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AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. GLOBAL UTILITIES FUND
Supplement dated October 2, 1998
to the Prospectus dated May 1, 1998
The following paragraph replaces the paragraph after the "REVERSE REPURCHASE
AGREEMENTS" section on page 5 of the Prospectus:
Reverse repurchase agreements involve the sale by the Fund of portfolio
securities with an agreement that the Fund will repurchase the
securities at an agreed upon price, date and interest payment. The Fund
may employ reverse repurchase agreements (i) for temporary emergency
purposes, such as to meet unanticipated net redemptions so as to avoid
liquidating other portfolio securities during unfavorable market
conditions; (ii) to cover short-term cash requirements resulting from
the timing of trade settlements; or (iii) to take advantage of market
situations where the interest income to be earned from the investment
of the proceeds of the transaction is greater than the interest expense
of the transaction. At the time it enters into a reverse repurchase
agreement, the Fund will segregate liquid assets having a dollar value
equal to the repurchase price. The Fund may enter into reverse
repurchase agreements in amounts not exceeding 33 1/3% of the value of
its total assets. Reverse repurchase agreements involve the risk that
the market value of securities retained by the Fund in lieu of
liquidation may decline below the repurchase price of the securities
sold by the Fund which it is obligated to repurchase. This risk, if
encountered, could cause a reduction in the net asset value of the
Fund's shares. Reverse repurchase agreements are considered to be
borrowings under the 1940 Act. See "Borrowing" in this Prospectus for
percentage limitations on borrowings.
The following paragraph replaces in its entirety the third paragraph after the
"CERTAIN INVESTMENT STRATEGIES AND TECHNIQUES-FUTURES AND FORWARD CONTRACTS"
section on page 7 of the Prospectus:
In managing its currency exposure, the Fund may buy and sell currencies
either in the spot (cash) market or in the forward market (through
forward contracts generally expiring within one year). The Fund may
also enter into forward contracts with respect to a specific purchase
or sale of a security, or with respect to its portfolio positions
generally. When the Fund purchases a security denominated in a foreign
currency for settlement in the near future, it may immediately purchase
in the forward market the currency needed to pay for and settle the
purchase. By entering into a forward contract with respect to the
specific purchase or sale of a security denominated in a foreign
currency, the Fund can secure an exchange rate between the trade and
settlement dates for that purchase or sale transaction. This practice
is sometimes referred to as "transaction hedging." Positions hedging is
the purchase or sale of foreign currency with respect to portfolio
security positions (or underlying portfolio positions, such as in an
ADR) denominated or quoted in a foreign currency. Unlike futures
contracts, forward contracts are generally individually negotiated and
privately traded. A forward contract obligates the seller to sell a
specific security or currency at a specific price on a future date,
which may be any fixed number of days from the date of the contract.
The Fund may enter into forward contracts for transaction hedging
purposes with respect to all or a substantial portion of their trades.
The Fund will not speculate in foreign exchange nor commit a larger
percentage of its total assets to foreign exchange hedges than the
percentage of its total assets which it could invest in foreign
securities.
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The second full paragraph appearing under the caption "MANAGEMENT - PORTFOLIO
MANAGEMENT" on page 9 of the Prospectus is deleted and replaced in its entirety
by the following:
Claude C. Cody IV, Robert G. Alley, Craig A. Smith, Carolyn L. Gibbs
and Meggan M. Walsh are responsible for the day-to-day management of
the Fund's portfolio securities. Mr. Cody is Vice President of A I M
Capital Management, Inc. ("AIM Capital"), a wholly owned subsidiary of
AIM, and has been responsible for the Fund since its inception in 1994.
He has been associated with AIM and/or its subsidiaries since 1992 and
has been an investment professional since 1976. Mr. Alley is Senior
Vice President of AIM Capital, Vice President of AIM and of the Company
and has been responsible for the Fund since its inception in 1994. He
has been associated with AIM and/or its subsidiaries since 1992 and has
been an investment professional since 1972. Mr. Smith is Vice President
of AIM Capital and has been responsible for the Fund since 1996. He has
been associated with AIM and/or its subsidiaries since 1989 and has
been an investment professional since 1988. Carolyn L. Gibbs is Vice
President of AIM Capital and has been responsible for the Fund since
1998. She has been associated with AIM since 1992 and has been an
investment professional since 1983. Ms. Walsh is Vice President of AIM
Capital and has been responsible for the Fund since 1998. She has been
associated with AIM and/or its subsidiaries since 1991 and has been an
investment professional since 1987.
