------------
DENMARK - 0.86%
Novo Nordisk A.S. - Class B (Medical - Drugs) 17,200 1,875,450
- -------------------------------------------------------------------------------
FINLAND - 0.47%
Enso Oy (Forest Products) 55,000 508,401
- -------------------------------------------------------------------------------
Nokia Oy A.B. (Telecommunications) 6,900 520,880
- -------------------------------------------------------------------------------
1,029,281
- -------------------------------------------------------------------------------
FRANCE - 10.33%
Alcatel Alsthom (Telecommunications) 15,700 1,966,274
- -------------------------------------------------------------------------------
AXA S.A. (Insurance - Life & Health) 13,000 808,532
- -------------------------------------------------------------------------------
Cap Gemini Sogeti S.A. (Computer Software/Services) 16,000 844,011
- -------------------------------------------------------------------------------
Carrefour S.A. (Retail - Food & Drug) 730 530,168
- -------------------------------------------------------------------------------
Cetelem (Finance - Consumer Credit) 4,600 578,454
- -------------------------------------------------------------------------------
Compagnie Francaise d'Etudes et de Construction Technip
(Engineering & Construction) 8,500 986,438
- -------------------------------------------------------------------------------
Compagnie Generale des Eaux (Water Supply) 12,800 1,640,104
- -------------------------------------------------------------------------------
Compagnie Generale des Eaux - Wts., expiring 05/02/01
(Water Supply)(a) 12,800 7,667
- -------------------------------------------------------------------------------
Elf Aquitaine S.A. (Oil & Gas - Services) 17,900 1,931,118
- -------------------------------------------------------------------------------
Essilor International (Medical Instruments/Products) 2,275 613,588
- -------------------------------------------------------------------------------
Etablissements Economiques du Casino Guichard-Perrachon
(Retail - Food & Drug) 19,000 940,511
- -------------------------------------------------------------------------------
Lafarge S.A. (Building Materials) 13,600 845,849
- -------------------------------------------------------------------------------
Michelin - Class B (Automobile/Truck Parts & Tires) 13,200 792,669
- -------------------------------------------------------------------------------
Pinault-Printemps-Redoute S.A. (Retail - Stores) 3,560 1,710,729
- -------------------------------------------------------------------------------
Promodes (Retail - Stores) 2,750 1,071,137
- -------------------------------------------------------------------------------
Rexel S.A. (Electronic Component/Miscellaneous) 2,000 613,950
- -------------------------------------------------------------------------------
Rhone-Poulenc - Class A (Chemicals) 26,500 1,082,240
- -------------------------------------------------------------------------------
Schneider S.A. (Electronic Components/Miscellaneous) 15,800 840,989
- -------------------------------------------------------------------------------
Sidel, S.A. (Machinery - Miscellaneous) 5,700 441,319
- -------------------------------------------------------------------------------
Societe BIC S.A. (Office Products) 11,000 1,798,799
- -------------------------------------------------------------------------------
Sodexho S.A. (Business Services) 900 460,820
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
72
<PAGE>
<TABLE>
<CAPTION> MARKET
SHARES VALUE
<S> <C> <C>
FRANCE - (CONTINUED)
Total S.A. - Class B (Oil & Gas - Exploration &
Production) 10,300 $ 1,041,094
- ---------------------------------------------------------------------------
Valeo S.A. (Automobile/Truck Parts & Tires) 15,500 962,700
- ---------------------------------------------------------------------------
22,509,160
- ---------------------------------------------------------------------------
GERMANY - 4.78%
Adidas A.G. (Shoes & Related Apparel) 12,050 1,333,438
- ---------------------------------------------------------------------------
Allianz A.G. (Insurance-Broker) 2,300 481,337
- ---------------------------------------------------------------------------
Altana A.G. (Chemicals) 1,350 1,439,711
- ---------------------------------------------------------------------------
Commerzbank A.G. (Banking - Money Center) 29,500 835,560
- ---------------------------------------------------------------------------
Continental A.G. (Automobile/Truck Parts & Tires) 28,000 695,144
- ---------------------------------------------------------------------------
Deutsche Bank A.G. (Banking) 17,000 993,234
- ---------------------------------------------------------------------------
Dresdner Bank A.G. (Banking) 24,000 829,769
- ---------------------------------------------------------------------------
SAP A.G. (Computer Software/Services) 2,650 531,793
- ---------------------------------------------------------------------------
SAP A.G. - Pfd. (Computer Software/Services) 2,700 560,404
- ---------------------------------------------------------------------------
Schering A.G. (Medical - Drugs) 9,200 982,983
- ---------------------------------------------------------------------------
SGL Carbon A.G. (Metals - Miscellaneous) 5,500 753,053
- ---------------------------------------------------------------------------
VEBA A.G. (Electric Power) 17,500 983,315
- ---------------------------------------------------------------------------
10,419,741
- ---------------------------------------------------------------------------
HONG KONG - 8.00%
Asia Satellite Telecommunications Holdings Ltd.
(Telecommunications) 100,000 306,558
- ---------------------------------------------------------------------------
Asia Satellite Telecommunications Holdings Ltd.-ADR
(Telecommunications) 17,400 524,175
- ---------------------------------------------------------------------------
Cheung Kong (Holdings) Ltd. (Real Estate) 180,000 1,777,393
- ---------------------------------------------------------------------------
Cosco Pacific Ltd. (Business Services) 1,476,000 3,419,798
- ---------------------------------------------------------------------------
Dao Heng Bank Group Ltd. (Banking) 254,100 1,390,657
- ---------------------------------------------------------------------------
First Pacific Company Ltd. (Conglomerates) 1,137,368 1,453,402
- ---------------------------------------------------------------------------
Hang Seng Bank Ltd. (Banking) 82,400 1,175,274
- ---------------------------------------------------------------------------
Hong Kong & China Gas Co. Ltd. (Electric Power) 770,352 1,541,241
- ---------------------------------------------------------------------------
HSBC Holdings PLC (Banking) 67,000 2,015,025
- ---------------------------------------------------------------------------
Hutchison Whampoa Ltd. (Conglomerates) 180,000 1,556,671
- ---------------------------------------------------------------------------
New World Infrastructure Ltd.
(Engineering & Construction)(a) 290,000 819,769
- ---------------------------------------------------------------------------
Sun Hung Kai Properties Ltd. (Real Estate) 121,600 1,463,632
- ---------------------------------------------------------------------------
17,443,595
- ---------------------------------------------------------------------------
INDONESIA - 1.15%
PT Bank Dagang Nasional (Banking) 517,000 366,704
- ---------------------------------------------------------------------------
PT Bank Internasional Indonesia (Banking) 1,931,350 1,667,695
- ---------------------------------------------------------------------------
PT Indosat (Telecommunications) 91,000 272,214
- ---------------------------------------------------------------------------
PT Indosat-ADR (Telecommunications) 6,400 191,600
- ---------------------------------------------------------------------------
2,498,213
- ---------------------------------------------------------------------------
IRELAND - 0.33%
Elan Corp. PLC-ADR (Medical - Drugs)(a) 16,000 724,000
- ---------------------------------------------------------------------------
MARKET
SHARES VALUE
ISRAEL - 0.55%
Teva Pharmaceutical Industries Ltd.-ADR
(Medical - Drugs) 18,500 $ 1,197,875
- ----------------------------------------------------------------------------
ITALY - 3.35%
Credito Italiano S.p.A. (Banking) 610,000 1,115,147
- ----------------------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas -
Exploration & Production) 201,000 1,136,410
- ----------------------------------------------------------------------------
Fiat S.p.A. (Automobile - Manufacturers) 295,000 1,060,533
- ----------------------------------------------------------------------------
Istituto Mobiliare Italiano S.p.A. (Banking) 81,000 724,990
- ----------------------------------------------------------------------------
Telecom Italia Mobile S.p.A. (Telephone) 503,800 1,620,571
- ----------------------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 510,000 1,636,914
- ----------------------------------------------------------------------------
7,294,565
- ----------------------------------------------------------------------------
JAPAN - 15.15%
Advantest Corp. (Semiconductors) 24,530 1,883,301
- ----------------------------------------------------------------------------
Bridgestone Corp. (Automobile/Truck Parts & Tires) 69,000 1,601,291
- ----------------------------------------------------------------------------
Canon, Inc. (Office Automation) 80,000 2,177,630
- ----------------------------------------------------------------------------
Fuji Photo Film Co. (Electronic
Components/Miscellaneous) 52,000 2,091,433
- ----------------------------------------------------------------------------
Honda Motor Co., Ltd. (Automobile - Manufacturers) 61,000 1,836,067
- ----------------------------------------------------------------------------
Ibiden Co., Ltd. (Building Materials) 118,000 1,698,656
- ----------------------------------------------------------------------------
JUSCO Co. (Retail - Stores) 20,000 675,275
- ----------------------------------------------------------------------------
Matsushita Electric Industrial Co. Ltd. (Electronic
Components/Miscellaneous) 57,000 1,148,752
- ----------------------------------------------------------------------------
Minebea Company Ltd. (Machinery - Miscellaneous) 78,000 830,222
- ----------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. (Telephone) 2,320 2,226,488
- ----------------------------------------------------------------------------
Nippon Television Network (Advertising/Broadcasting) 2,690 1,079,567
- ----------------------------------------------------------------------------
NSK Ltd. (Metals) 172,000 1,105,950
- ----------------------------------------------------------------------------
NTT Data Communications Systems Co. (Computer
Software/Services) 450 1,739,225
- ----------------------------------------------------------------------------
Okuma Corp. (Machine Tools) 85,000 748,997
- ----------------------------------------------------------------------------
Ricoh Corp. Ltd. (Office Automation) 108,000 1,413,366
- ----------------------------------------------------------------------------
Rohm Co. (Semiconductors) 8,000 823,591
- ----------------------------------------------------------------------------
SMC (Machinery - Miscellaneous) 10,200 861,420
- ----------------------------------------------------------------------------
Sony Corp. (Electronic Components/Miscellaneous) 23,000 2,004,624
- ----------------------------------------------------------------------------
TDK Corp. (Electronic Components/Miscellaneous) 24,000 1,760,949
- ----------------------------------------------------------------------------
Tokyo Electron Ltd. (Electronic
Components/Miscellaneous) 47,500 2,270,982
- ----------------------------------------------------------------------------
Toyota Motor Corp. (Automobile - Manufacturers) 60,000 1,769,325
- ----------------------------------------------------------------------------
Yamatake-Honeywell (Airlines) 67,000 1,274,298
- ----------------------------------------------------------------------------
33,021,409
- ----------------------------------------------------------------------------
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
73
<PAGE>
<TABLE>
<CAPTION> MARKET
SHARES VALUE
<S> <C> <C>
MALAYSIA - 1.45%
AMMB Holdings Berhad (Banking) 122,000 $ 758,875
- -------------------------------------------------------------------------------
Commerce Asset Holdings Berhad (Finance - Asset
Management) 177,000 466,343
- -------------------------------------------------------------------------------
Commerce Asset Holdings Berhad - Rts. to Common expiring
07/23/97 (Finance - Asset Management)(a) 57,600 2,054
- -------------------------------------------------------------------------------
Commerce Asset Holdings Berhad - Rts. to Wts., expiring
07/23/97 (Finance - Asset Management)(a) 36,000 5,563
- -------------------------------------------------------------------------------
Edaran Otomobil Nasional Berhad (Automobile -
Manufacturers) 61,000 519,612
- -------------------------------------------------------------------------------
Malayan Banking Berhad (Banking) 96,000 1,007,924
- -------------------------------------------------------------------------------
UMW Holdings Berhad (Automobile-Manufacturers) 84,000 396,038
- -------------------------------------------------------------------------------
3,156,409
- -------------------------------------------------------------------------------
MEXICO - 2.96%
Coca-Cola Femsa S.A. - ADR (Beverages - Soft Drinks) 23,300 1,202,863
- -------------------------------------------------------------------------------
Fomento Economico Mexicano, S.A. de C.V. - Class B
(Beverages - Alcoholic) 188,000 1,117,710
- -------------------------------------------------------------------------------
Grupo Industrial Maseca S.A. de CV - Class B
(Food/Processing) 646,200 705,759
- -------------------------------------------------------------------------------
Grupo Televisa S.A. - GDR (Advertising/Broadcasting)(a) 18,600 564,975
- -------------------------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de C.V. - Class A (Paper &
Forest Products) 217,000 872,369
- -------------------------------------------------------------------------------
Panamerican Beverages, Inc. - Class A (Beverages - Soft
Drinks) 60,200 1,979,075
- -------------------------------------------------------------------------------
6,442,751
- -------------------------------------------------------------------------------
NETHERLANDS - 5.70%
CMG PLC (Computer Software/Services) 35,400 786,306
- -------------------------------------------------------------------------------
DSM N.V. (Chemicals - Specialty) 9,300 925,310
- -------------------------------------------------------------------------------
Elsevier N.V. (Publishing) 38,000 634,979
- -------------------------------------------------------------------------------
Getronics N.V. (Computer Software/Services) 29,200 943,135
- -------------------------------------------------------------------------------
Koninklijke Ahold N.V. (Retail - Food & Drug) 19,000 1,602,934
- -------------------------------------------------------------------------------
Nutricia Verenigde Bedrijven N.V. (Food/Processing) 3,000 473,789
- -------------------------------------------------------------------------------
Oce-Van Der Grinten N.V. (Office Automation) 6,300 812,655
- -------------------------------------------------------------------------------
Philips Electronics N.V. (Electronic
Components/Miscellaneous) 35,400 2,535,656
- -------------------------------------------------------------------------------
Randstad Holdings N.V. (Business Services) 10,200 1,075,653
- -------------------------------------------------------------------------------
Royal Dutch Petroleum Co. (Oil & Gas - Services) 21,200 1,102,715
- -------------------------------------------------------------------------------
VNU-Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit (Publishing) 32,500 718,580
- -------------------------------------------------------------------------------
Wolters Kluwer N.V. (Publishing) 6,590 802,389
- -------------------------------------------------------------------------------
12,414,101
- -------------------------------------------------------------------------------
NORWAY - 0.53%
Kvaerner A.S.A. (Oil & Gas - Integrated) 6,350 384,246
- -------------------------------------------------------------------------------
Storebrand A.S.A. (Insurance - Multi-Line Property)(a) 128,000 763,194
- -------------------------------------------------------------------------------
1,147,440
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE
PHILIPPINES - 1.89%
C & P Homes, Inc. (Home Building) 1,930,000 $ 724,409
- -------------------------------------------------------------------------------
Filinvest Land Inc. (Real Estate)(a) 2,932,450 733,776
- -------------------------------------------------------------------------------
Metro Pacific Corp. (Conglomerates) 3,568,000 771,065
- -------------------------------------------------------------------------------
Metropolitan Bank & Trust Co. (Banking) 46,324 983,524
- -------------------------------------------------------------------------------
Philippine Long Distance Telephone Co. (Telephone) 16,660 540,048
- -------------------------------------------------------------------------------
Philippine Long Distance Telephone Co. - ADR (Telephone) 5,800 372,650
- -------------------------------------------------------------------------------
4,125,472
- -------------------------------------------------------------------------------
PORTUGAL - 1.15%
Electricidade de Portugal, S.A. - ADR (Electric Power)(a) 13,800 496,800
- -------------------------------------------------------------------------------
Portugal Telecom S.A. (Telephone)(a) 50,000 2,016,931
- -------------------------------------------------------------------------------
2,513,731
- -------------------------------------------------------------------------------
SINGAPORE - 1.73%
City Developments Ltd. (Real Estate) 155,000 1,517,801
- -------------------------------------------------------------------------------
DBS Land Ltd. (Real Estate) 408,000 1,289,893
- -------------------------------------------------------------------------------
Overseas Union Bank Ltd. (Banking) 151,000 939,987
- -------------------------------------------------------------------------------
Overseas Union Bank Ltd. - Wts., expiring 07/02/97
(Banking)(a) 30,200 16,476
- -------------------------------------------------------------------------------
3,764,157
- -------------------------------------------------------------------------------
SOUTH AFRICA - 0.35%
Sasol Ltd. (Oil & Gas - Exploration & Production) 58,550 767,848
- -------------------------------------------------------------------------------
SPAIN - 3.16%
Banco Bilbao Vizcaya, S.A. (Banking) 14,300 1,161,663
- -------------------------------------------------------------------------------
Banco Popular Espanol S.A. (Banking) 4,700 1,151,476
- -------------------------------------------------------------------------------
Empresa Nacional de Electricidad, S.A. (Electric Power) 12,300 1,032,582
- -------------------------------------------------------------------------------
Gas Natural SDG, S.A. - Class E (Gas Distribution) 4,000 873,838
- -------------------------------------------------------------------------------
Iberdrola S.A. (Electric Power) 83,800 1,057,808
- -------------------------------------------------------------------------------
Telefonica de Espana (Telephone) 56,000 1,619,002
- -------------------------------------------------------------------------------
6,896,369
- -------------------------------------------------------------------------------
SWEDEN - 1.87%
Electrolux A.B. (Appliances) 15,500 1,118,092
- -------------------------------------------------------------------------------
Hennes & Mauritz A.B. - Class B (Retail - Stores) 37,000 1,301,015
- -------------------------------------------------------------------------------
Sparbanken Sverige A.B. - Class A (Banking) 52,000 1,156,228
- -------------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson - ADR (Telecommunications) 12,980 511,088
- -------------------------------------------------------------------------------
4,086,423
- -------------------------------------------------------------------------------
SWITZERLAND - 4.11%
ABB A.G. (Engineering & Construction) 740 1,120,137
- -------------------------------------------------------------------------------
Adecco S.A. (Business Services) 3,000 1,150,685
- -------------------------------------------------------------------------------
Clariant A.G. (Chemicals - Specialty) 1,900 1,229,795
- -------------------------------------------------------------------------------
Holderbank Financiere Glarus A.G. - Class B (Building
Materials) 1,190 1,123,979
- -------------------------------------------------------------------------------
Nestle S.A. (Food/Processing) 770 1,015,767
- -------------------------------------------------------------------------------
Novartis A.G. (Medical - Drugs)(a) 1,368 2,186,926
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
74
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND - (CONTINUED)
Winterthur Schweizerische Versicherungs-Gesellschaft
(Insurance - Broker) 630 $ 554,918
- -------------------------------------------------------------------------------
Zuerich Versicherungs-Gesellschaft (Insurance - Broker) 1,450 577,021
- -------------------------------------------------------------------------------
8,959,228
- -------------------------------------------------------------------------------
UNITED KINGDOM - 14.37%
Airtours PLC (Leisure & Recreation) 45,150 871,433
- -------------------------------------------------------------------------------
Amersham International PLC (Medical Instruments/Products) 10,100 268,271
- -------------------------------------------------------------------------------
B.A.T. Industries PLC (Conglomerates) 126,000 1,127,825
- -------------------------------------------------------------------------------
Blue Circle Industries PLC (Manufacturing - Miscellaneous) 155,000 1,104,761
- -------------------------------------------------------------------------------
British Aerospace PLC (Aerospace/Defense) 42,000 934,783
- -------------------------------------------------------------------------------
British Petroleum Co. PLC (Oil & Gas - Services) 140,000 1,740,406
- -------------------------------------------------------------------------------
Compass Group PLC (Restaurants) 78,000 874,833
- -------------------------------------------------------------------------------
Dixons Group PLC (Retail - Stores) 118,000 917,681
- -------------------------------------------------------------------------------
EMAP PLC (Publishing) 62,500 773,845
- -------------------------------------------------------------------------------
General Electric Co. PLC (Electronic
Components/Miscellaneous) 110,000 657,627
- -------------------------------------------------------------------------------
GKN PLC (Automobile/Truck Parts & Tires) 50,000 861,377
- -------------------------------------------------------------------------------
Granada Group PLC (Leisure & Recreation) 78,000 1,026,159
- -------------------------------------------------------------------------------
Guinness PLC (Beverages - Alcoholic) 211,000 2,066,106
- -------------------------------------------------------------------------------
Hays PLC (Business Services) 104,000 988,922
- -------------------------------------------------------------------------------
Kingfisher PLC (Retail - Stores) 80,000 908,588
- -------------------------------------------------------------------------------
Ladbroke Group PLC (Hotels/Motels) 428,000 1,674,960
- -------------------------------------------------------------------------------
Lloyds TSB Group PLC (Finance - Savings & Loans) 57,000 584,721
- -------------------------------------------------------------------------------
LucasVarity PLC (Automobile/Truck Parts & Tires)(a) 230,000 796,680
- -------------------------------------------------------------------------------
Medeva PLC (Medical - Drugs) 147,000 627,910
- -------------------------------------------------------------------------------
Next PLC (Retail - Stores) 97,500 1,101,659
- -------------------------------------------------------------------------------
Orange PLC (Telecommunications)(a) 250,000 826,406
- -------------------------------------------------------------------------------
Provident Financial PLC (Finance - Consumer Credit) 92,800 860,787
- -------------------------------------------------------------------------------
Railtrack Group PLC (Railroads) 145,000 1,510,386
- -------------------------------------------------------------------------------
Rentokil Initial PLC (Business Services) 274,000 962,777
- -------------------------------------------------------------------------------
Scottish & Newcastle PLC (Beverages - Alcoholic) 51,850 558,230
- -------------------------------------------------------------------------------
Siebe PLC (Electronic Components/Miscellaneous) 38,000 643,572
- -------------------------------------------------------------------------------
Smiths Industries PLC (Electronics/Defense) 53,500 685,575
- -------------------------------------------------------------------------------
Standard Chartered PLC (Finance - Asset Management) 63,100 962,537
- -------------------------------------------------------------------------------
Tarmac PLC (Building Materials) 490,000 1,019,997
- -------------------------------------------------------------------------------
Unilever PLC (Consumer Non-Durables) 52,000 1,490,744
- -------------------------------------------------------------------------------
Vodafone Group PLC (Telecommunications) 185,000 901,136
- -------------------------------------------------------------------------------
WPP Group PLC (Advertising/Broadcasting) 240,000 985,192
- -------------------------------------------------------------------------------
31,315,886
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 209,465,254
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FOREIGN CONVERTIBLE BONDS - 1.67%(c)
FRANCE - 0.37%
AXA-UAP (Insurance - Life & Health), Conv. Sr.
Deb., 4.50%, 01/01/99 FRF 3,307,500 $ 799,199
- --------------------------------------------------------------------------------
GERMANY - 0.51%
Volkswagen International Finance N.V. (Automobile -
Manufacturers), Conv. Gtd. Notes, 3.00%,
01/24/02 DEM 770,000 1,114,575
- --------------------------------------------------------------------------------
HONG KONG - 0.15%
New World Infrastructure Ltd. (Banking), Conv.
Bonds, 5.00%, 07/15/01 $ 80,000 93,800
- --------------------------------------------------------------------------------
New World Infrastructure Ltd. (Banking), Conv.
Bonds, 5.00%, 07/15/01 (Acquired 04/10/97-
04/11/97; Cost $234,938)(d) 200,000 234,500
- --------------------------------------------------------------------------------
328,300
- --------------------------------------------------------------------------------
ITALY - 0.44%
Pirelli S.p.A. (Automobile/Truck Parts & Tires),
Conv. Bonds, 5.00%, 12/31/98 ITL 1,007,349,200 957,965
- --------------------------------------------------------------------------------
JAPAN - 0.20%
Ricoh Co., Ltd. (Office Automation), Conv. Bonds,
0.35%, 03/31/03 JPY 40,000,000 438,667
- --------------------------------------------------------------------------------
Total Foreign Convertible Bonds 3,638,706
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.58%(e)
UBS Securities Inc.(f) 5,617,924 5,617,924
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.34% 218,721,884
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (0.34%) (749,076)
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $217,972,808
================================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Issued as a unit. Each unit also includes 24,500 warrants exchangeable
into one ordinary share per warrant.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(d) Restricted security. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
market value of this security at 06/30/97 was $234,500 which represented
0.11% of the Fund's net assets.
(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% of the sales
price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(f) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$300,050,833. Collateralized $320,816,334 by U.S. Government obligations,
0% to 13.25% due 07/14/97 to 04/01/27 with an aggregate market value at
06/30/97 of $306,003,435.
Abbreviations
ADR - American Depository Receipt ITL - Italian Lira
Conv. - Convertible JPY - Japanese Yen
Deb. - Debentures Pfd. - Preferred
DEM - German Deutschemark Rts. - Rights
FRF - French Franc Sr. - Senior
GDR - Global Depository Receipt Wts. - Warrants
Gtd. - Guaranteed
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
75
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $169,072,514) $218,721,884
- ----------------------------------------------------------------------
Foreign currencies, at market value (cost $485,426) 485,515
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 230,298
- ----------------------------------------------------------------------
Investments sold 564,102
- ----------------------------------------------------------------------
Dividends and interest 507,322
- ----------------------------------------------------------------------
Organizational costs, net 2,410
- ----------------------------------------------------------------------
Investment for deferred compensation plan 12,960
- ----------------------------------------------------------------------
Other assets 7,144
- ----------------------------------------------------------------------
Total assets 220,531,635
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock purchased 210,977
- ----------------------------------------------------------------------
Investments purchased 2,114,231
- ----------------------------------------------------------------------
Deferred compensation plan 12,960
- ----------------------------------------------------------------------
Accrued advisory fees 130,650
- ----------------------------------------------------------------------
Accrued administrative services fees 5,307
- ----------------------------------------------------------------------
Accrued directors' fees 2,817
- ----------------------------------------------------------------------
Accrued operating expenses 81,885
- ----------------------------------------------------------------------
Total liabilities 2,558,827
- ----------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $217,972,808
======================================================================
Capital shares, $.001 par value per share:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 11,929,926
- ----------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $18.27
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $276,349 foreign withholding tax) $ 1,851,367
- ----------------------------------------------------------------------------
Interest 162,906
- ----------------------------------------------------------------------------
Total investment income 2,014,273
- ----------------------------------------------------------------------------
EXPENSES:
Advisory fees 689,062
- ----------------------------------------------------------------------------
Custodian fees 105,161
- ----------------------------------------------------------------------------
Administrative services fees 31,686
- ----------------------------------------------------------------------------
Directors' fees and expenses 3,561
- ----------------------------------------------------------------------------
Organizational costs 1,446
- ----------------------------------------------------------------------------
Other 29,293
- ----------------------------------------------------------------------------
Total expenses 860,209
- ----------------------------------------------------------------------------
Less: Expenses paid indirectly (359)
- ----------------------------------------------------------------------------
Net expenses 859,850
- ----------------------------------------------------------------------------
Net investment income 1,154,423
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (222,513)
- ----------------------------------------------------------------------------
Foreign currencies (53,401)
- ----------------------------------------------------------------------------
(275,914)
- ----------------------------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities 21,340,639
- ----------------------------------------------------------------------------
Foreign currencies (3,116)
- ----------------------------------------------------------------------------
21,337,523
- ----------------------------------------------------------------------------
Net gain on investment securities and foreign currencies 21,061,609
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $22,216,032
- ----------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
76
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,154,423 $ 962,870
- ------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities and foreign currencies (275,914) 4,388,374
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities and foreign currencies 21,337,523 17,071,573
==============================================================================
Net increase in net assets resulting from
operations 22,216,032 22,422,817
==============================================================================
Distributions to shareholders from net investment
income -- (377,734)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 30,018,698 61,436,140
- ------------------------------------------------------------------------------
Net increase in net assets 52,234,730 83,481,223
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 165,738,078 82,256,855
- ------------------------------------------------------------------------------
End of period $217,972,808 $165,738,078
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $163,207,509 $133,188,811
- ------------------------------------------------------------------------------
Undistributed net investment income 2,091,551 937,128
- ------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities and foreign currency transactions 3,029,124 3,305,038
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 49,644,624 28,307,101
- ------------------------------------------------------------------------------
$217,972,808 $165,738,078
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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 and variable life insurance policies.
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 (except
convertible bonds) 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. 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. 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. Debt obligations (including convertible bonds) 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
AIM V.I. INTERNATIONAL EQUITY FUND
77
<PAGE>
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. 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. 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 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 currency 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 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. 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.
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.
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.
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 six months ended June 30, 1997, AIM was reimbursed $31,686 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 six months ended June 30, 1997, the Fund incurred legal fees of
$2,688 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997 the Fund's expenses were reduced by $81 and the
Fund received reductions in custodian fees of $278 under an expense offset
arrangement. The effect of the above arrangements resulted in a reduction of
the Fund's total expenses of $359 during the six months ended June 30, 1997.
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the six months ended June
30, 1997 was $83,468,225 and $46,123,662, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $51,657,202
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,015,266)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $49,641,936
==========================================================================
</TABLE>
Cost of investments for tax purposes is $169,079,948.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1997
and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold 1,999,983 $33,366,090 4,432,824 $66,189,679
- --------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 23,877 377,734
- --------------------------------------------------------------------------
Reacquired (199,755) (3,347,392) (347,543) (5,131,273)
- --------------------------------------------------------------------------
1,800,228 $30,018,698 4,109,158 $61,436,140
==========================================================================
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
78
<PAGE>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
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>
DECEMBER 31, JANUARY 31,
JUNE 30, ----------------- -------------------
1997 1996 1995 1995 1994
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 16.36 $ 13.66 $ 11.03 $ 12.49 $ 10.00
- -------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.08 0.07 0.07 0.06 --
- -------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 1.83 2.67 2.58 (1.49) 2.49
- -------------------------------------------------------------------------------------------
Total from investment
operations 1.91 2.74 2.65 (1.43) 2.49
- -------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.04) (0.02) (0.03) --
- -------------------------------------------------------------------------------------------
Net asset value, end of
period $ 18.27 $ 16.36 $ 13.66 $ 11.03 $ 12.49
===========================================================================================
Total return(a) 11.67% 20.05% 24.04% (11.48)% 24.90%
===========================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $217,973 $165,738 $82,257 $55,019 $23,533
===========================================================================================
Ratio of expenses to
average net assets 0.94%(b)(c) 0.96% 1.15%(d) 1.27%(e) 1.98%(d)(e)
===========================================================================================
Ratio of net investment
income to average net
assets 1.26%(b) 0.78% 0.75%(d) 0.60%(f) (0.15)%(d)(f)
===========================================================================================
Portfolio turnover rate 25% 59% 67% 64% 26%
===========================================================================================
Average broker
commission rate paid(g) $ 0.0181 $ 0.0209 N/A N/A N/A
===========================================================================================
</TABLE>
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are annualized and based on average net assets of $185,272,636.
(c) Includes expenses paid indirectly. Excluding expenses paid indirectly, the
ratio of expenses to average net assets would have remained the same.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.28% and 3.06%, respectively.
(f) After fee waivers and/or expense reimbursements. Ratios and net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were 0.59% and (1.23)%, respectively.
(g) Disclosure requirement beginning with the Fund's fiscal year ended
December 31, 1996.
- -------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION - SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES
DIRECTOR/MATTER VOTES FOR AGAINST WITHHOLD/ABSTENTIONS
--------------- ----------- --------- --------------------
<C> <S> <C> <C> <C>
(1) Charles T. Bauer............. 138,450,525 N/A 3,241,923
Bruce L. Crockett............ 138,630,018 N/A 3,062,431
Owen Daly II................. 138,241,309 N/A 3,451,139
Carl Frischling.............. 138,615,279 N/A 3,077,169
Robert H. Graham............. 138,641,752 N/A 3,050,695
John F. Kroeger.............. 138,250,777 N/A 3,441,671
Lewis F. Pennock............. 138,618,633 N/A 3,073,814
Ian W. Robinson.............. 138,281,116 N/A 3,411,332
Louis S. Sklar............... 138,611,786 N/A 3,080,663
(2) Approval of new Investment
Advisory Agreement.......... 9,461,244 101,559 269,731
(3) Elimination of policy
restricting investments in
other investment companies.. 9,212,997 263,126 356,413
(4) Tait, Weller & Baker......... 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
79
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
MONEY MARKET FUND OFFERS COMPETITIVE YIELD FOR SIX-MONTH PERIOD
A roundtable discussion with the Fund management team for AIM V.I. Money Market
Fund for the six months ended June 30, 1997.
- --------------------------------------------------------------------------------
<S> <C> <C>
Q. WHAT WERE MARKET CONDITIONS DURING Q. HOW DID YOU MANAGE THE FUND IN Nevertheless, caution remains
THE REPORTING PERIOD? THIS ENVIRONMENT? advisable. Any data hinting at an
A. As 1997 began, markets were A. We acted cautiously, keeping the uptick in inflation or a surge of
concerned that vigorous economic growth portfolio's weighted average maturity unsustainable economic growth could
might ignite inflation, which would quite short: about 20 days. Only late in induce volatility in interest rates,
prompt the Federal Reserve Board (the the reporting period, as the likelihood and many market experts still anticipate
Fed) to raise interest rates. of another rate hike diminished, did we higher short-term rates during the
In late March, the Fed did so, lengthen the weighted average maturity second half of the year.
increasing the benchmark federal funds to capture higher yields. As the In such an environment, money market
rate from 5.25% to 5.50%. Rates had reporting period closed, weighted funds provide an attractive shelter from
been rising in anticipation of this average maturity stood at 27 days. market instability.
move, so the increase had effectively Despite a significant drop in
been factored into securities prices short-term market yields late in the
by the time it was announced. reporting period, the Fund continued to
The market remained poised for provide competitive yield. As of the
further rate hikes. However, the close of the reporting period, seven-day
economy began to exhibit signs it yield was 5.07%, compared to 5.00% for
was slowing from the 4.9% annualized produced by similar funds, according to
growth rate logged during the year's IBC's Money Fund Report.
first quarter. Retail sales declined
for three months in a row from Q. WHAT IS THE MARKET OUTLOOK FOR THE
March through May, for example, and REST OF 1997?
single family home sales fell during A. As the reporting period closed, a
both March and April. climate of confidence prevailed. While
Though opinion was generally not unanimous, the general expectation
divided about whether the Fed would was that Fed policy would remain
raise rates when it met in May, the unchanged. The economic underpinnings
economic indicators led to a shift in for strong stock and bond markets were
market expectations, and rates in place, with inflation remarkably
declined during the year's controlled, and economic growth brisk.
second quarter. The Fed held rates In July, after close of reporting
steady at its May meeting, as many period, the Fed left interest rates
forecasts placed second quarter growth as they were.
in the 2% to 2.5% range judged
sustainable by the central bank.
An investment in the Fund is neither insured nor guaranteed by the U.S. government, and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.
</TABLE>
______________________________
Despite a significant drop
in short-term market yields
late in the reporting period,
the Fund continued to
provide competitive yield.
______________________________
AIM V.I. MONEY MARKET FUND
80
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 54.62%(a)
ASSET-BACKED SECURITIES - 13.17%
Asset Securitization Cooperative Corp.
5.65% 08/15/97 $ 1,000 $ 992,938
- -----------------------------------------------------------------------
5.62% 09/03/97 400 396,004
- -----------------------------------------------------------------------
Clipper Receivables Corp.
5.59% 09/23/97 1,000 986,957
- -----------------------------------------------------------------------
Delaware Funding Corp.
5.61% 09/16/97 393 388,284
- -----------------------------------------------------------------------
5.61% 09/30/97 2,000 1,971,638
- -----------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.66% 07/14/97 1,200 1,197,547
- -----------------------------------------------------------------------
Receivables Capital Corp.
5.61% 07/16/97 2,303 2,297,617
- -----------------------------------------------------------------------
8,230,985
- -----------------------------------------------------------------------
AUTOMOBILE - 3.17%
Ford Motor Credit Co.
5.58% 09/02/97 2,000 1,980,470
- -----------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES - 4.11%
First Data Corp.
5.60% 09/09/97 2,000 1,978,222
- -----------------------------------------------------------------------
5.58% 09/16/97 600 592,839
- -----------------------------------------------------------------------
2,571,061
- -----------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 1.60%
Merrill Lynch & Co., Inc.
5.67% 07/14/97 1,000 997,953
- -----------------------------------------------------------------------
FINANCE (BUSINESS CREDIT) - 1.60%
General Electric Capital Corp.
5.55% 07/18/97 1,000 997,379
- -----------------------------------------------------------------------
FINANCE (MISCELLANEOUS) - 1.59%
BTR Dunlop Finance Inc.
5.57% 08/06/97 1,000 994,250
- -----------------------------------------------------------------------
FINANCE (PERSONAL CREDIT) - 2.87%
Transamerica Finance Corp.
5.34% 07/14/97 1,800 1,796,529
- -----------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 5.12%
Hancock (John) Capital Corp.
5.63% 07/03/97 3,200 3,198,999
- -----------------------------------------------------------------------
INSURANCE (PROPERTY & CASUALTY) - 2.22%
A.I. Credit Corp.
5.60% 08/20/97 1,400 1,389,111
- -----------------------------------------------------------------------
MACHINERY - 1.58%
Caterpillar Financial Services Corp.
5.60% 08/26/97 1,000 991,289
- -----------------------------------------------------------------------
PAR
MATURITY (000) VALUE
METAL MINING - 3.93%
RTZ America, Inc.
5.60% 09/22/97 $ 1,500 $ 1,480,633
- ---------------------------------------------------------------------------
U.S. Borax, Inc.
5.58% 12/17/97 1,000 973,805
- ---------------------------------------------------------------------------
2,454,438
- ---------------------------------------------------------------------------
OIL & GAS (INTEGRATED) - 7.88%
ARCO Coal Australia Inc.
5.70% 07/14/97 2,750 2,744,340
- ---------------------------------------------------------------------------
Shell Martinez Refining Co.(b)
5.73% 08/08/97 1,000 1,000,000
- ---------------------------------------------------------------------------
5.70% 09/24/97 1,179 1,179,000
- ---------------------------------------------------------------------------
4,923,340
- ---------------------------------------------------------------------------
PUBLISHING - 2.13%
McGraw-Hill Inc.
5.61% 08/25/97 1,345 1,333,472
- ---------------------------------------------------------------------------
TELEPHONE - 3.65%
GTE Funding Inc.
5.59% 07/02/97 1,300 1,299,798
- ---------------------------------------------------------------------------
MCI Communications Corp.
5.64% 10/20/97 1,000 982,610
- ---------------------------------------------------------------------------
2,282,408
- ---------------------------------------------------------------------------
Total Commercial Paper 34,141,684
- ---------------------------------------------------------------------------
MASTER NOTE AGREEMENTS(c) - 19.20%
Citicorp Securities, Inc.
6.50%(d) 07/28/97 3,000 3,000,000
- ---------------------------------------------------------------------------
The Goldman Sachs Group, L.P.
5.69%(e) 10/20/97 3,000 3,000,000
- ---------------------------------------------------------------------------
J.P. Morgan Securities, Inc.
6.35%(f) 10/06/97 3,000 3,000,000
- ---------------------------------------------------------------------------
Morgan Stanley Group Inc.
6.35%(g) 11/24/97 3,000 3,000,000
- ---------------------------------------------------------------------------
Total Master Note Agreements 12,000,000
- ---------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES - 4.00%
Federal National Mortgage Association
5.05%(h) 06/02/99 2,000 2,000,000
- ---------------------------------------------------------------------------
Student Loan Marketing Association
5.13%(h) 08/20/98 500 499,961
- ---------------------------------------------------------------------------
Total U.S. Government Agency Securities 2,499,961
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS, EXCLUDING REPURCHASE
AGREEMENTS 48,641,645
- ---------------------------------------------------------------------------
</TABLE>
AIM V.I. MONEY MARKET FUND
81
<PAGE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 22.45%(i)
Goldman, Sachs & Co.
5.875%(j) 07/01/97 $ 2,037 $ 2,036,572
- ---------------------------------------------------------------------
HSBC Securities, Inc.
6.10%(k) 07/01/97 2,000 2,000,000
- ---------------------------------------------------------------------
UBS LLC Securities, Inc.
6.10%(l) 07/01/97 10,000 10,000,000
- ---------------------------------------------------------------------
Total Repurchase Agreements 14,036,572
- ---------------------------------------------------------------------
TOTAL INVESTMENTS - 100.27% 62,678,217(m)
- ---------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS - (0.27%) (168,813)
- ---------------------------------------------------------------------
NET ASSETS - 100.00% $ 62,509,404
=====================================================================
</TABLE>
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) Trust certificates representing an interest in a trust (comprised of
eligible debt obligations) entitling the Fund to receive interest. The
Fund has the right, upon seven calendar days' notice to the trustee, to
put its certificates to the trust at par value plus accrued interest.
Because trust certificates involve a trust and a third party put feature,
they involve complexities and potential risks that may not be present
where the debt obligation is owned directly. Rates shown are the rates in
effect on 06/30/97.
(c) The investments in master note agreements are through participation in
joint accounts with other mutual funds, private accounts, and certain
nonregistered investment companies managed by the investment advisor or
its affiliates.
(d) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 3 business days' notice to the issuer.
Interest rates on master notes are redetermined periodically. Rate shown
is the rate in effect on 06/30/97.
(e) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 7 business days' prior written notice to the
issuer. Interest rates on master notes are redetermined periodically. Rate
shown is the rate in effect on 06/30/97.
(f) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 7 days' notice to the issuer. Interest rates
on master notes are redetermined periodically. Rate shown is the rate in
effect on 06/30/97.
(g) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 3 business days' prior written notice to the
issuer. Interest rates on master notes are redetermined periodically. Rate
shown is the rate in effect on 06/30/97.
(h) Interest rates are redetermined weekly. Rate shown is the rate in effect
on 06/30/97.
(i) 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, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(j) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$500,081,597. Collateralized by $489,647,000 U.S. Government obligations,
5.875% to 12.00% due 02/28/99 to 05/15/05 with an aggregate market value
at 06/30/97 of $510,506,061.
(k) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$100,016,944. Collateralized by $97,880,000 U.S. Government obligations,
7.50% due 10/31/99 with a market value at 06/30/97 of $102,002,909.
(l) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$300,050,833. Collateralized by $300,050,833 U.S. Government obligations,
0% to 13.25% due 07/14/97 to 04/01/27 with an aggregate market value at
06/30/97 of $306,003,435.
(m) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
82
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
ASSETS:
<S> <C>
Investments, excluding repurchase agreements, at value (amortized
cost) $ 48,641,645
- -------------------------------------------------------------------------------
Repurchase agreements 14,036,572
- -------------------------------------------------------------------------------
Interest receivable 79,924
- -------------------------------------------------------------------------------
Organizational costs, net 2,410
- -------------------------------------------------------------------------------
Investment for deferred compensation plan 12,648
- -------------------------------------------------------------------------------
Other assets 522
- -------------------------------------------------------------------------------
Total assets 62,773,721
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for capital stock reacquired 216,644
- -------------------------------------------------------------------------------
Deferred compensation plan 12,648
- -------------------------------------------------------------------------------
Accrued advisory fees 21,250
- -------------------------------------------------------------------------------
Accrued administrative service fees 3,370
- -------------------------------------------------------------------------------
Accrued directors' fees 1,978
- -------------------------------------------------------------------------------
Accrued operating expenses 8,427
- -------------------------------------------------------------------------------
Total liabilities 264,317
- -------------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 62,509,404
===============================================================================
Capital shares, $.001 par value per share:
Authorized 250,000,000
- -------------------------------------------------------------------------------
Outstanding 62,509,347
===============================================================================
Net asset value, offering and redemption price per share $ 1.00
===============================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $1,778,818
- -------------------------------------------------------------------------------
EXPENSES:
Advisory fees 128,825
- -------------------------------------------------------------------------------
Custodian fees 11,635
- -------------------------------------------------------------------------------
Administrative services fees 20,197
- -------------------------------------------------------------------------------
Directors' fees and expenses 3,564
- -------------------------------------------------------------------------------
Organizational costs 1,518
- -------------------------------------------------------------------------------
Other 20,423
- -------------------------------------------------------------------------------
Total expenses 186,162
- -------------------------------------------------------------------------------
Net investment income 1,592,656
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,592,656
===============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
83
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,592,656 $ 3,207,475
- ----------------------------------------------------------------------------
Net realized gain on sales of investment
securities -- 16,294
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,592,656 3,223,769
- ----------------------------------------------------------------------------
Distributions to shareholders from net investment
income (1,592,656) (3,207,475)
- ----------------------------------------------------------------------------
Net increase (decrease) from capital stock
transactions (1,020,089) (1,992,555)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets (1,020,089) (1,976,261)
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 63,529,493 65,505,754
- ----------------------------------------------------------------------------
End of period $62,509,404 $63,529,493
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $62,509,347 $63,529,436
- ----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities 57 57
- ----------------------------------------------------------------------------
$62,509,404 $63,529,493
============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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 and variable life insurance policies.
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. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. 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.
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 $846 which expires, if not previously utilized,
in the year 2003. The Fund cannot distribute capital gains to shareholders
until the tax loss carryforwards have been utilized.
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.
AIM V.I. MONEY MARKET FUND
84
<PAGE>
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 six months ended June 30, 1997, AIM was reimbursed $20,197 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 six months ended June 30, 1997, the Fund incurred legal fees of
$2,509 for services rendered by Kramer, Levin, Naftalis & 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 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1997 and the year ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold 41,956,384 $ 41,956,384 76,145,573 $ 76,145,573
- ---------------------- ----------- ------------ ----------- ------------
Issued as reinvestment
of distributions 1,592,656 1,592,656 3,207,475 3,207,475
- ---------------------- ----------- ------------ ----------- ------------
Reacquired (44,569,129) $(44,569,129) (81,345,603) $(81,345,603)
- ---------------------- ----------- ------------ ----------- ------------
(1,020,089) $ (1,020,089) (1,992,555) $ (1,992,555)
=========== ============ =========== ============
</TABLE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
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>
DECEMBER 31, JANUARY 31,
JUNE 30, ---------------- -------------------
1997 1996 1995 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.02 0.05 0.05 0.04 0.02
- ----------------------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.02) (0.05) (0.05) (0.04) (0.02)
- ----------------------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ======= ======= ======= ======= =======
Total return 5.00%(a) 4.97% 5.69%(a) 3.98% 2.27%(a)
- ----------------------- ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period
(000s omitted) $62,509 $63,529 $65,506 $31,017 $13,891
- ----------------------- ======= ======= ======= ======= =======
Ratio of expenses to
average net assets 0.58%(b) 0.55% 0.53%(a) 0.63%(c) 0.95%(a)(d)
- ----------------------- ======= ======= ======= ======= =======
Ratio of net investment
income to average net
assets 4.95%(b) 4.84% 5.40%(a) 4.14%(c) 2.29%(a)(d)
- ----------------------- ======= ======= ======= ======= =======
</TABLE>
(a) Annualized.
(b) Ratios are annualized and based on average net assets of $64,946,153.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average net assets prior to fee waivers and/or
expense reimbursements are 0.70% and 4.07%, respectively.
(d) After fee waivers and/or expense reimbusements. Annualized ratios of
expenses and net investment income to average net assets prior to fee
waivers and/or expense reimbursements are 1.53% and 1.70%, respectively.
AIM V.I. MONEY MARKET FUND
85
<PAGE>
SUPPLEMENTAL PROXY INFORMATION--SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES WITHHOLD/
DIRECTOR/MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------- --------- ------- -----------
<S> <C> <C> <C>
(1) Charles T. Bauer............................. 138,450,525 N/A 3,241,923
Bruce L. Crockett............................ 138,630,018 N/A 3,062,431
Owen Daly II................................. 138,241,309 N/A 3,451,139
Carl Frischling.............................. 138,615,279 N/A 3,077,169
Robert H. Graham............................. 138,641,752 N/A 3,050,695
John F. Kroeger.............................. 138,250,777 N/A 3,441,671
Lewis F. Pennock............................. 138,618,633 N/A 3,073,814
Ian W. Robinson.............................. 138,281,116 N/A 3,411,332
Louis S. Sklar............................... 138,611,786 N/A 3,080,663
(2) Approval of new Investment Advisory
Agreement................................... 57,802,293 304,066 3,825,213
(3) Elimination of policy restricting
investments in other investment companies... 54,592,044 1,045,699 6,293,828
(4) Tait, Weller & Baker......................... 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. MONEY MARKET FUND
86
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
FUND PRODUCES SOLID RETURNS THOUGH MARKET'S RISE MAKES VALUE STOCKS HARD TO FIND
A roundtable discussion with the Fund management team for AIM V.I. Value Fund
for the six-month reporting period ended June 30, 1997.
- --------------------------------------------------------------------------------
<S> <C> <C>
Q. IT HAS BEEN A TOUGH MARKET FOR are firms drawing a significant portion of For example, we increased our holdings
VALUE-BIASED INVESTORS. HOW DID AIM their revenue and earnings from abroad. of American International Group, Inc.,
V.I. VALUE FUND PERFORM DURING THE Such companies won't be hit too hard if (AIG) the largest property/casualty
REPORTING PERIOD? the U.S. economy slows, as it appears insurer in the U.S. AIG operates
A. We are pleased with the Fund's to be doing. worldwide, receiving about 50 percent
total return of 15.96% for the six of revenues from overseas, including
months ended June 30, compared to the Q. WHY ARE YOU FOCUSED ON COMPANIES Eastern Europe, where it is expanding
15.40% return posted by the Lipper THAT ARE LESS SENSITIVE TO THE ECONOMY'S operations. In May the company
Growth Fund Index for the period. The PERFORMANCE? declared a three-for-two stock split.
Fund performed particularly well during A. When we look at the individual
the second quarter of the year. For the companies we follow, the earnings Q. AND WHAT KINDS OF OPPORTUNITIES DID
three months ended June 30, its total projections for them, and the prices YOU FIND IN HEALTH-CARE STOCKS?
return was 17.30%. their stocks command, the best bargains A. We found some good values among
have been in those defensive areas patient-care providers, especially
Q. WHAT WERE THE MARKET CONDITIONS because the markets aren't pricing physician practice management firms
DURING THE FIRST HALF OF 1997? much risk of an economic slowdown and HMOs. Both groups are pressured by
A. The stock market confounded into equities. the stress on controlling health-care
predictions, rising more than anyone had Seven years into an economic costs and by concern about changes in
anticipated. As 1996 closed, many expansion, it seems natural to assume Medicare reimbursement. We believe
observers were cautioning investors about the economy could cool, either patient care providers offer an
inflated expectations of double-digit naturally or because the Federal excellent long-term opportunity, and
returns for a third year in a row. Reserve Board nudges it into a such stocks composed 8.28% of the
Yet six months into 1997, both the slowdown. Fed Chairman Alan portfolio as of June 30, 1997.
S&P 500 and the narrower Dow were up more Greenspan has repeatedly made clear
than 20%. There was a near correction that he would encourage the economy to
from mid-March to mid-April, when the Dow cool off by raising rates at the first
Jones Industrial Average lost 9.8% of sign of serious inflation.
its value, but the markets recovered
swiftly and completely. Q. WHAT IS YOUR OPINION ON THE
FINANCIAL SECTOR?
Q. HOW DID YOU MANAGE THE FUND IN SUCH A. In an environment where we are
A VOLATILE MARKET? concerned about growing consumer debt
A. We took advantage of the spring burden and possible credit problems, we
selloff to add to our favorite holdings are very selective. Our holdings are
while prices were down. We were able to more in insurance, mortgage agencies,
find stocks with relatively good and, to a lesser extent, banks.
valuations and consistent earnings that Insurance has been an area of particular
are less sensitive to the overall U.S. focus because valuations there have not
economy, including selected financial risen as much as growth rates for many
firms and companies in the pharmaceutical insurers might warrant.
and health-care industries. A number
</TABLE>
_____________________________
We took advantage of
the spring selloff
to add to
our favorite holdings
while prices were down.
_____________________________
AIM V.I. VALUE FUND
87
<PAGE>
<TABLE>
<S> <C> <C>
Pharmaceutical companies-almost 9% drop. Nevertheless, the Fund still However, many market participants
of the portfolio-are bringing a steady provides considerable asset are voicing worry about the exceptional
stream of new products to market and diversification, which AIM believes rise in stock valuations during the
reporting very healthy earnings growth is a prime tool for dealing with market past two and one-half years. The New York
at prices we find reasonable. We own volatility. Times has called this "a market
very well-known names, among them oblivious to gravity." Some caution
Bristol-Myers Squibb, SmithKline Q. WHAT IS YOUR MARKET OUTLOOK? seems advisable.
Beecham, and Novartis. A. A climate of confidence prevailed We will continue to focus on the
at the close of the reporting period. areas where we find opportunities; right
Q. HAS IT BEEN DIFFICULT TO FIND The rate of economic growth may have now that is in stocks not very sensitive
STOCKS TO ADD TO THE PORTFOLIO? slowed from the dramatic 4.9% annualized to the overall economy. We are not
A. Yes. We had 129 holdings in the rate logged during the first quarter of predicting a downturn, though one seems
portfolio at the close of the reporting 1997, but there are no signs of a inevitable. We are simply going where
period, down from 175 holdings six serious downturn. And corporate earnings the earnings growth and valuations
months ago. So the number of stocks continue to outstrip analysts' forecasts. lead us.
that fit our criteria continues to
Top 10 Holdings Growth of a $10,000 Investment
As of 6/30/97, based on total net assets From 5/5/93-6/30/97
1. WorldCom, Inc. 5.22% AIM V.I. Value Fund S&P 500 Stock Index Lipper Growth Funds Index
2. Columbia/HCA Healthcare (In thousands)
Corp. 4.21 5/5/93 $10,000 $10,000 $10,000
3. American International 7/30/93 10,690 10,155 10,417
Group, Inc. 3.98 10/29/93 11,370 10,675 11,111
4. Baxter International Inc. 3.75 1/31/94 12,193 11,062 11,564
5. Federal National Mortgage 4/29/94 11,793 10,430 10,930
Assn. 3.33 7/29/94 11,592 10,681 10,906
6. Citicorp 3.27 10/31/94 12,163 11,088 11,338
7. Allstate Corp. (The) 3.18 1/31/95 11,945 11,123 11,042
8. Philip Morris Companies, 4/28/95 13,400 12,247 12,131
Inc. 3.04 7/31/95 15,833 13,462 13,691
9. Bristol-Myers Squibb Co. 2.99 10/31/95 16,146 14,011 14,057
10. International Business 1/31/96 16,346 15,412 14,946
Machines 2.95 4/30/96 16,750 15,937 15,634
7/31/96 16,387 15,678 14,904
Please keep in mind that the Fund's 10/31/96 17,862 17,376 16,437
portfolio composition is subject to 12/31/96 18,721 18,344 17,145
change and there is no assurance 6/30/97 21,709 19,785 22,120
the Fund will continue to hold
any particular security. AVERAGE ANNUAL TOTAL Return Past performances cannot guarantee
As of 6/30/97 comparable future results.
1 Year 26.25%
Inception (5/5/93) 20.52
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--Registered Trademark--.
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--Registered
Trademark--.
The Dow Jones Industrial Average (DJIA) is an unmanaged composite of the
performance of 30 large-company stocks.
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 shown are for the
period 4/30/94 to 6/30/97.
An investment cannot be made in any indexes listed. Index results include
reinvested dividends.
</TABLE>
AIM V.I. VALUE FUND
88
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 78.14%
AEROSPACE/DEFENSE - 0.04%
Boeing Co. (The) 3,900 $ 206,944
- -------------------------------------------------------------
AIRLINES - 0.31%
AMR Corp.(a) 18,000 1,665,000
- -------------------------------------------------------------
BANKING - 1.13%
BankBoston Corp. 21,000 1,513,312
- -------------------------------------------------------------
First American Corp. 30,900 1,185,787
- -------------------------------------------------------------
Summit Bancorp 3,900 195,488
- -------------------------------------------------------------
Union Planters Corp. 31,100 1,613,313
- -------------------------------------------------------------
US Bancorp 24,000 1,539,000
- -------------------------------------------------------------
6,046,900
- -------------------------------------------------------------
BANKING (MONEY CENTER) - 6.96%
BankAmerica Corp. 240,000 15,495,000
- -------------------------------------------------------------
Chase Manhattan Corp. 45,000 4,367,812
- -------------------------------------------------------------
Citicorp 145,600 17,553,893
- -------------------------------------------------------------
37,416,705
- -------------------------------------------------------------
BIOTECHNOLOGY - 1.04%
Amgen, Inc.(a)(b) 34,900 2,028,562
- -------------------------------------------------------------
Biogen, Inc.(a) 105,300 3,567,037
- -------------------------------------------------------------
5,595,599
- -------------------------------------------------------------
CHEMICALS - 0.23%
Monsanto Co. 29,000 1,248,813
- -------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.20%
IMC Global, Inc. 30,900 1,081,500
- -------------------------------------------------------------
COMPUTER MAINFRAMES - 2.95%
International Business Machines Corp. 176,000 15,873,000
- -------------------------------------------------------------
COMPUTER MINI/PCS - 2.35%
Compaq Computer Corp.(a) 47,000 4,664,750
- -------------------------------------------------------------
Dell Computer Corp.(a)(b) 18,000 2,113,875
- -------------------------------------------------------------
Sun Microsystems, Inc.(a)(b) 157,000 5,843,344
- -------------------------------------------------------------
12,621,969
- -------------------------------------------------------------
COMPUTER NETWORKING - 0.74%
Comverse Technology, Inc.(a) 21,400 1,112,800
- -------------------------------------------------------------
3Com Corp.(a) 64,000 2,880,000
- -------------------------------------------------------------
3,992,800
- -------------------------------------------------------------
COMPUTER PERIPHERALS - 0.24%
Seagate Technology, Inc.(a) 15,500 545,406
- -------------------------------------------------------------
Western Digital Corp.(a) 23,100 730,537
- -------------------------------------------------------------
1,275,943
- -------------------------------------------------------------
MARKET
SHARES VALUE
COMPUTER SOFTWARE/SERVICES - 1.86%
American Management Systems, Inc.(a) 63,200 $ 1,690,600
- -------------------------------------------------------------------
Computer Associates International, Inc. 111,000 6,181,312
- -------------------------------------------------------------------
Compuware Corp.(a) 15,000 716,250
- -------------------------------------------------------------------
National Data Corp. 11,000 476,438
- -------------------------------------------------------------------
Network General Corp.(a) 6,600 98,175
- -------------------------------------------------------------------
Wallace Computer Services, Inc. 27,800 835,743
- -------------------------------------------------------------------
9,998,518
- -------------------------------------------------------------------
CONGLOMERATES - 0.83%
Corning Inc. 46,000 2,558,750
- -------------------------------------------------------------------
Loews Corp. 19,000 1,902,375
- -------------------------------------------------------------------
4,461,125
- -------------------------------------------------------------------
ELECTRIC POWER - 1.06%
Allegheny Power System, Inc. 69,000 1,841,438
- -------------------------------------------------------------------
American Electric Power Co. 77,500 3,255,000
- -------------------------------------------------------------------
DQE, Inc. 21,000 593,250
- -------------------------------------------------------------------
5,689,688
- -------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.07%
Symbol Technologies, Inc. 10,800 363,150
- -------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT) - 2.06%
Merrill Lynch & Co., Inc. 186,000 11,090,250
- -------------------------------------------------------------------
FINANCE (CONSUMER CREDIT) - 4.83%
Federal Home Loan Mortgage Corp. 100,000 3,437,500
- -------------------------------------------------------------------
Federal National Mortgage Association 410,000 17,886,250
- -------------------------------------------------------------------
Student Loan Marketing Association 36,300 4,610,100
- -------------------------------------------------------------------
25,933,850
- -------------------------------------------------------------------
FINANCE (SAVINGS & LOAN) - 0.68%
Great Western Financial Corp. 9,800 526,750
- -------------------------------------------------------------------
Washington Mutual, Inc. 52,000 3,107,000
- -------------------------------------------------------------------
3,633,750
- -------------------------------------------------------------------
FOOD/PROCESSING - 1.23%
Interstate Bakeries Corp. 27,000 1,601,438
- -------------------------------------------------------------------
Nabisco Holdings Corp. - Class A 126,000 5,024,250
- -------------------------------------------------------------------
6,625,688
- -------------------------------------------------------------------
FUNERAL SERVICES - 1.95%
Service Corp. International 205,000 6,739,375
- -------------------------------------------------------------------
Stewart Enterprises, Inc. - Class A 89,000 3,738,000
- -------------------------------------------------------------------
10,477,375
- -------------------------------------------------------------------
GAS DISTRIBUTION - 0.07%
NorAm Energy Corp. 23,100 352,275
- -------------------------------------------------------------------
</TABLE>
AIM V.I. VALUE FUND
89
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (LIFE & HEALTH) - 0.83%
Conseco Inc. 28,600 $ 1,058,200
- --------------------------------------------------------------------
Provident Companies, Inc. 42,000 2,247,000
- --------------------------------------------------------------------
ReliaStar Financial Corp. 16,000 1,170,000
- --------------------------------------------------------------------
4,475,200
- --------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY) - 12.12%
Ace, Ltd. 53,200 3,930,150
- --------------------------------------------------------------------
Aetna Inc. 41,700 4,269,037
- --------------------------------------------------------------------
Allstate Corp. 234,000 17,082,000
- --------------------------------------------------------------------
American International Group, Inc. 143,000 21,360,625
- --------------------------------------------------------------------
Chubb Corp. 12,000 802,500
- --------------------------------------------------------------------
CIGNA Corp. 17,000 3,017,500
- --------------------------------------------------------------------
Exel Ltd. 74,000 3,903,500
- --------------------------------------------------------------------
Hartford Financial Services Group Inc. (The) 55,700 4,609,175
- --------------------------------------------------------------------
MBIA, Inc. 18,700 2,109,594
- --------------------------------------------------------------------
Progressive Corp. 31,000 2,697,000
- --------------------------------------------------------------------
Transatlantic Holdings, Inc. 11,500 1,141,375
- --------------------------------------------------------------------
Travelers Property Casualty Corp. - Class A 4,700 187,412
- --------------------------------------------------------------------
65,109,868
- --------------------------------------------------------------------
LEISURE & RECREATION - 1.29%
Callaway Golf Co. 38,000 1,349,000
- --------------------------------------------------------------------
Carnival Corp. - Class A 135,000 5,568,750
- --------------------------------------------------------------------
6,917,750
- --------------------------------------------------------------------
MEDICAL (DRUGS) - 3.94%
American Home Products Corp. 42,000 3,213,000
- --------------------------------------------------------------------
Bristol-Myers Squibb Co. 198,000 16,038,000
- --------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 67,060 1,923,784
- --------------------------------------------------------------------
21,174,784
- --------------------------------------------------------------------
MEDICAL (PATIENT SERVICES) - 8.28%
Columbia/HCA Healthcare Corp. 575,000 22,604,687
- --------------------------------------------------------------------
Health Care and Retirement Corp.(a) 38,400 1,281,600
- --------------------------------------------------------------------
MedPartners, Inc.(a) 391,530 8,466,836
- --------------------------------------------------------------------
PhyCor, Inc.(a) 22,500 774,844
- --------------------------------------------------------------------
Quorum Health Group, Inc.(a) 21,000 750,750
- --------------------------------------------------------------------
Tenet Healthcare Corp.(a) 215,000 6,355,938
- --------------------------------------------------------------------
United Healthcare Corp. 82,000 4,264,000
- --------------------------------------------------------------------
44,498,655
- --------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS - 4.58%
Baxter International Inc. 386,000 20,168,500
- --------------------------------------------------------------------
Boston Scientific Corp.(a) 34,000 2,088,875
- --------------------------------------------------------------------
Hillenbrand Industries, Inc. 22,000 1,045,000
- --------------------------------------------------------------------
Sybron International Corp.(a) 33,000 1,315,875
- --------------------------------------------------------------------
24,618,250
- --------------------------------------------------------------------
MARKET
SHARES VALUE
NATURAL GAS PIPELINE - 0.86%
El Paso Natural Gas Co. 73,100 $ 4,020,500
- -------------------------------------------------------------------------
Williams Companies, Inc. (The) 13,400 586,250
- -------------------------------------------------------------------------
4,606,750
- -------------------------------------------------------------------------
OIL & GAS (REFINING/MARKETING) - 0.48%
Tosco Corp. 85,480 2,559,058
- -------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES - 2.29%
Baker Hughes, Inc. 105,000 4,062,188
- -------------------------------------------------------------------------
BJ Services Co.(a) 43,000 2,305,875
- -------------------------------------------------------------------------
Cooper Cameron Corp.(a) 46,000 2,150,500
- -------------------------------------------------------------------------
Diamond Offshore Drilling, Inc.(a) 4,200 327,075
- -------------------------------------------------------------------------
Noble Drilling Corp.(a) 74,000 1,669,625
- -------------------------------------------------------------------------
Rowan Companies, Inc.(a) 15,500 436,906
- -------------------------------------------------------------------------
Tidewater, Inc. 31,000 1,364,000
- -------------------------------------------------------------------------
12,316,169
- -------------------------------------------------------------------------
RETAIL (FOOD & DRUG) - 0.39%
Kroger Co.(a) 72,500 2,102,500
- -------------------------------------------------------------------------
RETAIL (STORES) - 0.49%
Dayton Hudson Corp. 50,000 2,659,375
- -------------------------------------------------------------------------
SEMICONDUCTORS - 0.77%
Intel Corp. 14,000 1,985,379
- -------------------------------------------------------------------------
National Semiconductor Corp.(a) 70,000 2,143,750
- -------------------------------------------------------------------------
4,129,129
- -------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.58%
Lucent Technologies, Inc. 43,000 3,098,688
- -------------------------------------------------------------------------
TELEPHONE - 5.39%
Cincinnati Bell, Inc. 28,000 882,000
- -------------------------------------------------------------------------
WorldCom, Inc.(a) 877,019 28,064,608
- -------------------------------------------------------------------------
28,946,608
- -------------------------------------------------------------------------
TOBACCO - 5.02%
DIMON, Inc. 43,600 1,155,400
- -------------------------------------------------------------------------
Philip Morris Companies, Inc. 368,000 16,330,000
- -------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 288,000 9,504,000
- -------------------------------------------------------------------------
26,989,400
- -------------------------------------------------------------------------
Total Domestic Common Stocks 419,853,026
- -------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 15.89%
AUSTRALIA - 0.36%
Westpac Banking Corp., Ltd. (Banking) 322,163 1,940,493
- -------------------------------------------------------------------------
BRAZIL - 0.59%
Uniao de Banco Brasiliero S.A. - GDR (Banking)(a) 86,000 3,192,750
- -------------------------------------------------------------------------
CANADA - 3.70%
Bank of Montreal (Banking) 60,000 2,341,866
- -------------------------------------------------------------------------
Canadian National Railway Co. (Railroads) 63,800 2,791,250
- -------------------------------------------------------------------------
</TABLE>
AIM V.I. VALUE FUND
90
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA - (CONTINUED)
CanWest Global Communications Corp.
(Advertising/Broadcasting) 7,400 $ 109,613
- -----------------------------------------------------------------------------
Newbridge Networks Corp. (Computer Networking)(a) 51,400 2,235,900
- -----------------------------------------------------------------------------
Potash Corp. of Saskatchewan Inc. (Fertilizers) 14,400 1,080,900
- -----------------------------------------------------------------------------
Royal Bank of Canada (Banking) 250,000 11,323,726
- -----------------------------------------------------------------------------
19,883,255
- -----------------------------------------------------------------------------
DENMARK - 0.26%
Novo Nordisk A/S (Medical-Drugs) 13,000 1,417,491
- -----------------------------------------------------------------------------
FINLAND - 0.60%
Nokia Oy A.B. - Class A - ADR (Telecommunications) 44,000 3,245,000
- -----------------------------------------------------------------------------
GERMANY - 0.41%
Bayerische Hypotheken-und Wechsel-Bank A.G. (Banking) 75,000 2,242,561
- -----------------------------------------------------------------------------
HONG KONG - 0.45%
HSBC Holdings PLC (Banking) 80,000 2,406,000
- -----------------------------------------------------------------------------
ITALY - 1.02%
Credito Italiano S.p.A. (Banking) 1,200,000 2,193,731
- -----------------------------------------------------------------------------
Istituto Mobiliare Italiano S.p.A. (Banking) 185,000 1,655,842
- -----------------------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 504,150 1,618,138
- -----------------------------------------------------------------------------
5,467,711
- -----------------------------------------------------------------------------
NETHERLANDS - 0.33%
VNU-Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit (Publishing) 80,000 1,768,811
- -----------------------------------------------------------------------------
NORWAY - 0.12%
Storebrand A.S.A (Insurance-Multi-Line Property)(a) 106,350 634,107
- -----------------------------------------------------------------------------
PHILIPPINES - 0.16%
C & P Homes, Inc. (Home Building) 402,000 150,887
- -----------------------------------------------------------------------------
Filinvest Land Inc. (Home Building)(a) 793,500 198,556
- -----------------------------------------------------------------------------
Metro Pacific Corp. (Real Estate) 2,348,000 507,416
- -----------------------------------------------------------------------------
856,859
- -----------------------------------------------------------------------------
SPAIN - 0.03%
Banco Popular Espanol S.A. (Banking) 620 151,897
- -----------------------------------------------------------------------------
SWEDEN - 1.90%
Nordbanken A.B. (Banking) 73,500 2,479,930
- -----------------------------------------------------------------------------
Sparbanken Sverige A.B. - Class A (Banking) 190,000 4,224,679
- -----------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson - ADR
(Telecommunications) 85,000 3,346,875
- -----------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson - Class B
(Telecommunications) 4,000 157,455
- -----------------------------------------------------------------------------
10,208,939
- -----------------------------------------------------------------------------
SWITZERLAND - 2.24%
Novartis A.G. (Medical-Drugs)(a) 7,520 12,021,699
- -----------------------------------------------------------------------------
UNITED KINGDOM - 3.72%
Granada Group PLC (Leisure & Recreation) 222,750 $ 2,930,472
- --------------------------------------------------------------------------
Ladbroke Group PLC (Hotels/Motels) 250,000 978,364
- --------------------------------------------------------------------------
Railtrack Group PLC (Railroads) 125,000 1,302,057
- --------------------------------------------------------------------------
Reed International PLC (Publishing) 107,350 1,040,442
- --------------------------------------------------------------------------
SmithKline Beecham PLC-ADR (Medical-Drugs) 143,000 13,102,375
- --------------------------------------------------------------------------
Standard Chartered PLC (Finance-Asset Management) 39,900 608,641
- --------------------------------------------------------------------------
19,962,351
- --------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 85,399,924
- --------------------------------------------------------------------------
DOMESTIC PREFERRED STOCKS - 0.31%
INSURANCE (LIFE & HEALTH) - 0.09%
Conseco Inc. - $4.278 Conv. PRIDES 3,600 467,100
- --------------------------------------------------------------------------
TELEPHONE - 0.22%
WorldCom, Inc. - $2.68 Conv. Preferred 10,400 1,172,600
- --------------------------------------------------------------------------
Total Domestic Preferred Stocks 1,639,700
- --------------------------------------------------------------------------
PRINCIPAL
U.S. TREASURY SECURITIES - 1.17% AMOUNT
U.S. TREASURY BILLS - 1.17%(c)
5.31%, 01/08/98 $6,500,000 6,324,825
- --------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 4.17%(d)
Smith Barney, Inc., 6.05%, 07/01/97(e) 17,813,551 17,813,551
- --------------------------------------------------------------------------
UBS Securities LLC, 6.10%, 07/01/97(f) 4,584,399 4,584,399
==========================================================================
Total Repurchase Agreements 22,397,950
- --------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.68% 535,615,425
- --------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.32% 1,700,687
- --------------------------------------------------------------------------
NET ASSETS - 100.00% $537,316,112
==========================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
(a) Non-income producing security.
(b) A portion of these securities are subject to call options written. See
Note 7.
(c) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at
the time of purchase by the Fund.
(d) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value as being 102% of the sales
price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$200,033,611. Collateralized by $369,338,000 U.S. Government obligations,
0% to 10.70% due 09/15/97 to 07/15/43 with an aggregate market value at
06/30/97 of $204,000,115.
(f) Joint repurchase agreement entered into 06/30/97 with a maturing value of
$300,050,833. Collateralized by $320,816,334 U.S. Government obligations,
0% to 13.25% due 07/14/97 to 04/01/27 with an aggregate market value at
06/30/97 of $306,003,435.
Investment Abbreviations:
ADR- American Depository Receipt
GDR- Global Depository Receipt
Conv.- Convertible
PRIDES- Preferred Redeemable Increased Dividend Equity Security
See Notes to Financial Statements.
AIM V.I. VALUE FUND
91
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $441,439,458) $535,615,425
- ----------------------------------------------------------------------
Foreign currencies, at market value (cost $2,209,496) 2,212,318
- ----------------------------------------------------------------------
Receivables for:
Investments sold 5,703,216
- ----------------------------------------------------------------------
Capital stock sold 469,922
- ----------------------------------------------------------------------
Dividends and interest 725,445
- ----------------------------------------------------------------------
Investment for deferred compensation plan 14,006
- ----------------------------------------------------------------------
Organizational costs, net 2,410
- ----------------------------------------------------------------------
Other assets 37,480
- ----------------------------------------------------------------------
Total assets 544,780,222
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 6,946,695
- ----------------------------------------------------------------------
Capital stock reacquired 27,299
- ----------------------------------------------------------------------
Options written 126,000
- ----------------------------------------------------------------------
Deferred compensation 14,006
- ----------------------------------------------------------------------
Accrued advisory fees 267,143
- ----------------------------------------------------------------------
Accrued directors' fees 1,912
- ----------------------------------------------------------------------
Accrued administrative services fees 4,696
- ----------------------------------------------------------------------
Accrued operating expenses 76,359
- ----------------------------------------------------------------------
Total liabilities 7,464,110
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $537,316,112
======================================================================
CAPITAL SHARES, $.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 26,505,762
- ----------------------------------------------------------------------
Net asset value, offering and redemption price per share $20.27
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $141,970 foreign withholding tax) $ 3,309,571
- ----------------------------------------------------------------------------
Interest 873,665
- ----------------------------------------------------------------------------
Total investment income 4,183,236
- ----------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,354,190
- ----------------------------------------------------------------------------
Custodian fees 69,479
- ----------------------------------------------------------------------------
Administrative service fees 27,990
- ----------------------------------------------------------------------------
Directors' fees and expenses 4,328
- ----------------------------------------------------------------------------
Organizational costs 1,446
- ----------------------------------------------------------------------------
Other 54,056
- ----------------------------------------------------------------------------
Total expenses 1,511,489
- ----------------------------------------------------------------------------
Less: Expenses paid indirectly (1,315)
- ----------------------------------------------------------------------------
Net expenses 1,510,174
- ----------------------------------------------------------------------------
Net investment income 2,673,062
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 21,039,999
- ----------------------------------------------------------------------------
Foreign currencies 17,470
- ----------------------------------------------------------------------------
Option contracts 431,241
- ----------------------------------------------------------------------------
21,488,710
- ----------------------------------------------------------------------------
Unrealized appreciation of:
Investment securities 44,166,789
- ----------------------------------------------------------------------------
Foreign currencies 28,371
- ----------------------------------------------------------------------------
Option contracts 245,043
- ----------------------------------------------------------------------------
44,440,203
- ----------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
option contracts 65,928,913
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $68,601,975
============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. VALUE FUND
92
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1997 and the year ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,673,062 $ 6,092,474
- -----------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and option contracts 21,488,710 19,315,881
- -----------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies and option
contracts 44,440,203 19,921,129
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 68,601,975 45,329,484
- -----------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (1,864,217)
- -----------------------------------------------------------------------------
Distributions to shareholders from realized
capital gains -- (18,073,097)
- -----------------------------------------------------------------------------
Net increase from capital stock transactions 98,978,991 87,131,189
- -----------------------------------------------------------------------------
Net increase in net assets 167,580,966 112,523,359
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 369,735,146 257,211,787
- -----------------------------------------------------------------------------
End of period $537,316,112 $369,735,146
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $394,665,853 $295,686,862
- -----------------------------------------------------------------------------
Undistributed net investment income 8,689,303 6,016,241
- -----------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and
option contracts 39,704,466 18,215,756
- -----------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 94,256,490 49,816,287
- -----------------------------------------------------------------------------
$537,316,112 $369,735,146
=============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
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. 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. Currently, shares of the
Fund are sold only to insurance company separate accounts to fund the benefits
of variable annuity contracts and variable life insurance policies.
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 (except
convertible bonds) 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. 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. 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. Debt
obligations (including convertible bonds) 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. 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
AIM V.I. VALUE FUND
93
<PAGE>
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. Realized gains or
losses on sales 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 the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. 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.
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.
G. 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 currency 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.
H. 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 "market-to-market" to reflect the current market
value of the option written. The current market value of a written option
is 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.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services to the Fund.
During the six months ended June 30, 1997, AIM was reimbursed $27,990 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.
AIM V.I. VALUE FUND
94
<PAGE>
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the six months ended June 30, 1997, the Fund incurred legal fees of
$2,994 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of
the Fund's expenses related to pricing services used by the Fund. For the six
months ended June 30, 1997, the Fund's expenses were reduced by $186 and the
Fund received reductions in custodian fees of $1,129 under expense offset
arrangements. The effect of the above arrangements resulted in reductions of
the Fund's total expenses of $1,315 during the six months ended June 30, 1997.
NOTE 4 - 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 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the six months ended June 30, 1997 was
$349,303,797 and $227,229,750, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1997 is as follows:
Aggregate unrealized appreciation of investment securities $96,065,397
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,924,490)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $94,140,907
==========================================================================
Cost of investments for tax purposes is $441,474,518.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1997 and the year ended December 31, 1996:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold 5,897,024 $108,832,318 5,143,694 $86,219,671
- ------------------------- --------- ------------ ---------- -----------
Issued as reinvestment of
distributions -- -- 1,179,025 19,937,315
- ------------------------- --------- ------------ ---------- -----------
Reacquired (543,601) (9,853,327) (1,140,219) (19,025,797)
- ------------------------- --------- ------------ ---------- -----------
5,353,423 $ 98,978,991 5,182,500 $87,131,189
========= ============ ========== ===========
</TABLE>
NOTE 7 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended June 30,
1997 are summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
--------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of period 3,487 $1,119,905
Written 1,898 886,993
Closed (1,270) (510,837)
Exercised (510) (259,895)
Expired (3,145) (1,013,426)
------ ----------
End of period 460 $ 222,740
====== ==========
</TABLE>
Open call option contracts written at June 30, 1997 were as follows:
<TABLE>
<CAPTION>
CONTRACT STRIKE NUMBER OF PREMIUM JUNE 30, 1997 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- -------- ------ --------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Amgen, Inc. Jul 65 200 $ 69,398 $ 3,750 $65,648
Dell Computer Corp. Aug 115 60 75,507 66,000 9,507
Sun Microsystems, Inc. Jul 35 200 77,835 56,250 21,585
--- -------- -------- -------
460 $222,740 $126,000 $96,740
=== ======== ======== =======
</TABLE>
AIM V.I. VALUE FUND
95
<PAGE>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1997, the year ended December 31, 1996,
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>
DECEMBER 31, JANUARY 31,
JUNE 30, ------------------ ------------------
1997 1996 1995 1995 1994
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 17.48 $ 16.11 $ 11.83 $ 12.17 $ 10.00
- ------------------------- -------- -------- -------- -------- -------
Income from investment
operations:
Net investment income 0.04 0.30 0.11 0.10 0.02
- ------------------------- -------- -------- -------- -------- -------
Net gains (losses) on
securities (both
realized and
unrealized) 2.75 2.09 4.18 (0.35) 2.17
- ------------------------- -------- -------- -------- -------- -------
Total from investment
operations 2.79 2.39 4.29 (0.25) 2.19
- ------------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income -- (0.10) (0.01) (0.09) (0.02)
- ------------------------- -------- -------- -------- -------- -------
Distributions from
realized capital gains -- (0.92) -- -- --
- ------------------------- -------- -------- -------- -------- -------
Total distributions -- (1.02) (0.01) (0.09) (0.02)
- ------------------------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 20.27 $ 17.48 $ 16.11 $ 11.83 $ 12.17
- ------------------------- -------- -------- -------- -------- -------
Total return(a) 15.96% 15.02% 36.25% (2.03)% 21.94%
- ------------------------- -------- -------- -------- -------- -------
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $537,316 $369,735 $257,212 $109,257 $38,255
- ------------------------- -------- -------- -------- -------- -------
Ratio of expenses to
average net assets 0.70%(b)(c) 0.73% 0.75%(d) 0.82% 1.00%(d)(e)
- ------------------------- -------- -------- -------- -------- -------
Ratio of net investment
income to average net
assets 1.24%(b) 2.00% 1.11%(d) 1.17% 0.51%(d)(e)
- ------------------------- -------- -------- -------- -------- -------
Portfolio turnover rate 56% 129% 145% 143% 87%
- ------------------------- -------- -------- -------- -------- -------
Average broker commission
rate paid(f) $ 0.0472 $ 0.0429 N/A N/A N/A
- ------------------------- -------- -------- -------- -------- -------
</TABLE>
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are annualized and based on average net assets of $434,454,915.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been
the same.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Annualized ratios of
expenses and net investment income to average net assets prior to fee
waivers and/or expense reimbursements were 1.35% and 0.16%, respectively.
(f) Disclosure requirement beginning with the Fund's fiscal year ended
December 31, 1996.
- -------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION--SHAREHOLDER MEETING
The Annual Meeting of Shareholders of the Company was held on February 7,
1997. The meeting was held for the following purposes:
(1) To elect directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Investment Advisory Agreement between the Company and
AIM.
(3) To approve the elimination of the fundamental investment policy
prohibiting or restricting investments in other investment companies
and/or the amendment of certain related fundamental investment policies.
(4) Ratification of Tait, Weller & Baker as independent accountants for the
Company's fiscal year ending December 31, 1997.
The following votes were cast with respect to each item:
<TABLE>
<CAPTION>
VOTES WITHHOLD/
DIRECTOR/MATTER VOTES FOR AGAINST ABSTENTIONS
- --------------- --------- ------- -----------
<S> <C> <C> <C>
(1) Charles T. Bauer............................. 138,450,525 N/A 3,241,923
Bruce L. Crockett............................ 138,630,018 N/A 3,062,431
Owen Daly II................................. 138,241,309 N/A 3,451,139
Carl Frischling.............................. 138,615,279 N/A 3,077,169
Robert H. Graham............................. 138,641,752 N/A 3,050,695
John F. Kroeger.............................. 138,250,777 N/A 3,441,671
Lewis F. Pennock............................. 138,618,633 N/A 3,073,814
Ian W. Robinson.............................. 138,281,116 N/A 3,411,332
Louis S. Sklar............................... 138,611,786 N/A 3,080,663
(2) Approval of new Investment Advisory
Agreement................................... 18,920,282 318,005 262,558
(3) Elimination of policy restricting
investments in other investment companies... 17,998,855 913,664 588,328
(4) Tait, Weller & Baker......................... 134,067,336 1,753,834 5,851,268
</TABLE>
AIM V.I. VALUE FUND
96
<PAGE>
<TABLE>
<S> <C>
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 Chairman Suite 100
FUNDS, INC. A I M Management Group Inc. Houston, TX 77046
Robert H. Graham (800) 347-1919
Bruce L. Crockett President
Formerly Director, President and INVESTMENT ADVISOR
Chief Executive Officer John J. Arthur
COMSAT Corporation Senior Vice President A I M Advisors, Inc.
and Treasurer 11 Greenway Plaza
Owen Daly II Suite 100
Director Gary T. Crum Houston, TX 77046
Cortland Trust Inc. Senior Vice President
TRANSFER AGENT AND CUSTODIAN
Jack Fields Scott G. Lucas
Formerly Member of the Senior Vice President State Street Bank & Trust Co.
U.S. House of Representatives 225 Franklin Street
Carol F. Relihan Boston, MA 02110
Carl Frischling Vice President and
Partner Secretary COUNSEL TO THE FUNDS
Kramer, Levin, Naftalis & Frankel
Dana R. Sutton Freedman, Levy, Kroll &
Robert H. Graham Vice President and Simonds
President and Chief Executive Officer Assistant Treasurer 1050 Conn. Avenue, N.W.
A I M Management Group Inc. Washington, D.C. 20036
Robert G. Alley
John F. Kroeger Vice President COUNSEL TO THE DIRECTORS
Formerly, Consultant
Wendell & Stockel Associates, Inc. Stuart W. Coco Kramer, Levin, Naftalis
Vice President & Frankel
Lewis F. Pennock 919 Third Avenue
Attorney Melville B. Cox New York, NY 10022
Vice President
Ian W. Robinson DISTRIBUTOR
Consultant; Formerly Executive Karen Dunn Kelley
Vice President and Chief Vice President A I M Distributors, Inc.
Financial Officer Bell 11 Greenway Plaza
Atlantic Management Services, Inc. Jonathan C. Schoolar Suite 100
Vice President Houston, TX 77046
Louis S. Sklar
Executive Vice President P. Michelle Grace
Hines Interests Assistant Secretary
Limited Partnership
David L. Kite
Assistant Secretary
Nancy L. Martin
Assistant Secretary
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
</TABLE>
