<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AIM Variable Insurance Funds, Inc.
AIM V.I. Aggressive Growth Fund............................. 1
AIM V.I. Balanced Fund...................................... 12
AIM V.I. Capital Appreciation Fund.......................... 26
AIM V.I. Capital Development Fund........................... 38
AIM V.I. Diversified Income Fund............................ 49
AIM V.I. Global Utilities Fund.............................. 61
AIM V.I. Government Securities Fund......................... 71
AIM V.I. Growth Fund........................................ 79
AIM V.I. Growth and Income Fund............................. 89
AIM V.I. High Yield Fund.................................... 99
AIM V.I. International Equity Fund.......................... 108
AIM V.I. Money Market Fund.................................. 118
AIM V.I. Value Fund......................................... 123
Directors and Officers of the Funds......................... Inside Back Cover
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
SMALL-CAP STOCK REBOUND BOOSTS
FUND PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID AIM V.I. AGGRESSIVE GROWTH But the Fed left rates unchanged until Q. WHAT IS YOUR OUTLOOK FOR THE
FUND PERFORM DURING THE REPORTING the very close of the reporting period, REMAINDER OF 1999?
PERIOD? and small-cap stocks began to rally A. We continue to be upbeat about the
A. For the six months ended June 30, 1999, during the spring. long-term prospects of small-cap
the fund returned 8.02%, as compared to the stocks. Many smaller companies are
12.82% return of the Russell 2000 Growth Q. DID TECHNOLOGY STOCKS PLAY A enjoying greater earnings growth than are
Index and the 9.43% return of the Lipper ROLE IN THE FUND'S GAINS? their larger counterparts. Moreover,
Small Cap Funds Index. A. The performance of technology most smaller companies transact the
stocks, stellar in 1998, fell off in majority of their business in the
Q. WHAT WERE THE MAJOR TRENDS IN THE the initial months of 1999 as investors United States, and they are thus less
FINANCIAL MARKETS DURING THE REPORTING shifted their focus to other sectors. susceptible to downturns in foreign
PERIOD? Many Internet companies did not meet markets. The strong economic growth in
A. The venerable Dow Jones Industrial our earnings criterion for ownership of the United States could bode well for
Average (the Dow) achieved a milestone their stocks-they had no earnings. Still, the continued profitability of many
on May 3, 1999, when it closed above the we were able to find plenty of technology smaller companies.
11,000 mark for the first time. However, companies with attractive long-term Additionally, small-cap stocks remain
this record-setting performance masked a growth prospects. Alpha Industries, favorably priced in comparison to
very narrow market. The stocks of a the fund's top holding, sells integrated large-cap issues. This could continue to
handful of extremely large firms--the circuits that send and receive radio make them attractive to investors.
so-called "mega-caps"--along with the frequencies to a variety of customers, Regardless of economic trends,
equities of fledgling Internet companies, including wireless-phone manufacturers. we will strive to select the stocks
including several that have yet to The company's net income has soared of smaller companies with outstanding
realize a profit, outperformed over the past year. growth prospects for inclusion in the
other issues by a wide margin. fund's portfolio.
Early in 1999, investors were worried
about a host of economic problems
worldwide, exemplified by the Brazilian PORTFOLIO COMPOSITION
currency crisis in January.
Such uncertainty often leads to what's As of 6/30/99, based on total net assets
called a "flight to quality," and it
did this time. Investors favored stocks TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
of very large companies because of
their relative safety and liquidity. 1. Alpha Industries, Inc. 1.57% 1. Computers (Software & Services) 9.50%
The markets were quite narrow, with 2. Hispanic Broadcasting Corp. 1.28% 2. Electronics (Semiconductors) 7.57%
most of the growth in the first quarter 3. Comverse Technology, Inc. 1.12% 3. Communications Equipment 5.05%
of the year coming from just a handful 4. QLogic Corp. 1.03% 4. Retail (Specialty - Apparel) 4.70%
of stocks. 5. Emulex Corp. 1.01% 5. Services (Data Processing) 4.29%
Markets also fretted about the 6. Applied Micro Circuits Corp. 0.96% 6. Retail (Specialty) 4.27%
Federal Reserve Board (the Fed) 7. Microchip Technology, Inc. 0.92% 7. Health Care (Medical Products 4.12%
raising interest rates to cool off 8. American Eagle Outfitters, Inc. 0.88% & Supplies)
the rapidly growing economy. During the 9. Uniphase Corp. 0.86% 8. Computers (Peripherals) 3.81%
first quarter of 1999, the economy grew 10. CDW Computer Centers, Inc. 0.85% 9. Electrical Equipment 3.18%
at an annualized rate of 4.1%. 10. Electronics (Instrumentation) 2.40%
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND
<PAGE>
[GRAPH APPEARS HERE]
RESULTS OF A $10,000 INVESTMENT
- -------------------------------
5/1/98 - 6/30/99
AVERAGE ANNUAL TOTAL RETURN
As of 6/30/99
Inception (5/1/98) 5.98%
1 Year 10.31%
AIM V.I. RUSSELL LIPPER
AGGRESSIVE 2000 SMALL CAP
(In thousands) GROWTH FUND GROWTH INDEX FUNDS INDEX
------------ ------------ -----------
5/1/98 10,000 10,000 10,000
6/98 9,700 9,481 9,574
9/98 8,090 7,571 9,525
12/98 9,906 8,806 8,917
3/99 9,443 8,328 8,496
6/99 10,700 10,145 9,758
Past performance cannot guarantee
comparable future results.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The performance figures shown represent AIM V.I. Aggressive 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. AIM V.I. Aggressive Growth Fund performance figures are historical
and reflect reinvestment of all distributions and changes in net asset value.
The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost. Had fees and expenses not been waived during the reporting
period, returns would have been lower.
The Dow Jones Industrial Average is a price-weighted average of 30
actively traded primarily industrial stocks. The unmanaged Lipper Small Cap
Funds Index represents an average of the performance of small-capitalization
growth funds. It is compiled by Lipper Inc., an independent mutual-fund
performance monitor. The Russell 2000 Stock Index is an unmanaged index
generally considered representative of small-capitalization stocks. Data for
the Russell 2000 and the Lipper Index are for the period 4/30/93-6/30/99.
An investment cannot be made in any index listed. Unless otherwise
noted, index results include reinvested dividends.
2 AIM V.I. AGGRESSIVE GROWTH FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 88.49%
AIR FREIGHT - 0.35%
Expeditors International of Washington, Inc. 1,000 $ 27,250
- ---------------------------------------------------------------------
AIRLINES - 0.11%
Alaska Air Group, Inc.(a) 200 8,350
- ---------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 1.20%
Gentex Corp.(a) 1,500 42,000
- ---------------------------------------------------------------------
Meritor Automotive, Inc. 1,200 30,600
- ---------------------------------------------------------------------
Tower Automotive, Inc.(a) 800 20,350
- ---------------------------------------------------------------------
92,950
- ---------------------------------------------------------------------
BANKS (REGIONAL) - 2.30%
Bank United Corp. - Class A 1,000 40,187
- ---------------------------------------------------------------------
Community First Bankshares, Inc. 1,500 35,812
- ---------------------------------------------------------------------
First Republic Bank(a) 900 26,044
- ---------------------------------------------------------------------
Southwest Bancorporation of Texas, Inc.(a) 2,300 41,400
- ---------------------------------------------------------------------
Trustmark Corp. 1,500 34,312
- ---------------------------------------------------------------------
177,755
- ---------------------------------------------------------------------
BIOTECHNOLOGY - 0.18%
IDEXX Laboratories, Inc.(a) 600 13,987
- ---------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 1.46%
Hispanic Broadcasting Corp.(a) 1,300 98,637
- ---------------------------------------------------------------------
Radio One, Inc.(a) 300 13,950
- ---------------------------------------------------------------------
112,587
- ---------------------------------------------------------------------
BUILDING MATERIALS - 1.04%
Elcor Corp. 900 39,319
- ---------------------------------------------------------------------
NCI Building Systems, Inc.(a) 600 12,825
- ---------------------------------------------------------------------
Simpson Manufacturing Co., Inc.(a) 600 28,500
- ---------------------------------------------------------------------
80,644
- ---------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.54%
OM Group, Inc. 1,200 41,400
- ---------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 5.05%
Adtran, Inc.(a) 1,100 40,012
- ---------------------------------------------------------------------
ANTEC Corp.(a) 900 28,856
- ---------------------------------------------------------------------
Comverse Technology, Inc.(a) 1,150 86,825
- ---------------------------------------------------------------------
Dycom Industries, Inc.(a) 900 50,400
- ---------------------------------------------------------------------
Harmonic, Inc.(a) 1,000 57,437
- ---------------------------------------------------------------------
Polycom, Inc.(a) 200 7,800
- ---------------------------------------------------------------------
Proxim, Inc.(a) 900 52,200
- ---------------------------------------------------------------------
Uniphase Corp.(a) 400 66,400
- ---------------------------------------------------------------------
389,930
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (HARDWARE) - 1.51%
Genesis Microchip, Inc.(a) 1,100 $ 25,987
- --------------------------------------------------------------------
National Instruments Corp.(a) 1,300 52,487
- --------------------------------------------------------------------
Visual Networks, Inc.(a) 1,200 38,400
- --------------------------------------------------------------------
116,874
- --------------------------------------------------------------------
COMPUTERS (NETWORKING) - 1.70%
Emulex Corp.(a) 700 77,831
- --------------------------------------------------------------------
International Network Services(a) 900 36,337
- --------------------------------------------------------------------
VeriSign, Inc.(a) 200 17,250
- --------------------------------------------------------------------
131,418
- --------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 3.81%
Cybex Computer Products Corp.(a) 1,100 30,662
- --------------------------------------------------------------------
DSP Communications, Inc.(a) 1,500 43,312
- --------------------------------------------------------------------
Jabil Circuit, Inc.(a) 900 40,612
- --------------------------------------------------------------------
Network Applicance, Inc.(a) 400 22,350
- --------------------------------------------------------------------
QLogic Corp.(a) 600 79,200
- --------------------------------------------------------------------
SanDisk Corp.(a) 1,200 54,000
- --------------------------------------------------------------------
Xircom, Inc.(a) 800 24,050
- --------------------------------------------------------------------
294,186
- --------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 8.64%
American Management Systems, Inc.(a) 500 16,031
- --------------------------------------------------------------------
Analytical Surveys, Inc.(a) 400 9,950
- --------------------------------------------------------------------
AVT Corp.(a) 900 34,087
- --------------------------------------------------------------------
Citrix Systems, Inc.(a) 1,000 56,500
- --------------------------------------------------------------------
Concord Communications, Inc.(a) 300 13,500
- --------------------------------------------------------------------
Electronics for Imaging, Inc.(a) 1,200 61,650
- --------------------------------------------------------------------
Gemstar International Group Ltd.(a) 900 58,725
- --------------------------------------------------------------------
InfoCure Corp.(a) 500 26,469
- --------------------------------------------------------------------
ISS Group, Inc.(a) 400 15,100
- --------------------------------------------------------------------
Jack Henry & Associates 400 15,700
- --------------------------------------------------------------------
Macromedia, Inc.(a) 700 24,675
- --------------------------------------------------------------------
Medical Manager Corp.(a) 900 39,825
- --------------------------------------------------------------------
Mercury Interactive Corp.(a) 900 31,837
- --------------------------------------------------------------------
Micromuse, Inc.(a) 500 24,937
- --------------------------------------------------------------------
Peregrine Systems, Inc.(a) 300 7,706
- --------------------------------------------------------------------
QRS Corp.(a) 300 23,400
- --------------------------------------------------------------------
Rational Software Corp.(a) 1,700 55,994
- --------------------------------------------------------------------
ScanSource, Inc.(a) 500 10,812
- --------------------------------------------------------------------
Transaction Systems Architects, Inc.-Class A(a) 600 23,400
- --------------------------------------------------------------------
USWeb Corp.(a) 1,500 33,281
- --------------------------------------------------------------------
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND
3
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES) - CONTINUED
Veritas Software Corp.(a) 650 $ 61,709
- ------------------------------------------------------------------
Verity, Inc.(a) 400 21,675
- ------------------------------------------------------------------
666,963
- ------------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.78%
Action Performance Companies, Inc.(a) 500 16,500
- ------------------------------------------------------------------
Fossil, Inc.(a) 900 43,537
- ------------------------------------------------------------------
60,037
- ------------------------------------------------------------------
CONSUMER FINANCE - 0.50%
AmeriCredit Corp.(a) 1,000 16,000
- ------------------------------------------------------------------
Doral Financial Corp. 1,300 22,425
- ------------------------------------------------------------------
38,425
- ------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.40%
Patterson Dental Co.(a) 900 31,275
- ------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.18%
CommScope, Inc.(a) 1,000 30,750
- ------------------------------------------------------------------
Cree Research, Inc.(a) 700 53,856
- ------------------------------------------------------------------
Electro Scientific Industries, Inc.(a) 100 4,178
- ------------------------------------------------------------------
Oak Industries, Inc.(a) 800 34,950
- ------------------------------------------------------------------
Pinnacle Systems, Inc.(a) 1,300 43,712
- ------------------------------------------------------------------
Sammina Corp.(a) 600 45,525
- ------------------------------------------------------------------
Sawtek, Inc.(a) 600 27,525
- ------------------------------------------------------------------
SLI, Inc.(a) 200 5,400
- ------------------------------------------------------------------
245,896
- ------------------------------------------------------------------
ELECTRONICS (DEFENSE) - 0.56%
Aeroflex, Inc.(a) 2,200 43,450
- ------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 2.40%
Alpha Industries, Inc.(a) 2,550 121,444
- ------------------------------------------------------------------
Waters Corp.(a) 1,200 63,750
- ------------------------------------------------------------------
185,194
- ------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 7.57%
American Xtal Technology, Inc.(a) 600 14,288
- ------------------------------------------------------------------
ANADIGICS, Inc.(a) 1,100 40,700
- ------------------------------------------------------------------
Apex PC Solutions, Inc.(a) 650 13,325
- ------------------------------------------------------------------
Applied Micro Circuits Corp.(a) 900 74,025
- ------------------------------------------------------------------
Burr-Brown Corp.(a) 500 18,312
- ------------------------------------------------------------------
Dallas Semiconductor Corp. 500 25,250
- ------------------------------------------------------------------
Flextronics International, Ltd.(a) 700 38,850
- ------------------------------------------------------------------
Micrel, Inc.(a) 500 37,000
- ------------------------------------------------------------------
Microchip Technology, Inc.(a) 1,500 71,062
- ------------------------------------------------------------------
PMC-Sierra, Inc.(a) 800 47,150
- ------------------------------------------------------------------
SDL, Inc.(a) 900 45,956
- ------------------------------------------------------------------
Semtech Corp.(a) 900 46,912
- ------------------------------------------------------------------
TranSwitch Corp.(a) 600 28,425
- ------------------------------------------------------------------
Unitrode Corp.(a) 1,500 43,031
- ------------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 600 40,463
- ------------------------------------------------------------------
584,749
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ENTERTAINMENT - 0.75%
SFX Entertainment, Inc.-Class A(a) 900 $ 57,600
- ------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 1.73%
Advanced Energy Industries, Inc.(a) 800 32,450
- ------------------------------------------------------------------
Asyst Technologies, Inc.(a) 900 26,944
- ------------------------------------------------------------------
Brooks Automation, Inc.(a) 400 10,825
- ------------------------------------------------------------------
Credence Systems Corp.(a) 700 25,988
- ------------------------------------------------------------------
Etec Systems, Inc.(a) 500 16,625
- ------------------------------------------------------------------
Novellus Systems, Inc.(a) 300 20,475
- ------------------------------------------------------------------
133,307
- ------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.75%
NCO Group, Inc.(a) 600 22,800
- ------------------------------------------------------------------
SEI Investments Co. 400 35,300
- ------------------------------------------------------------------
58,100
- ------------------------------------------------------------------
FOODS - 0.42%
Hain Food Group, Inc. (The)(a) 1,200 24,750
- ------------------------------------------------------------------
United Natural Foods, Inc.(a) 300 7,425
- ------------------------------------------------------------------
32,175
- ------------------------------------------------------------------
FOOTWEAR - 0.36%
K-Swiss, Inc. 600 27,900
- ------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.40%
Station Casinos, Inc.(a) 1,500 30,563
- ------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.09%
Alpharma, Inc.-Class A 1,500 53,344
- ------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 1,200 30,450
- ------------------------------------------------------------------
83,794
- ------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.87%
Health Management Associates, Inc.-Class A(a) 1,500 16,875
- ------------------------------------------------------------------
Province Healthcare Co.(a) 1,100 21,450
- ------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 600 28,650
- ------------------------------------------------------------------
66,975
- ------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.55%
Express Scripts, Inc.-Class A(a) 700 42,131
- ------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 4.12%
Henry Schein, Inc.(a) 1,000 31,688
- ------------------------------------------------------------------
MiniMed, Inc.(a) 500 38,469
- ------------------------------------------------------------------
Osteotech, Inc.(a) 1,750 50,313
- ------------------------------------------------------------------
ResMed, Inc.(a) 800 26,550
- ------------------------------------------------------------------
Sybron International Corp.(a) 1,500 41,344
- ------------------------------------------------------------------
Syncor International Corp.(a) 500 18,000
- ------------------------------------------------------------------
VISX, Inc.(a) 700 55,431
- ------------------------------------------------------------------
Xomed Surgical Products, Inc.(a) 1,150 55,991
- ------------------------------------------------------------------
317,786
- ------------------------------------------------------------------
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND
4
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES) - 1.88%
Advance Paradigm, Inc.(a) 700 $ 42,700
- -----------------------------------------------------------------
Capital Senior Living Group(a) 800 8,000
- -----------------------------------------------------------------
Hooper Holmes, Inc. 1,800 36,675
- -----------------------------------------------------------------
OEC Medical Systems, Inc.(a) 400 9,800
- -----------------------------------------------------------------
Renal Care Group, Inc.(a) 900 23,288
- -----------------------------------------------------------------
Res-Care, Inc.(a) 200 4,550
- -----------------------------------------------------------------
Veterinary Centers of America, Inc.(a) 1,500 20,344
- -----------------------------------------------------------------
145,357
- -----------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.80%
FPIC Insurance Group, Inc.(a) 900 43,650
- -----------------------------------------------------------------
HCC Insurance Holdings, Inc. 800 18,150
- -----------------------------------------------------------------
61,800
- -----------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.63%
Hambrecht & Quist Group(a) 1,300 48,263
- -----------------------------------------------------------------
INVESTMENT MANAGEMENT - 1.27%
Affiliated Managers Group, Inc.(a) 100 3,019
- -----------------------------------------------------------------
Eaton Vance Corp. 1,000 34,438
- -----------------------------------------------------------------
Knight/Trimark Group, Inc.-Class A(a) 1,000 60,313
- -----------------------------------------------------------------
97,770
- -----------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.21%
International Speedway Corp.-Class A 100 4,750
- -----------------------------------------------------------------
Speedway Motorsports, Inc.(a) 300 11,794
- -----------------------------------------------------------------
16,544
- -----------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.25%
Spartech Corp. 600 18,975
- -----------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.32%
Astec Industries, Inc.(a) 600 24,450
- -----------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.35%
Daisytek International Corp.(a) 1,649 26,899
- -----------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.75%
Cal Dive International, Inc.(a) 600 17,925
- -----------------------------------------------------------------
Global Industries Ltd.(a) 1,700 21,781
- -----------------------------------------------------------------
Maverick Tube Corp.(a) 1,300 18,119
- -----------------------------------------------------------------
57,825
- -----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.70%
Cabot Oil & Gas Corp.-Class A 600 11,175
- -----------------------------------------------------------------
Evergreen Resources, Inc.(a) 1,200 30,225
- -----------------------------------------------------------------
Stone Energy Corp.(a) 300 12,713
- -----------------------------------------------------------------
54,113
- -----------------------------------------------------------------
PERSONAL CARE - 0.47%
Steiner Leisure Ltd.(a) 1,200 36,375
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PUBLISHING - 0.37%
IDG Books Worldwide, Inc.-Class A(a) 1,200 $ 21,900
- ------------------------------------------------------------------
Meredith Corp. 200 6,925
- ------------------------------------------------------------------
28,825
- ------------------------------------------------------------------
RAILROADS - 0.52%
MotivePower Industries, Inc.(a) 2,150 39,775
- ------------------------------------------------------------------
RESTAURANTS - 1.72%
CEC Entertainment, Inc.(a) 1,400 59,150
- ------------------------------------------------------------------
Foodmaker, Inc.(a) 1,100 31,213
- ------------------------------------------------------------------
Papa John's International, Inc.(a) 300 13,406
- ------------------------------------------------------------------
Sonic Corp.(a) 900 29,363
- ------------------------------------------------------------------
133,132
- ------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.27%
Fastenal Co. 400 20,975
- ------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 0.85%
CDW Computer Centers, Inc.(a) 1,500 66,000
- ------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 0.97%
99 Cents Only Stores(a) 575 28,714
- ------------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 450 19,800
- ------------------------------------------------------------------
Family Dollar Stores, Inc. 1,100 26,400
- ------------------------------------------------------------------
74,914
- ------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.24%
Wild Oats Markets, Inc.(a) 600 18,206
- ------------------------------------------------------------------
RETAIL (SPECIALTY) - 4.27%
Cheap Tickets, Inc.(a) 100 3,650
- ------------------------------------------------------------------
Claire's Stores, Inc. 1,600 41,000
- ------------------------------------------------------------------
Cost Plus, Inc.(a) 950 43,225
- ------------------------------------------------------------------
Footstar, Inc.(a) 1,200 44,625
- ------------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 1,200 26,400
- ------------------------------------------------------------------
Linens 'N Things, Inc.(a) 1,000 43,750
- ------------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 1,200 60,450
- ------------------------------------------------------------------
Rent-A-Center, Inc.(a) 1,100 26,400
- ------------------------------------------------------------------
Rent-Way, Inc.(a) 700 17,238
- ------------------------------------------------------------------
Tuesday Morning Corp.(a) 900 22,950
- ------------------------------------------------------------------
329,688
- ------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 4.70%
Abercrombie & Fitch Co.-Class A(a) 1,276 61,248
- ------------------------------------------------------------------
American Eagle Outfitters, Inc.(a) 1,500 68,250
- ------------------------------------------------------------------
AnnTaylor Stores Corp.(a) 1,300 58,500
- ------------------------------------------------------------------
Buckle, Inc. (The)(a) 850 24,438
- ------------------------------------------------------------------
Children's Place Retail Stores, Inc. (The)(a) 800 32,400
- ------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 2,133 54,392
- ------------------------------------------------------------------
Pacific Sunwear of California(a) 1,800 43,875
- ------------------------------------------------------------------
Wet Seal, Inc.-Class A(a) 700 20,038
- ------------------------------------------------------------------
363,141
- ------------------------------------------------------------------
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND
5
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SAVINGS & LOAN COMPANIES - 0.21%
Queens County Bancorp, Inc. 500 $ 16,188
- ------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.45%
Acxiom Corp.(a) 1,100 27,431
- ------------------------------------------------------------------
Forrester Research, Inc.(a) 800 20,000
- ------------------------------------------------------------------
Metris Companies, Inc. 1,200 48,900
- ------------------------------------------------------------------
TMP Worldwide, Inc.(a) 250 15,875
- ------------------------------------------------------------------
112,206
- ------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 1.68%
Bright Horizons Family Solutions, Inc.(a) 600 11,325
- ------------------------------------------------------------------
Cerner Corp.(a) 800 16,775
- ------------------------------------------------------------------
Championship Auto Racing Teams, Inc.(a) 200 5,988
- ------------------------------------------------------------------
Copart, Inc.(a) 900 19,125
- ------------------------------------------------------------------
G & K Services, Inc.-Class A 300 15,713
- ------------------------------------------------------------------
Iron Mountain, Inc.(a) 300 8,588
- ------------------------------------------------------------------
Metzler Group, Inc.(a) 400 11,050
- ------------------------------------------------------------------
Provant, Inc.(a) 500 7,781
- ------------------------------------------------------------------
Regis Corp. 1,750 33,579
- ------------------------------------------------------------------
129,924
- ------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 1.76%
Critical Path, Inc.(a) 100 5,531
- ------------------------------------------------------------------
Insight Enterprises, Inc.(a) 2,050 50,738
- ------------------------------------------------------------------
Safeguard Scientifics, Inc.(a) 300 18,600
- ------------------------------------------------------------------
SunGard Data Systems, Inc.(a) 600 20,700
- ------------------------------------------------------------------
Sykes Enterprises, Inc.(a) 1,200 40,050
- ------------------------------------------------------------------
135,619
- ------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 4.29%
Affiliated Computer Services, Inc.-Class A(a) 900 45,563
- ------------------------------------------------------------------
CheckFree Holdings Corp.(a) 800 22,050
- ------------------------------------------------------------------
Concord EFS, Inc.(a) 1,400 59,238
- ------------------------------------------------------------------
CSG Systems International, Inc.(a) 1,500 39,281
- ------------------------------------------------------------------
FactSet Research Systems, Inc. 350 19,819
- ------------------------------------------------------------------
Lason Holdings, Inc.(a) 200 9,925
- ------------------------------------------------------------------
MedQuist, Inc.(a) 1,100 48,125
- ------------------------------------------------------------------
National Computer Systems, Inc. 1,400 47,250
- ------------------------------------------------------------------
NOVA Corp.(a) 1,614 40,350
- ------------------------------------------------------------------
331,601
- ------------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL) - 0.42%
Cornell Corrections, Inc.(a) 100 1,644
- ------------------------------------------------------------------
Tetra Tech, Inc.(a) 1,875 30,938
- ------------------------------------------------------------------
32,582
- ------------------------------------------------------------------
SPECIALTY PRINTING - 0.43%
Valassis Communications, Inc.(a) 900 32,962
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.85%
Amdocs Ltd.(a) 900 $ 20,475
- -----------------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 1,400 45,150
- -----------------------------------------------------------------------------
65,625
- -----------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.46%
Quicksilver, Inc.(a) 1,350 35,183
- -----------------------------------------------------------------------------
TEXTILES (HOME FURNISHINGS) - 0.47%
Mohawk Industries, Inc.(a) 1,200 36,450
- -----------------------------------------------------------------------------
TRUCKERS - 0.61%
M.S. Carriers, Inc.(a) 300 8,897
- -----------------------------------------------------------------------------
Swift Transportation Co., Inc.(a) 1,750 38,500
- -----------------------------------------------------------------------------
47,397
- -----------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $5,290,053) 6,832,415
- -----------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS - 2.64%
CANADA - 0.61%
Biovail Corporation International
(Health Care-Hospital Management)(a) 500 25,531
- -----------------------------------------------------------------------------
Cinar Films Inc.-Class B (Entertainment)(a) 100 2,450
- -----------------------------------------------------------------------------
Ritchie Bros. Auctioneers Inc. (Services-Commercial &
Consumer)(a) 500 19,063
- -----------------------------------------------------------------------------
47,044
- -----------------------------------------------------------------------------
FRANCE - 0.24%
Business Objects S.A.-ADR (Computers-Software &
Services)(a) 500 18,250
- -----------------------------------------------------------------------------
IRELAND - 0.62%
Ryanair Holdings PLC-ADR (Airlines)(a) 900 47,700
- -----------------------------------------------------------------------------
ISRAEL - 0.62%
Check Point Technologies Ltd. (Computers-Software &
Services)(a) 900 48,263
- -----------------------------------------------------------------------------
NETHERLANDS - 0.27%
Core Laboratories N.V. (Oil & Gas-Drilling Equipment)(a) 1,500 20,906
- -----------------------------------------------------------------------------
UNITED KINGDOM - 0.28%
Select Appointments Holdings PLC-ADR (Services-
Employment)(a) 900 21,600
- -----------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$166,346) 203,763
- -----------------------------------------------------------------------------
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND
6
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENT(b) - 7.73%
Dean Witter Reynolds, Inc., 4.85%, 07/01/99
(Cost $597,100)(c) $597,100 $ 597,100
- -----------------------------------------------------------------
TOTAL INVESTMENTS - 98.86% 7,633,278
- -----------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.14% 87,843
- -----------------------------------------------------------------
NET ASSETS - 100.00% $7,721,121
=================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repuchase 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 06/30/99 with a maturing value of
$100,013,472. Collateralized by U.S. Government obligations.
Investment Abbreviation:
ADR - American Depositary Receipt
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH F UND
7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, market value (cost $6,053,499) $ 7,633,278
- ---------------------------------------------------------------------
Receivables for:
Capital stock sold 19,385
- ---------------------------------------------------------------------
Investments sold 97,177
- ---------------------------------------------------------------------
Dividends and interest 232
- ---------------------------------------------------------------------
Reimbursement from advisor 7,791
- ---------------------------------------------------------------------
Investment for deferred compensation plan 4,109
- ---------------------------------------------------------------------
Total assets 7,761,972
- ---------------------------------------------------------------------
LIABILITIES:
Payables For:
Investments purchased 21,528
- ---------------------------------------------------------------------
Deferred compensation plan 4,109
- ---------------------------------------------------------------------
Accrued directors' fees 1,850
- ---------------------------------------------------------------------
Accrued operating expenses 13,364
- ---------------------------------------------------------------------
Total liabilities 40,851
- ---------------------------------------------------------------------
Net assets applicable to shares outstanding $ 7,721,121
=====================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 725,342
=====================================================================
Net asset value, offering and redemption price per share $10.64
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 25,887
- ---------------------------------------------------------------------
Dividends 2,493
- ---------------------------------------------------------------------
Total investment income 28,380
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 23,307
- ---------------------------------------------------------------------
Administrative services fees 18,696
- ---------------------------------------------------------------------
Custodian fees 19,445
- ---------------------------------------------------------------------
Directors' fees and expenses 4,076
- ---------------------------------------------------------------------
Professional fees 15,926
- ---------------------------------------------------------------------
Other 2,802
- ---------------------------------------------------------------------
Total expenses 84,252
- ---------------------------------------------------------------------
Less: Fees waived and reimbursed by advisor (49,897)
- ---------------------------------------------------------------------
Expenses paid indirectly (71)
- ---------------------------------------------------------------------
Net expenses 34,284
- ---------------------------------------------------------------------
Net investment income (loss) (5,904)
- ---------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (250,107)
- ---------------------------------------------------------------------
Futures contracts 19,210
- ---------------------------------------------------------------------
(230,897)
- ---------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 906,569
- ---------------------------------------------------------------------
Futures contracts (15,300)
- ---------------------------------------------------------------------
891,269
- ---------------------------------------------------------------------
Net gain from investment securities and futures contracts 660,372
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $ 654,468
=====================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the period May 1, 1998 (date
operations commenced) through December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
---------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (5,904) $ 15,665
- --------------------------------------------------------------------------------
Net realized gain (loss) from investment securities
and futures contracts (230,897) (395,537)
- --------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and futures contracts 891,269 688,510
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 654,468 308,638
- --------------------------------------------------------------------------------
Dividends to shareholders from net investment income -- (22,273)
- --------------------------------------------------------------------------------
Net increase from capital stock transactions 2,667,550 4,112,738
- --------------------------------------------------------------------------------
Net increase in net assets 3,322,018 4,399,103
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,399,103 --
- --------------------------------------------------------------------------------
End of period $7,721,121 $4,399,103
================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $6,776,466 $4,108,916
- --------------------------------------------------------------------------------
Undistributed net investment income (loss) (8,690) (2,786)
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and futures contracts (626,434) (395,537)
- --------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
futures contracts 1,579,779 688,510
- --------------------------------------------------------------------------------
$7,721,121 $4,399,103
================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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. Aggressive Growth Fund (the "Fund"). The Fund's investment
objective is to achieve long-term growth of capital. The Fund commenced
operations on May 1, 1998. 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 closing bid price on that day. 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
closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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
AIM V.I. AGGRESSIVE GROWTH FUND
9
<PAGE>
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. Such distributions are
declared and paid annually.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $354,222 as of December 31, 1998, which expires,
if not previously utilized, through the year 2006. The Fund cannot
distribute capital gains to shareholders until the tax loss carryforwards
have been utilized.
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.
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 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. During the six
months ended June 30, 1999, AIM waived expenses of $23,307 and reimbursed
expenses of $26,590.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $18,696 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$1,860 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
The Fund received reductions in custodian fees of $71 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $71 during the six months ended June 30, 1999.
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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the six months ended June 30, 1999 was
$5,285,080 and $2,535,794, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $1,700,157
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (125,042)
=========================================================================
Net unrealized appreciation of investment securities $1,575,115
=========================================================================
</TABLE>
Cost of investments for tax purposes is $6,058,163.
AIM V.I. AGGRESSIVE GROWTH FUND
10
<PAGE>
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1999
and the period May 1, 1998 (date operations commenced) through December 31,
1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Sold 569,447 $5,544,171 464,162 $4,261,686
- -------------------------------------------------------------------------------
Issued as reinvestment of dividends -- -- 2,421 22,273
- -------------------------------------------------------------------------------
Reacquired (290,726) (2,876,621) (19,962) (171,221)
- -------------------------------------------------------------------------------
278,721 $2,667,550 446,621 $4,112,738
===============================================================================
</TABLE>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during six months ended June 30, 1999 and the period May 1, 1998 (date
operations commenced) through December 31, 1998.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------- ------------
<S> <C> <C>
Net asset value, beginning of period $ 9.85 $10.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) 0.04
- --------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.80 (0.14)
- --------------------------------------------------------------------------------
Total from investment operations 0.79 (0.10)
- --------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.05)
- --------------------------------------------------------------------------------
Net asset value, end of period $10.64 $ 9.85
================================================================================
Total return(a) 8.02% (0.94)%
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $7,721 $4,399
================================================================================
Ratio of expenses to average net assets(b) 1.18%(c) 1.16%(d)
================================================================================
Ratio of net investment income (loss) to average net
assets(e) (0.20)%(c) 0.96%(d)
================================================================================
Portfolio turnover rate 52% 30%
================================================================================
</TABLE>
(a) Total return is not annualized for periods less than one year.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.89% (annualized) and 4.62% (annualized) for 1999-1998.
(c) Ratios are annualized and based on average net assets of $5,874,843.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursement were (1.92)% (annualized) and (2.50)% (annualized) for 1999-
1998.
AIM V.I. AGGRESSIVE GROWTH FUND
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Managers' Overview
FUND BENEFITS FROM BROADER MARKET
Q. HOW DID AIM V.I. BALANCED itional large-cap growth stocks were As of June 30, the fund had 74% of its
FUND PERFORM DURING THE REPORT- no longer the dominant market drivers net assets in large-, 21% in mid- and
ING PERIOD? at the reporting period's end. 4% in small-cap companies.
A. For the six-month reporting period Bond performance during the The fund's stock portion surged
ended June 30, 1999, cumulative total reporting period was generally ahead in early 1999, led by
return for AIM V.I. Balanced Fund was disappointing, stemming from favorable security holdings in
a solid 5.66%. Fund performance during heightened concerns regarding the technology companies and telephone and
the reporting period slightly lagged Federal Reserve Board's (the Fed) move telecommunications firms within the
the Lipper Balanced Funds Index, which to raise interest rates. This utilities sector.
returned 6.17%. uncertainty eroded bond prices in May
and June, sending their yields higher. Q. THE TECHNOLOGY SECTOR EXPERIENCED
Q. WHAT WERE THE MAJOR TRENDS IN On June 30, the Fed raised the federal SOME VOLATILITY IN EARLY 1999. WHAT
THE FINANCIAL MARKETS DURING THE funds rate from 4.75% to 5%, but TYPES OF TECHNOLOGY COMPANIES DOES THE
REPORTING PERIOD? returned to a neutral rate policy. FUND OWN?
A. U.S. equity markets regained their The latter decision signaled that rate A. The majority of the fund's
momentum in the first half of 1999 as increases were unlikely in the near technology holdings are high-quality,
major market indexes--the Dow, the future and sparked a "relief rally" in dominant brand-name firms. Companies
S&P 500, and the Nasdaq--reached both the stock and bond markets. such as America Online and Cisco
record highs. During the first quarter Systems continued to weather the
of 1999, the broadening of strong Q. WHAT FACTORS CONTRIBUTED TO THE sector's volatility due to their large
earnings across all market-cap sectors FUND'S STRONG GAINS? size, which has become a strategic
sparked investor interest in mid- and A. AIM V.I. Balanced Fund has a weapon in this sector. Larger
small-sized companies. The recovery flexible structure and invests across technology companies have more money to
also extended to a wide range of all market-capitalization sectors. spend on research and development,
industries that had suffered during the This flexibility proved especially which in turn drives further
market narrowness of the last few beneficial during the reporting period, technological advancement. In this
years. As a result of this dramatic as market performance broadened to sector, being small- or mid-cap may not
shift in market sentiment, trad- include smaller companies. necessarily be an advantage. Having
money to spend on research and
PORTFOLIO COMPOSITION development and the ability to provide
global reach to customers have become
As of 6/30/99, based on total net assets the main thrusts behind a technology
business's success.
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
Q. WHAT TYPES OF FIXED-INCOME HOLDINGS
1. Lucent Technologies Inc. 1.13% 1. Telecommunications (Long Distance) 4.65% ARE IN THE FUND'S PORTFOLIO?
2. America Online Inc. 1.10 2. Telephone 4.33 A. On the fixed-income side, we
3. VISX Inc. 0.76 3. Communications Equipment 3.96 continued to keep to an intermediate
4. Cisco Systems, Inc. 0.66 4. Broadcasting (Television, Radio & Cable) 3.61 maturity structure that is less
5. Nokia Corp. 0.66 5. Banks (Money Center) 3.46 sensitive to interest-rate changes.
6. Qwest Communications Inc. 0.66 6. Natural Gas 3.44 The average quality rating of bonds in
7. Univision Communications 0.65 7. Computers (Software & Services) 3.43 the fund's portfolio remained A. We
8. Chase Manhattan Corp. 0.59 8. Electric Companies 2.64 invest mainly in higher-quality,
9. MCI WorldCom Inc. 0.59 9. Services (Commercial & Consumer) 2.34 shorter-maturity bonds, such as
10. Microsoft Corp. 0.59 10. Financial (Diversified) 2.27 U.S. government issues and investment-
grade corporate bonds.
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
</TABLE>
12 AIM V.I. BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
During the reporting period, we performance: modest inflationary
increased our holdings of corporate pressures, full employment, income
bonds in an attempt to capture more growth and capital formation. To the
yield as the spread between U.S. extent that these factors remain in
Treasuries and corporate bonds widened place through 1999, AIM V.I. Balanced
at the end of 1998. As of June 30, Fund should continue to meet its goals
corporate bonds represented 31.55% of of competitive returns and reduced
total net assets, while Treasuries volatility.
accounted for 2.78%. The average
maturity of the fund's bond portion is [GRAPH APPEARS HERE]
approximately 12 years; this is RESULTS OF A $10,000 INVESTMENT
slightly longer than in the past since -------------------------------
we are trying to obtain more returns 5/1/98 - 6/30/99
on these bonds by moving out the yield
curve. However, as interest rates
started to increase toward the end of
the reporting period, we began to AVERAGE ANNUAL TOTAL RETURNS
shorten the maturity on the fund's For periods ended 6/30/99
fixed-income holdings. We also held Inception (5/1/98) 16.46%
2.47% of total net assets in 1 Year 17.65
convertible bonds on June 30. LIPPER
AIM V.I BALANCED S & P
Q. WHAT ARE CONVERTIBLE BONDS? HOW DO BALANCED FUNDS 500
THEY FIT INTO THE FUND'S INVESTMENT (In thousands) FUND INDEX INDEX
STRATEGY? -------------------------
A. Convertible bonds are corporate 5/1/98 10,000 10,000 10,000
bonds that may be exchanged for a fixed 6/30/98 10,150 10,001 10,227
number of shares of the issuing 9/30/98 10,030 9,497 9,212
company's common stocks. Convertibles 12/31/98 11,302 10,590 11,172
fit the theme for the fund since they 3/31/99 11,678 10,760 11,728
contain both an equity and a fixed- 6/30/99 11,941 11,244 12,555
income component. They offer the
relative safety of the fixed-income MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF
market and the potential appreciation AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
of the equity market. As with all PERFORMANCE SHOWN.
holdings, we follow AIM's earnings-
momentum model in deciding what to do The performance figures shown represent AIM V.I. Balanced Fund and are not
with convertible bonds. When intended to reflect actual annuity values, and do not reflect charges at the
earnings for the issuing company separate account level, which, if applied, would lower the performance
increase, we generally convert the results. AIM V.I. Balanced Fund performance figures are historical and
bonds to capture all the returns of the reflect reinvestment of all distributions and changes in net asset value. The
underlying stocks. We use convertibles fund's investment return and principal value will fluctuate, so an investor's
to reduce volatility with investments shares, when redeemed, may be worth more or less than their original cost.
in the small- and mid-cap sectors. Had fees and expenses not been waived during the reporting period, returns
would have been lower.
Q. WHAT IS YOUR OUTLOOK FOR THE The Dow Jones Industrial Average (the Dow) is a price-weighted average
REMAINDER OF 1999? of 30 actively traded primarily industrial stocks.
A. Equity performance remains strong as The Lipper Balanced Funds Index is a net-asset-value-weighted index of
corporations across all market- the 30 largest funds within the balanced-fund investment objective. It is
capitalization sectors continue to calculated daily with adjustments for distributions as of the ex-dividend
post solid earning reports. At the dates. It is compiled by Lipper Inc., an independent mutual-fund performance
same time, several current economic monitor.
forces are favorable for bond The Nasdaq (National Association of Securities Dealers Automated
Quotation system) Composite Index is a market-value-weighted index comprising
all Nasdaq domestic and non-U.S. based common stocks listed on the Nasdaq
Stock Market. It includes more than 5,000 companies and is often considered
representative of the small and medium-size company stock universe. While it
includes many small and mid-sized company stocks, large-capitalization
technology companies tend to dominate the Nasdaq Index.
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.
An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
</TABLE>
AIM V.I. BALANCED FUND 13
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS & NOTES - 29.33%
AGRICULTURAL PRODUCTS - 0.48%
Cargill, Inc., Notes, 6.875%, 05/01/28(a)
(Acquired 03/12/99; Cost $149,703) $150,000 $ 139,551
- -----------------------------------------------------------------------------------------------------
AIRLINES - 0.76%
Delta Air Lines, Inc.,
Deb., 10.375%, 12/15/22 100,000 124,234
- -----------------------------------------------------------------------------------------------------
Notes, 6.65%, 03/15/04 100,000 98,262
- -----------------------------------------------------------------------------------------------------
222,496
- -----------------------------------------------------------------------------------------------------
AUTOMOBILES - 0.98%
General Motors Acceptance Corp., Bonds, 6.15%, 04/05/07 300,000 287,506
- -----------------------------------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 0.04%
HSBC Holdings PLC (United Kingdom), Sub. Notes, 7.50%, 07/15/09 10,000 10,112
- -----------------------------------------------------------------------------------------------------
BANKS (MONEY CENTER) - 2.20%
Bank of America Corp., Unsec. Sub. Notes, 7.125%, 03/01/09 200,000 200,814
- -----------------------------------------------------------------------------------------------------
First Union Bancorp, Sub. Deb., 7.50%, 04/15/35 200,000 205,782
- -----------------------------------------------------------------------------------------------------
International Bank for Reconstruction and Development
(The), Deb., 8.25%, 09/01/16 200,000 236,834
- -----------------------------------------------------------------------------------------------------
643,430
- -----------------------------------------------------------------------------------------------------
BANKS (REGIONAL) - 1.03%
HSBC USA, Inc., Unsec. Sub. Notes, 7.00%, 11/01/06 100,000 98,920
- -----------------------------------------------------------------------------------------------------
Mercantile Bancorp, Inc., Unsec. Sub. Notes, 7.30%,
06/15/07 200,000 202,486
- -----------------------------------------------------------------------------------------------------
301,406
- -----------------------------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 1.86%
Comcast Cable Communications, Unsec. Unsub. Notes, 6.20%, 11/15/08 100,000 93,307
- -----------------------------------------------------------------------------------------------------
CSC Holdings, Inc., Sr. Unsec. Deb., 7.625%, 07/15/18 50,000 47,329
- -----------------------------------------------------------------------------------------------------
7.875%, 02/15/18 100,000 97,062
- -----------------------------------------------------------------------------------------------------
TCI Communications, Inc., Sr. Notes, 8.00%, 08/01/05 200,000 211,684
- -----------------------------------------------------------------------------------------------------
USA Networks, Inc., Sr. Unsec. Gtd. Notes, 6.75%, 11/15/05 100,000 96,084
- -----------------------------------------------------------------------------------------------------
545,466
- -----------------------------------------------------------------------------------------------------
CHEMICALS - 0.74%
Airgas, Inc., Medium Term Notes, 7.14%, 03/08/04 50,000 48,056
- -----------------------------------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee Deb., 8.50%, 12/15/12 150,000 166,812
- -----------------------------------------------------------------------------------------------------
214,868
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CHEMICALS (DIVERSIFIED) - 0.16%
Monsanto Co., Deb., 6.50%, 12/01/18(a) (Acquired 12/04/98; Cost $49,791) $ 50,000 $ 45,202
- -----------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.32%
Lucent Technologies, Unsec. Deb., 6.45%, 03/15/29 100,000 92,029
- -----------------------------------------------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.65%
American Greetings Corp., Unsec. Notes, 6.10%, 08/01/28 200,000 190,706
- -----------------------------------------------------------------------------------------------------
CONSUMER FINANCE - 0.85%
Beneficial Corp. - Series H Medium Term Notes, 6.94%, 12/15/06 250,000 249,265
- -----------------------------------------------------------------------------------------------------
ELECTRIC COMPANIES - 2.38%
Cleveland Electric Illuminating Co. (The), Sr. Sec.
Series D Notes, 7.43%, 11/01/09 50,000 50,376
- -----------------------------------------------------------------------------------------------------
CMS Energy Corp., Sr. Unsec. Notes, 8.125%, 05/15/02 150,000 152,974
- -----------------------------------------------------------------------------------------------------
Commonwealth Edison Co., First Mortgage Notes, 7.50%, 07/01/13 70,000 73,592
- -----------------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp.,
First Mortgage Notes, 9.25%, 10/01/01 200,000 212,072
- -----------------------------------------------------------------------------------------------------
Series G Sr. Unsec. Notes, 7.75%, 10/01/08 200,000 206,000
- -----------------------------------------------------------------------------------------------------
695,014
- -----------------------------------------------------------------------------------------------------
ENTERTAINMENT - 1.16%
Time Warner, Inc., Deb.,
9.125%, 01/15/13 145,000 165,852
- -----------------------------------------------------------------------------------------------------
9.15%, 02/01/23 150,000 174,254
- -----------------------------------------------------------------------------------------------------
340,106
- -----------------------------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.32%
Associates Corp. of North America, Sr. Deb., 6.95%, 11/01/18 100,000 95,213
- -----------------------------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.16%
Beckman Coulter Inc., Sr. Unsec. Gtd. Notes, 7.45%, 03/04/08 50,000 47,617
- -----------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.38%
Procter & Gamble Co. (The), Putable Deb., 8.00%, 09/01/24 100,000 111,698
- -----------------------------------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 1.37%
Sun Life Canada Capital Trust, Gtd. Notes, 8.526%,
05/29/49(a) (Acquired 03/29/99; Cost $104,510) 100,000 101,107
- -----------------------------------------------------------------------------------------------------
Torchmark Corp., Notes, 7.875%, 05/15/23 300,000 300,291
- -----------------------------------------------------------------------------------------------------
401,398
- -----------------------------------------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND
14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY) - 1.57%
Florida Windstorm,
Sr. Notes, 6.85%, 08/25/07(a) (Acquired 01/07/99; Cost
$106,456) $100,000 $ 99,328
- ------------------------------------------------------------------------------
Sr. Sec. Bonds, 7.125%, 02/25/19(a) (Acquired 03/26/99;
Cost $149,177) 150,000 148,418
- ------------------------------------------------------------------------------
Terra Nova Holdings Co. (United Kingdom),
Sr. Yankee Sec. Gtd. Notes, 7.20%, 08/15/07 70,000 68,034
- ------------------------------------------------------------------------------
Unsec. Gtd. Notes, 7.00%, 05/15/08(a) (Acquired
02/25/99; Cost $146,335) 150,000 143,588
- ------------------------------------------------------------------------------
459,368
- ------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.16%
Merrill Lynch & Co., Unsec. Notes, 6.875%, 11/15/18 50,000 46,788
- ------------------------------------------------------------------------------
NATURAL GAS - 2.78%
CMS Panhandle Holding Company, Sr. Notes, 6.125%,
03/15/04(a) (Acquired 06/08/99; Cost $194,612) 200,000 194,772
- ------------------------------------------------------------------------------
Enron Corp.,
Notes, 6.75%, 08/01/09 170,000 163,288
- ------------------------------------------------------------------------------
Sr. Sub. Deb., 8.25%, 09/15/12 200,000 212,070
- ------------------------------------------------------------------------------
Ferrellgas Partners, Series B Sr. Sec. Gtd. Notes,
9.375%, 06/15/06 50,000 49,250
- ------------------------------------------------------------------------------
K N Energy, Inc., Unsec. Deb., 7.35%, 08/01/26 100,000 98,793
- ------------------------------------------------------------------------------
National Fuel Gas Co., Series D Medium Term Notes,
6.303%, 05/27/08 100,000 95,927
- ------------------------------------------------------------------------------
814,100
- ------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.67%
NRG Energy, Inc., Sr. Unsec. Notes, 7.50%, 06/01/09 200,000 197,296
- ------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.21%
CE Generation LLC, Notes, 7.416%, 12/15/18(a) (Acquired
04/13/99; Cost $205,604) 200,000 194,372
- ------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., Sr. Unsec. Bonds,
8.48%, 09/15/28 150,000 160,616
- ------------------------------------------------------------------------------
354,988
- ------------------------------------------------------------------------------
RAILROADS - 0.62%
CSX Corp. - Series C Medium Term Notes, 6.80%, 12/01/28 200,000 180,382
- ------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.94%
Laidlaw, Inc. (Canada), Yankee Deb., 6.70%, 05/01/08 100,000 90,817
- ------------------------------------------------------------------------------
Protection One, Inc., Sr. Unsec. Gtd. Notes, 7.375%,
08/15/05 200,000 184,996
- ------------------------------------------------------------------------------
275,813
- ------------------------------------------------------------------------------
SOVEREIGN DEBT - 1.05%
Province of Manitoba (Canada), Yankee Deb., 7.75%,
07/17/16 100,000 107,912
- ------------------------------------------------------------------------------
Province of Quebec (Canada),
Series A Yankee Notes, 6.29%, 03/06/26 100,000 99,809
- ------------------------------------------------------------------------------
Series A Putable Yankee Notes, 5.735%, 03/02/26 100,000 99,638
- ------------------------------------------------------------------------------
307,359
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE) - 2.36%
Centel Capital, Deb., 9.00%, 10/15/19 $200,000 $ 235,502
- ----------------------------------------------------------------------------
MCI Communications Corp.,
Putable Sr. Unsec. Deb., 7.125%, 06/15/27 200,000 202,114
- ----------------------------------------------------------------------------
Sr. Unsec. Notes, 6.50%, 04/15/10 100,000 96,126
- ----------------------------------------------------------------------------
Sprint Capital Corp., Sr. Unsec. Gtd. Notes,
6.125%, 11/15/08 70,000 65,548
- ----------------------------------------------------------------------------
6.875%, 11/15/28 100,000 91,588
- ----------------------------------------------------------------------------
690,878
- ----------------------------------------------------------------------------
TELEPHONE - 1.78%
Cable & Wireless Communications PLC (United Kingdom),
Yankee Notes, 6.75%, 12/01/08 200,000 191,890
- ----------------------------------------------------------------------------
Electric Lightwave, Inc., Notes, 6.05%, 05/15/04(a)
(Acquired 04/21/99; Cost $199,854) 200,000 193,870
- ----------------------------------------------------------------------------
GTE California, Inc., Unsec. Deb., 6.75%, 05/15/27 70,000 65,823
- ----------------------------------------------------------------------------
SBC Communications, Inc., Deb., 7.375%, 07/15/43 70,000 68,674
- ----------------------------------------------------------------------------
520,257
- ----------------------------------------------------------------------------
WASTE MANAGEMENT - 0.35%
WMX Technologies, Inc., Unsec. Putable Notes, 7.10%,
08/01/26 100,000 101,310
- ----------------------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes
(Cost $8,944,326) 8,581,622
- ----------------------------------------------------------------------------
U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES -
2.18%
COMMUNICATIONS EQUIPMENT - 0.42%
Comverse Technology, Inc., Conv. Unsec. Sub. Deb.,
4.50%, 07/01/05 66,000 123,337
- ----------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.22%
Candescent Technology Corp., Sr. Conv. Sub. Deb.,
7.00%, 05/01/03(a) (Acquired 11/06/98-02/10/99; Cost
$72,036) 83,000 64,740
- ----------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 0.48%
Exodus Communications, Inc., Conv. Sub. Notes, 5.00%,
03/15/06(a) (Acquired 02/25/99; Cost $30,000) 30,000 80,813
- ----------------------------------------------------------------------------
Veritas Software Corp., Conv. Unsec. Notes, 5.25%,
11/01/04 25,000 58,609
- ----------------------------------------------------------------------------
139,422
- ----------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.21%
Alpharma, Inc., Conv. Sr. Unsec. Sub. Notes, 3.00%,
06/01/06(a) (Acquired 05/27/99; Cost $50,000) 50,000 61,500
- ----------------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.30%
Amazon.com, Inc.,
Conv. Deb., 4.75%, 02/01/09(a) (Acquired 01/29/99-
02/18/99; Cost $47,342) 50,000 48,531
- ----------------------------------------------------------------------------
Conv. Sub. Deb., 4.75%, 02/01/09 40,000 38,825
- ----------------------------------------------------------------------------
87,356
- ----------------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND
15
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL) - 0.11%
AnnTaylor Stores Corp., Conv. Gtd. Bond, 0.55%,
06/18/19(a) (Acquired 06/14/99; Cost $27,653) $ 50,000 $ 31,625
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.28%
Global Telesystems Group, Conv. Notes, 8.75%, 06/30/00 20,000 81,400
- -----------------------------------------------------------------------------
TELEPHONE - 0.16%
Telefonos de Mexico S.A. (Mexico), Conv. Yankee Notes,
4.25%, 06/15/04 47,000 47,999
- -----------------------------------------------------------------------------
Total U.S. Dollar Denominated Convertible Bonds &
Notes (Cost $504,483) 637,379
- -----------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
DOMESTIC COMMON STOCKS - 36.57%
AUTOMOBILES - 0.29%
Ford Motor Co. 1,500 84,656
- -----------------------------------------------------------------------------
BANKS (MONEY CENTER) - 0.74%
Bank of America Corp. 600 43,987
- -----------------------------------------------------------------------------
Chase Manhattan Corp. (The) 2,000 173,250
- -----------------------------------------------------------------------------
217,237
- -----------------------------------------------------------------------------
BANKS (REGIONAL) - 0.25%
Bank United Corp. - Class A 1,800 72,337
- -----------------------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 0.03%
PepsiCo, Inc. 200 7,737
- -----------------------------------------------------------------------------
BIOTECHNOLOGY - 0.42%
Biogen, Inc.(b) 1,000 64,312
- -----------------------------------------------------------------------------
Genzyme Corp.(b) 1,200 58,200
- -----------------------------------------------------------------------------
Genzyme Surgical Products(b) 215 947
- -----------------------------------------------------------------------------
123,459
- -----------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 1.75%
CBS Corp.(b) 3,500 152,031
- -----------------------------------------------------------------------------
Hispanic Broadcasting Corp.(b) 2,200 166,925
- -----------------------------------------------------------------------------
Univision Communications, Inc.(b) 2,900 191,400
- -----------------------------------------------------------------------------
510,356
- -----------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 2.46%
ADC Telecommunications, Inc.(b) 1,600 72,900
- -----------------------------------------------------------------------------
ANTEC Corp.(b) 2,900 92,981
- -----------------------------------------------------------------------------
Lucent Technologies, Inc. 4,905 330,781
- -----------------------------------------------------------------------------
Motorola, Inc. 1,000 94,750
- -----------------------------------------------------------------------------
Tellabs, Inc.(b) 1,900 128,369
- -----------------------------------------------------------------------------
719,781
- -----------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 1.22%
Dell Computer Corp.(b) 2,600 96,200
- -----------------------------------------------------------------------------
International Business Machines Corp. 1,000 129,250
- -----------------------------------------------------------------------------
Sun Microsystems, Inc.(b) 1,900 130,862
- -----------------------------------------------------------------------------
356,312
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (NETWORKING) - 0.76%
3Com Corp.(b) 1,100 $ 29,356
- -----------------------------------------------------------------------------
Cisco Systems, Inc.(b) 3,000 193,500
- -----------------------------------------------------------------------------
222,856
- -----------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.53%
EMC Corp.(b) 2,800 154,000
- -----------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 2.79%
America Online, Inc. 2,900 320,450
- -----------------------------------------------------------------------------
Computer Associates International, Inc. 400 22,000
- -----------------------------------------------------------------------------
Concord Communications, Inc.(b) 1,200 54,000
- -----------------------------------------------------------------------------
InfoSpace.com, Inc.(b) 1,800 84,600
- -----------------------------------------------------------------------------
ISS Group, Inc.(b) 1,600 60,400
- -----------------------------------------------------------------------------
Microsoft Corp.(b) 1,900 171,356
- -----------------------------------------------------------------------------
USWeb Corp.(b) 4,600 102,062
- -----------------------------------------------------------------------------
814,868
- -----------------------------------------------------------------------------
CONSUMER FINANCE - 0.17%
SLM Holding Corp. 1,100 50,394
- -----------------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.28%
Cardinal Health, Inc. 1,250 80,156
- -----------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.46%
General Electric Co. 1,200 135,600
- -----------------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.48%
Quanta Services, Inc.(b) 3,200 140,800
- -----------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 0.60%
Intel Corp. 2,400 142,800
- -----------------------------------------------------------------------------
Microchip Technology, Inc.(b) 700 33,162
- -----------------------------------------------------------------------------
175,962
- -----------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.23%
Applied Materials, Inc.(b) 900 66,487
- -----------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.78%
American Express Co. 700 91,087
- -----------------------------------------------------------------------------
Citigroup, Inc. 2,250 106,875
- -----------------------------------------------------------------------------
Fannie Mae 1,700 116,237
- -----------------------------------------------------------------------------
FINOVA Group, Inc. 1,000 52,625
- -----------------------------------------------------------------------------
Freddie Mac 2,000 116,000
- -----------------------------------------------------------------------------
MGIC Investment Corp. 800 38,900
- -----------------------------------------------------------------------------
521,724
- -----------------------------------------------------------------------------
FOODS - 0.42%
Keebler Foods Co.(b) 1,400 42,525
- -----------------------------------------------------------------------------
Ralston-Ralston Purina Group 2,600 79,137
- -----------------------------------------------------------------------------
121,662
- -----------------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND
16
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DIVERSIFIED) - 1.69%
Abbott Laboratories 700 $ 31,850
- -------------------------------------------------------------------
American Home Products Corp. 2,400 138,000
- -------------------------------------------------------------------
Bristol-Myers Squibb Co. 1,200 84,525
- -------------------------------------------------------------------
Johnson & Johnson 900 88,200
- -------------------------------------------------------------------
Warner-Lambert Co. 2,200 152,625
- -------------------------------------------------------------------
495,200
- -------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.28%
Barr Laboratories, Inc.(b) 300 11,962
- -------------------------------------------------------------------
Forest Laboratories, Inc.(b) 1,500 69,375
- -------------------------------------------------------------------
81,337
- -------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 1.53%
Lilly (Eli) & Co. 1,300 93,113
- -------------------------------------------------------------------
Merck & Co., Inc. 1,400 103,600
- -------------------------------------------------------------------
Pfizer, Inc. 1,300 142,675
- -------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 700 39,769
- -------------------------------------------------------------------
Schering-Plough Corp. 1,300 68,900
- -------------------------------------------------------------------
448,057
- -------------------------------------------------------------------
HEALTH CARE (LONG TERM CARE) - 0.20%
Sunrise Assisted Living, Inc.(b) 1,700 59,288
- -------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 2.09%
Baxter International, Inc. 1,100 66,688
- -------------------------------------------------------------------
Becton, Dickinson & Co. 1,500 45,000
- -------------------------------------------------------------------
Guidant Corp. 2,500 128,594
- -------------------------------------------------------------------
Medtronic, Inc. 1,900 147,963
- -------------------------------------------------------------------
VISX, Inc.(b) 2,800 221,725
- -------------------------------------------------------------------
609,970
- -------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 0.34%
MAXIMUS, Inc.(b) 2,000 57,500
- -------------------------------------------------------------------
Omnicare, Inc. 1,600 20,200
- -------------------------------------------------------------------
Quintiles Transnational Corp.(b) 500 21,000
- -------------------------------------------------------------------
98,700
- -------------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES - 0.49%
Ethan Allen Interiors, Inc. 2,900 109,475
- -------------------------------------------------------------------
Maytag Corp. 500 34,844
- -------------------------------------------------------------------
144,319
- -------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.15%
Procter & Gamble, Co. (The) 500 44,625
- -------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.45%
Equitable Companies, Inc. 1,300 87,100
- -------------------------------------------------------------------
Nationwide Financial Services, Inc. - Class A 1,000 45,250
- -------------------------------------------------------------------
132,350
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE) - 0.76%
American International Group, Inc. 1,300 $ 152,181
- -------------------------------------------------------------------
CIGNA Corp. 800 71,200
- -------------------------------------------------------------------
223,381
- -------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.34%
Everest Reinsurance Holdings, Inc. 1,000 32,625
- -------------------------------------------------------------------
Travelers Property Casualty Corp. - Class A 1,700 66,513
- -------------------------------------------------------------------
99,138
- -------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 1.22%
Goldman Sachs Group, Inc. (The) 450 32,513
- -------------------------------------------------------------------
Hambrecht & Quist Group(b) 1,600 59,400
- -------------------------------------------------------------------
Merrill Lynch & Co., Inc. 1,500 119,906
- -------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 1,400 143,500
- -------------------------------------------------------------------
355,319
- -------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.04%
Federated Investors, Inc. - Class B 700 12,556
- -------------------------------------------------------------------
LODGING - HOTELS - 0.15%
Carnival Corp. 900 43,650
- -------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.45%
Tyco International Ltd. 1,400 132,650
- -------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.24%
Superior TeleCom, Inc. 2,850 71,250
- -------------------------------------------------------------------
NATURAL GAS - 0.66%
Enron Corp. 1,100 89,925
- -------------------------------------------------------------------
Williams Companies, Inc. (The) 2,400 102,150
- -------------------------------------------------------------------
192,075
- -------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.21%
Conoco, Inc. - Class A 2,200 61,325
- -------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 0.13%
Exxon Corp. 500 38,563
- -------------------------------------------------------------------
PERSONAL CARE - 0.36%
Avon Products, Inc. 800 44,400
- -------------------------------------------------------------------
Gillette Co. 1,500 61,500
- -------------------------------------------------------------------
105,900
- -------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.56%
AES Corp.(b) 2,100 122,063
- -------------------------------------------------------------------
MidAmerican Energy Holdings Co.(b) 1,200 41,550
- -------------------------------------------------------------------
163,613
- -------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.19%
Boston Properties, Inc. 900 32,288
- -------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 800 24,450
- -------------------------------------------------------------------
56,738
- ---------------------------------------------- --------------------
</TABLE>
AIM V.I. BALANCED FUND
17
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (BUILDING SUPPLIES) - 0.40%
Home Depot, Inc. (The) 1,800 $ 115,988
- -----------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.39%
Albertson's, Inc. 693 35,733
- -----------------------------------------------------------------
Safeway, Inc.(b) 1,600 79,200
- -----------------------------------------------------------------
114,933
- -----------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 0.47%
Dayton Hudson Corp. 2,100 136,500
- -----------------------------------------------------------------
RETAIL (SPECIALTY) - 0.34%
Linens 'N Things, Inc.(b) 2,300 100,625
- -----------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.79%
Omnicom Group, Inc. 500 40,000
- -----------------------------------------------------------------
Outdoor Systems, Inc.(b) 2,900 105,850
- -----------------------------------------------------------------
Young & Rubicam, Inc. 1,900 86,331
- -----------------------------------------------------------------
232,181
- -----------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 1.32%
Apollo Group, Inc. - Class A(b) 3,500 92,969
- -----------------------------------------------------------------
Avis Rent A Car, Inc.(b) 2,800 81,550
- -----------------------------------------------------------------
Hertz Corp. - Class A 2,300 142,600
- -----------------------------------------------------------------
Metzler Group, Inc.(b) 2,500 69,063
- -----------------------------------------------------------------
386,182
- -----------------------------------------------------------------
SERVICES (DATA PROCESSING) - 0.57%
Ceridian Corp.(b) 1,100 35,956
- -----------------------------------------------------------------
DST Systems, Inc.(b) 1,100 69,162
- -----------------------------------------------------------------
Paychex, Inc. 1,950 62,156
- -----------------------------------------------------------------
167,274
- -----------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.53%
AT&T Corp. 1,650 92,091
- -----------------------------------------------------------------
IXC Communications, Inc.(b) 1,800 70,762
- -----------------------------------------------------------------
MCI WorldCom, Inc.(b) 2,000 172,500
- -----------------------------------------------------------------
WinStar Communications, Inc.(b) 2,300 112,125
- -----------------------------------------------------------------
447,478
- -----------------------------------------------------------------
TELEPHONE - 1.80%
Bell Atlantic Corp. 1,400 91,525
- -----------------------------------------------------------------
McLeodUSA, Inc. - Class A(b) 1,100 60,500
- -----------------------------------------------------------------
Nextlink Communications, Inc. - Class A(b) 1,100 81,813
- -----------------------------------------------------------------
Qwest Communications International, Inc.(b) 5,800 191,763
- -----------------------------------------------------------------
SBC Communications, Inc. 1,300 75,400
- -----------------------------------------------------------------
Time Warner Telecom, Inc.(b) 900 26,100
- -----------------------------------------------------------------
527,101
- -----------------------------------------------------------------
TOBACCO - 0.15%
Philip Morris Companies, Inc. 1,100 44,206
- -----------------------------------------------------------------
TRUCKERS - 0.11%
C.H. Robinson Worldwide, Inc. 900 33,075
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT - 0.28%
Allied Waste Industries, Inc.(b) 2,700 $ 53,325
- ------------------------------------------------------------------
Republic Services, Inc.(b) 1,200 29,700
- ------------------------------------------------------------------
83,025
- ------------------------------------------------------------------
WATER UTILITIES - 0.23%
Azurix Corp.(b) 3,300 66,000
- ------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $9,292,386) 10,700,956
- ------------------------------------------------------------------
DOMESTIC PREFERRED STOCKS - 0.75%
CHEMICALS (DIVERSIFIED) - 0.14%
Monsanto Co., $2.60 Conv. Pfd. 1,000 40,125
- ------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 0.16%
PSINet, Inc., $3.375 Conv. Pfd. 1,000 48,250
- ------------------------------------------------------------------
PERSONAL CARE - 0.12%
Estee Lauder Co., $3.805 Conv. Pfd. 400 34,500
- ------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.08%
United Rentals Trust I, $3.25 Conv. Pfd.(a)
(Acquired 12/10/98; Cost $19,375) 500 23,125
- ------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.22
Global Telesystems Group, Inc., $3.625 Conv.
(Acquired 05/05/99; Cost $54,136) 1,000 66,000
- ------------------------------------------------------------------
TELEPHONE - 0.03%
Nextlink Communications, Inc., $3.25 Conv. Pfd. 100 9,113
- ------------------------------------------------------------------
Total Domestic Preferred Stocks
(Cost $199,132) 221,113
- ------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE
BONDS NOTES - 3.62%(c)
AUSTRALIA - 0.21%
New South Wales Treasury Corp. (Sovereign
Debt), Gtd. Notes, 7.00%, 04/01/04 90,000 61,582
- ------------------------------------------------------------------
CANADA - 0.12%
Clearnet Communications, Inc. (Telephone),
Unsec. Sr. Disc. Notes, 5.303%, 02/15/09(d) 50,000 18,663
- ------------------------------------------------------------------
GMAC Canada Ltd. (Financial Diversified), Sr.
Unsec. Gtd. Unsub. Notes, 6.50%, 03/23/04 10,000 15,794
- ------------------------------------------------------------------
34,457
- ------------------------------------------------------------------
DENMARK - 0.36%
Kingdom of Denmark (Sovereign Debt), Bonds,
7.00%, 12/15/04 670,000 104,486
- ------------------------------------------------------------------
GERMANY - 0.39%
Bundesrepublik Deutschland (Sovereign Debt),
Bonds, 7.25%, 10/21/02 50,000 57,218
- ------------------------------------------------------------------
Treuhandanstalt (Sovereign Debt), Gtd. Notes,
6.00%, 11/12/03 50,000 55,736
- ------------------------------------------------------------------
112,954
- ------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND
18
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
NETHERLANDS - 0.39%
Dresdner Finance B.V. (Banks - Major Regional), Series 11
Gtd. Notes, 3.072%, 07/30/03 EUR 60,000 $ 61,695
- --------------------------------------------------------------------------------
Hypovereins Finance N.V. (Banks - Major Regional), Gtd.
Series E Medium Term Notes, 6.00%, 03/12/07 DEM 25,000 13,859
- --------------------------------------------------------------------------------
Mannesmann Finance B.V. (Machinery - Diversified), Gtd.
Unsec. Unsub. Notes, 4.75%, 05/27/09 EUR 10,000 9,850
- --------------------------------------------------------------------------------
Prudential Financial B.V. (Investment Banking/Brokerage),
Sr. Unsec. Gtd. Bonds, 9.375%, 06/04/07 GBP 15,000 27,953
- --------------------------------------------------------------------------------
113,357
- --------------------------------------------------------------------------------
NEW ZEALAND - 0.41%
International Bank for Reconstruction & Development
(Banks - Money Center), Unsec. Notes, 5.50%, 04/15/04NZD 200,000 100,248
- --------------------------------------------------------------------------------
New Zealand Government (Sovereign Debt), Bonds, 10.00%,
03/15/02 NZD 20,000 11,716
- --------------------------------------------------------------------------------
Bonds, 8.00%, 04/15/04 NZD 15,000 8,515
- --------------------------------------------------------------------------------
120,479
- --------------------------------------------------------------------------------
SWEDEN - 0.63%
AB Spintab (Banks - Regional), Series 161, Unsec. Deb.,
7.50%, 06/15/04 SEK 600,000 77,548
- --------------------------------------------------------------------------------
Stadshypotek A.B. (Banks - Regional), Series 1562, Notes,
3.50%, 09/15/04 SEK 1,000,000 108,214
- --------------------------------------------------------------------------------
185,762
- --------------------------------------------------------------------------------
UNITED KINGDOM - 0.87%
European Investment Bank (Banks - Money Center), Unsec.
Unsub. Notes, 7.625%, 12/07/07 GBP 30,000 52,512
- --------------------------------------------------------------------------------
Lloyds Bank PLC (Banks - Major Regional), Sub. Notes,
5.25%, 07/14/08 DEM 50,000 26,317
- --------------------------------------------------------------------------------
Merrill Lynch & Co. (Investment Banking/Brokerage), Sr.
Unsec. Unsub. Notes, 7.375%, 12/17/07 GBP 55,000 90,810
- --------------------------------------------------------------------------------
National Power PLC (Electric Companies), Sr. Unsec.
Unsub. Notes, 8.00%, 02/21/07 AUD 100,000 67,754
- --------------------------------------------------------------------------------
Union Bank Switzerland London, (Banks - Major Regional),
Unsec. Sub. Notes, 7.375%, 11/26/04 GBP 10,000 16,456
- --------------------------------------------------------------------------------
253,849
- --------------------------------------------------------------------------------
UNITED STATES - 0.24%
General Electric Capital Corp. (Financial - Diversified),
Sr. Unsec. Unsub. Notes, 6.00%, 02/05/03 GBP 20,000 31,524
- --------------------------------------------------------------------------------
Global Notes (Sovereign Debt), Unsec. Sr. Notes, 6.875%,
06/07/02 GBP 25,000 40,394
- --------------------------------------------------------------------------------
71,918
- --------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Non-Convertible Bonds
& Notes (Cost $1,112,965) 1,058,844
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES -
0.29%
FRANCE - 0.11%
France Telecom (Telephone), Conv. Bonds,
2.00%, 01/01/04 FRF 183,680 $ 31,959
- --------------------------------------------------------------------------------
NETHERLANDS - 0.18%
Koninklijke Ahold N.V. (Retail-Food Chains), Sub. Notes,
3.00%, 09/30/03 NLG 91,000 52,665
- --------------------------------------------------------------------------------
Total Non - U.S. Dollar Denominated Convertible Bonds &
Notes (Cost $89,464) 84,624
- --------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 3.16%
BERMUDA - 0.48%
Global Crossing Ltd. (Telecommunications - Long
Distance)(b) 3,329 141,899
- --------------------------------------------------------------------------------
CANADA - 0.24%
AT&T Canada, Inc. (Telephone)(b) 900 57,656
- --------------------------------------------------------------------------------
Cadillac Fairview Corp. (Land Development)(b) 600 11,325
- --------------------------------------------------------------------------------
68,981
- --------------------------------------------------------------------------------
CAYMAN ISLANDS - 0.03%
Scottish Annuity & Life Holdings, Ltd. (Insurance -
Life/Health) 800 8,600
- --------------------------------------------------------------------------------
FINLAND - 0.69%
Fortum Corp. (Electric Companies) 2,100 10,150
- --------------------------------------------------------------------------------
Nokia Oyj A.B. - Class A - ADR (Communications Equipment) 2,100 192,281
- --------------------------------------------------------------------------------
202,431
- --------------------------------------------------------------------------------
FRANCE - 0.50%
AXA (Insurance - Multi-Line) 340 41,453
- --------------------------------------------------------------------------------
AXA-ADR (Insurance - Multi-Line) 1,200 74,775
- --------------------------------------------------------------------------------
France Telecom S.A. - ADR (Communications Equipment) 400 30,800
- --------------------------------------------------------------------------------
147,028
- --------------------------------------------------------------------------------
GERMANY - 0.18%
DaimlerChrysler A.G. (Automobiles) 587 52,170
- --------------------------------------------------------------------------------
NETHERLANDS - 0.69%
Equant N.V. (Computers - Networking)(b) 400 36,854
- --------------------------------------------------------------------------------
Equant N.V. - ADR (Computers - Networking)(b) 700 65,887
- --------------------------------------------------------------------------------
Libertel N.V. (Telecommunications - Cellular/Wireless)(b) 5,000 97,907
- --------------------------------------------------------------------------------
200,648
- --------------------------------------------------------------------------------
SOUTH KOREA - 0.19%
Korea Telecom Corp. - ADR (Telephone)(b) 1,384 55,360
- --------------------------------------------------------------------------------
UNITED KINGDOM - 0.16%
SmithKline Beecham PLC - ADR (Health Care - Drugs - Major
Pharmaceuticals) 700 46,244
- --------------------------------------------------------------------------------
Total Foreign Stocks (Cost $774,796) 923,361
- --------------------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND
19
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 3.63%
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") - 2.14%
Medium Term Notes, 6.18%, 03/15/01 $ 300,000 $ 301,956
- --------------------------------------------------------------------------------
Pass through certificates, 6.50%, 11/01/28 334,587 322,980
- --------------------------------------------------------------------------------
624,936
- --------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") - 0.67%
Pass through certificates, 6.50%, 03/15/29 203,735 196,095
- --------------------------------------------------------------------------------
PRIVATE EXPORT FUNDING COMPANY - 0.82%
Debentures, 8.35%, 01/31/01 230,000 238,800
- --------------------------------------------------------------------------------
Total U.S. Government Agency Securities
(Cost $1,086,449) 1,059,831
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 2.78%
U.S. TREASURY BONDS - 0.62%
5.50%, 08/15/28 200,000 182,818
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES - 2.16%
15.75%, 11/15/01 25,000 30,565
- --------------------------------------------------------------------------------
5.75%, 04/30/03(e) 600,000 600,797
- --------------------------------------------------------------------------------
631,362
- --------------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $843,726) 814,180
- --------------------------------------------------------------------------------
Total Investments, Excluding Repurchase Agreement (Cost
$22,847,727) 24,081,910
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 16.39%(f)
Dean Witter Reynolds, Inc., 4.85%, 07/01/99(g)
(Cost $4,794,569) 4,794,569 4,794,569
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.70% 28,876,479
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.30% 381,361
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $29,257,840
- --------------------------------------------------------------------------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) 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 06/30/99 was $1,636,542
which represented 5.59% of the Fund's net assets.
(b) Non-income producing security.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(d) Discounted bond at purchase. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(e) A portion of the principal balance was pledged as collateral to cover
margin requirements for open future contracts. See Note 8.
(f) 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 is at least 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.
(g) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$100,013,472. Collateralized by U.S. Government obligations.
Investment Abbreviations:
ADR - American Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
DEM - German Deutsche Mark
Disc. - Discounted
DKK - Danish Krone
EUR - Euro
FRF - French Franc
GBP - British Pound Sterling
Gtd. - Guaranteed
NLG - Dutch Guilder
NZD - New Zealand Dollar
Pfd. - Preferred
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
See Notes to Financial Statements.
AIM V.I. BALANCED FUND
20
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreement, at market value (cost
$22,847,727) $24,081,910
- -------------------------------------------------------------------------------
Repurchase agreement (cost $4,794,569) 4,794,569
- -------------------------------------------------------------------------------
Receivables for:
Investments sold 175,493
- -------------------------------------------------------------------------------
Capital stock sold 311,703
- -------------------------------------------------------------------------------
Dividends and interest 209,982
- -------------------------------------------------------------------------------
Forward currency contracts - closed 7,180
- -------------------------------------------------------------------------------
Forward currency contracts - open 5,851
- -------------------------------------------------------------------------------
Variation margin 68,750
- -------------------------------------------------------------------------------
Investment for deferred compensation plan 4,119
- -------------------------------------------------------------------------------
Other assets 29,534
- -------------------------------------------------------------------------------
Total assets 29,689,091
- -------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 374,205
- -------------------------------------------------------------------------------
Forward currency contracts - closed 907
- -------------------------------------------------------------------------------
Deferred compensation plan 4,119
- -------------------------------------------------------------------------------
Accrued advisory fees 29,120
- -------------------------------------------------------------------------------
Accrued directors' fees 2,100
- -------------------------------------------------------------------------------
Accrued operating expenses 20,800
- -------------------------------------------------------------------------------
Total liabilities 431,251
- -------------------------------------------------------------------------------
Net assets applicable to shares outstanding $29,257,840
===============================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- -------------------------------------------------------------------------------
Outstanding 2,485,880
===============================================================================
Net asset value, offering and redemption price per share $ 11.77
===============================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 347,458
- ----------------------------------------------------------------------------
Dividends (net of foreign withholding tax $799) 31,778
- ----------------------------------------------------------------------------
Total investment income 379,236
- ----------------------------------------------------------------------------
EXPENSES:
Advisory fees 71,737
- ----------------------------------------------------------------------------
Administrative services fees 24,726
- ----------------------------------------------------------------------------
Custodian fees 17,985
- ----------------------------------------------------------------------------
Directors' fees and expenses 4,227
- ----------------------------------------------------------------------------
Professional fees 15,986
- ----------------------------------------------------------------------------
Other 7,869
- ----------------------------------------------------------------------------
Total expenses 142,530
- ----------------------------------------------------------------------------
Less: Expenses paid indirectly (44)
- ----------------------------------------------------------------------------
Fees waived by advisor (29,276)
- ----------------------------------------------------------------------------
Net expenses 113,210
- ----------------------------------------------------------------------------
Net investment income 266,026
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (119,060)
- ----------------------------------------------------------------------------
Foreign currencies (2,190)
- ----------------------------------------------------------------------------
Forward contracts 2,411
- ----------------------------------------------------------------------------
Futures contracts 290,025
- ----------------------------------------------------------------------------
Option contracts (1,319)
- ----------------------------------------------------------------------------
169,867
- ----------------------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 652,827
- ----------------------------------------------------------------------------
Foreign currencies 5,788
- ----------------------------------------------------------------------------
Futures contracts 20,338
- ----------------------------------------------------------------------------
678,953
- ----------------------------------------------------------------------------
Net gain from investment securities and futures contracts 848,820
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,114,846
============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. BALANCED FUND
21
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the period May 1, 1998 (date
operations commenced) through December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 266,026 $ 105,191
- --------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 169,867 135,495
- --------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and futures contracts 678,953 700,688
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,114,846 941,374
- --------------------------------------------------------------------------------
Dividends from net investment income -- (115,294)
- --------------------------------------------------------------------------------
Distributions from net realized gains -- (20,295)
- --------------------------------------------------------------------------------
Net increase from capital stock transactions 17,799,658 9,537,551
- --------------------------------------------------------------------------------
Net increase in net assets 18,914,504 10,343,336
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 10,343,336 --
- --------------------------------------------------------------------------------
End of period $29,257,840 $10,343,336
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $27,336,079 $ 9,536,421
- --------------------------------------------------------------------------------
Undistributed net investment income 263,236 (2,790)
- --------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and options
contracts 278,884 109,017
- --------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and futures contracts 1,379,641 700,688
- --------------------------------------------------------------------------------
$29,257,840 $10,343,336
- --------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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. Balanced Fund (the "Fund"). The Fund's investment objective is
to achieve as high a total return to investors as possible, consistent with
preservation of capital. The Fund commenced operations on May 1, 1998.
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 closing bid price on that day. 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
closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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
AIM V.I. BALANCED FUND
22
<PAGE>
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. Such distributions are
declared and paid annually.
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. 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.
F. Put Options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, a Fund pays an option premium. The option's underlying instrument
may be a security, or a futures contract. Put options may be used by a Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
G. Bond Premiums - It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
H. 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. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
I. Foreign Currency Contracts - A foreign 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 foreign 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 foreign 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.
AIM V.I. BALANCED FUND
23
<PAGE>
Outstanding forward currency contracts at June 30, 1999 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO
SETTLEMENT ----------------- UNREALIZED
DATE DELIVER RECEIVE VALUE APPRECIATION
----------- --------- ------- ------- ------------
<S> <C> <C> <C> <C>
7/22/99 SEK 1,500,000 180,690 176,956 3,734
8/26/99 NZD 50,000 27,380 26,502 878
10/6/99 GBP 175,000 277,333 276,094 1,239
------- ------- -----
485,403 479,552 5,851
======= ======= =====
</TABLE>
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 $150 million of the Fund's average daily net assets, plus 0.50% of
the Fund's average daily net assets in excess of $150 million. During the six
months ended June 30, 1999, AIM waived fees of $29,276.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $21,885 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$1,866 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
The Fund received reductions in custodian fees of $44 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $44 during the six months ended June 30, 1999.
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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the six months ended June 30, 1999 was
$18,705,015 and $2,693,975, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $1,970,046
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (735,863)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,234,183
=========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1999
and the period May 1, 1998 (date operations commenced) through December 31,
1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Sold 1,615,711 $18,469,709 954,695 $9,785,741
- -----------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 12,578 135,589
- -----------------------------------------------------------------------
Reacquired (58,458) (670,051) (38,646) (383,779)
- -----------------------------------------------------------------------
1,557,253 $17,799,658 928,627 $9,537,551
=======================================================================
</TABLE>
NOTE 8 - OPEN FUTURES CONTRACTS
On June 30, 1999, $3,363,750 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
<TABLE>
<CAPTION>
NUMBER OF UNREALIZED
CONTRACTS CONTRACTS MONTH/COMMITMENT APPRECIATION
--------- --------- ---------------- ------------
<S> <C> <C> <C>
S&P 500 Index 11 September 99/Buy 140,113
======================================================
</TABLE>
NOTE 9 - CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the period ended June 30, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION
CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period -- $ --
- -------------------------------------------
Written 6 1,782
- -------------------------------------------
Closed (6) (1,782)
- -------------------------------------------
End of period -- $ --
===========================================
</TABLE>
AIM V.I. BALANCED FUND
24
<PAGE>
NOTE 10 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the period ended June 30, 1999 and the period May 1, 1998 (date
operation commenced) through December 31, 1998.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999(a) 1998
-------- ------------
<S> <C> <C>
Net asset value, beginning of period $ 11.14 $ 10.00
- -------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.16 0.12
- -------------------------------------------------------------------------
Net gains on securities (both realized and
unrealized) 0.47 1.18
- -------------------------------------------------------------------------
Total from investment operations 0.63 1.30
- -------------------------------------------------------------------------
Less Distributions:
Dividends from net investment income -- (0.14)
- -------------------------------------------------------------------------
Distributions from net realized gains -- (0.02)
- -------------------------------------------------------------------------
Total Distributions -- (0.16)
- -------------------------------------------------------------------------
Net asset value, end of period $ 11.77 $ 11.14
=========================================================================
Total return(b) 5.66% 13.02%
=========================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $29,258 $10,343
=========================================================================
Ratio of expenses to average net assets(c) 1.18%(d) 1.18%(e)
=========================================================================
Ratio of net investment income to average net
assets(f) 2.78%(d) 3.71%(e)
=========================================================================
Portfolio turnover rate 16% 9%
=========================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.49% (annualized) and 2.83% (annualized) for 1999-1998.
(d) Ratios are annualized and based on average net assets of $19,288,525.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursement were 2.47% (annualized) and 2.07% (annualized) for 1999-1998.
AIM V.I. BALANCED FUND
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Managers' Overview
FUND'S SIX-MONTH RETURNS IMPRESSIVE
Q. MARKET PERFORMANCE IMPROVED PORTFOLIO HOLDINGS
SIGNIFICANTLY IN THE FIRST HALF
OF 1999. HOW DID AIM V.I. CAPITAL As of 6/30/99, based on total net assets
APPRECIATION FUND PERFORM?
A. For the six-month reporting period TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
ended June 30, 1999, cumulative total
return for AIM V.I. Capital 1. Lucent Technologies, Inc. 1.69% 1. Computers (Software/Services) 9.72%
Appreciation Fund was a solid 9.53%. 2. Schwab (Charles) Corp. 1.65 2. Communications Equipment 7.91
The fund outperformed the S&P MidCap 3. Corning Inc. 1.46 3. Electronics (Semiconductors) 7.39
400 Index, which returned 6.87%. 4. BMC Software, Inc. 1.41 4. Services (Data Processing) 4.25
5. Solectron Corp. 1.31 5. Electrical Equipment 3.82
Q. WHAT WERE THE MAJOR TRENDS IN THE 6. Omnicom Group, Inc. 1.30 6. Broadcasting (TV, Radio, Cable) 3.37
FINANCIAL MARKETS DURING THE REPORTING 7. EMC Corp. 1.25 7. Oil & Gas (Drilling/Equipment) 3.15
PERIOD? 8. Concord EFS, Inc. 1.24 8. Banks (Regional) 2.78
A. The technology sector in particular 9. Staples, Inc. 1.21 9. Retail (Specialty) 2.62
was badly bruised after turning in a 10. PMC-Sierra, Inc. 1.15 10. Computers (Peripherals) 2.58
sterling performance during 1998.
Investors began to worry about a The fund's portfolio composition is subject to change, and there is no assurance
bubble developing, especially in high- that the fund will continue to hold any particular security.
flying Internet stocks--the ".com"
universe. A sell-off in the technology year. We also own Brinker International, in Internet stocks during 1998. Many of
area affected our significant holdings owner of the Chili's chain, because its these companies simply have no earnings
in technology industries. But the strong earnings growth met our investment to report. Our technology holdings tend
markets rebounded when first-quarter criteria. to be the companies that make the
earnings reports came in quite strong. A newcomer to our top-10 list is Internet possible. An example is
For instance, portfolio holding EMC Omnicom Group, which operates advertising PMC-Sierra Inc., which develops
Corp., a maker of information storage agencies worldwide; for the first semiconductor components for the
and retrieval systems, reported a 51% quarter of 1999, both revenue and broadband and high-bandwidth
rise in earnings for the first quarter, earnings rose 28% over the first quarter communications network industries.
its eighth consecutive quarter of of 1998. Some holdings that are Internet- and
revenue and earnings growth in excess technology-related aren't officially
of 30%. Q. THE TECHNOLOGY SECTOR, PARTICULARLY part of the technology sector. A good
INTERNET STOCKS, EXPERIENCED SOME example is Charles Schwab, the
Q. WHAT OTHER FACTORS CONTRIBUTED TO VOLATILITY IN EARLY 1999. WHAT TYPES discount broker that now has a huge
THE FUND'S GAINS? OF TECHNOLOGY COMPANIES DOES THE FUND presence in online trading. The rising
A. Certain restaurant stocks have OWN? value of Schwab stock made an important
become attractive recently. There was A. The tech sector represents more than contribution to the fund's solid
serious overbuilding in the restaurant 20% of net assets. Because of our performance during the period covered
industry a few years back, but that earnings-driven investment discipline, by this report.
seems to have stopped. Outback we did not participate in the huge run-up
Steakhouse saw earnings grow 50% last
</TABLE>
26 AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Q. WHAT IS YOUR OUTLOOK FOR THE [GRAPH APPEARS HERE]
REMAINDER OF 1999?
A. Toward the close of the reporting RESULTS OF A $10,000 INVESTMENT
period, markets started to pay more -------------------------------
attention to mid-cap stocks. For the 5/5/93 - 6/30/99
three months ended June 30, 1999, the
S&P MidCap 400 Index rose 14.15%, while
the large-cap S&P 500 rose only 7.05%.
It's too early to tell if this will be AVERAGE ANNUAL TOTAL RETURN
a long-term change in market sentiment. As of 6/30/99
Of course, we hope it is. Mid-sized Inception (5/5/93) 18.88%
companies have been reporting much 5 Years 21.16
better earnings than their large-cap 1 Year 15.81
counterparts, while the valuations of
mid-cap stocks remain relatively low. LIPPER
We have repeatedly stated our belief AIM V.I. S & P CAPITAL
that the time is ripe for a rally in CAPITAL MIDCAP APPRECIATION
mid-cap stocks. APPRECIATION 400 FUND
We will continue to seek out the (In thousands) FUND INDEX INDEX
best-performing companies in the --------------------------------------
mid-cap sector; the fund should be well 5/5/93 10,000 10,000 10,000
positioned for an ongoing rally in 12/93 11,949 10,794 11,534
mid-cap stocks. 12/94 12,248 10,936 11,250
12/95 16,618 15,042 14,805
----------- 12/96 19,540 18,495 17,019
12/97 22,179 24,663 20,417
We have repeatedly stated 12/98 26,460 31,711 24,497
6/99 28,980 28,707 28,165
our belief that the time is ripe
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF
for a rally in mid-cap stocks. AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
-----------
The performance figures shown represent 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. AIM V.I. Capital Appreciation Fund performance figures
are historical and reflect reinvestment of all distributions and changes in
net asset value. The fund's investment return and principal value will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost.
The Lipper Capital Appreciation Funds Index represents an average of the
performance of the 30 largest capital appreciation funds. It is compiled by
Lipper, Inc., an independent mutual-fund performance monitor. The Standard
& Poor's MidCap 400 Index is an unmanaged index comprising common stocks of
approximately 400 midcapitalization companies. Data for the S&P 400 and the
Lipper Index are for the period 4/30/93-6/30/99.
An investment cannot be made in any index listed. Unless otherwise
noted, index results include reinvested dividends.
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND 27
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 91.53%
AIRLINES - 0.26%
Southwest Airlines Co. 65,500 $ 2,038,688
- ----------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.74%
Danaher Corp. 63,900 3,714,187
- ----------------------------------------------------------------------
SPX Corp.(a) 25,000 2,087,500
- ----------------------------------------------------------------------
5,801,687
- ----------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 0.50%
Northern Trust Corp. 40,000 3,880,000
- ----------------------------------------------------------------------
BANKS (REGIONAL) - 2.78%
AmSouth Bancorporation 57,450 1,332,122
- ----------------------------------------------------------------------
Bank United Corp. - Class A 50,000 2,009,375
- ----------------------------------------------------------------------
Compass Bancshares, Inc. 65,000 1,771,250
- ----------------------------------------------------------------------
First Tennessee National Corp. 70,000 2,681,875
- ----------------------------------------------------------------------
Firstar Corp. 128,000 3,584,000
- ----------------------------------------------------------------------
Golden State Bancorp, Inc.(a) 78,000 1,716,000
- ----------------------------------------------------------------------
Mercantile Bankshares Corp. 26,000 919,750
- ----------------------------------------------------------------------
North Fork Bancorporation, Inc. 127,700 2,721,606
- ----------------------------------------------------------------------
Old Kent Financial Corp. 42,315 1,771,941
- ----------------------------------------------------------------------
TCF Financial Corp. 40,000 1,115,000
- ----------------------------------------------------------------------
Zions Bancorporation 33,200 2,108,200
- ----------------------------------------------------------------------
21,731,119
- ----------------------------------------------------------------------
BIOTECHNOLOGY - 0.88%
Biogen, Inc.(a) 102,200 6,572,738
- ----------------------------------------------------------------------
Celera Genomics(a) 17,150 277,616
- ----------------------------------------------------------------------
6,850,354
- ----------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.37%
Adelphia Communications Corp.(a) 50,000 3,181,250
- ----------------------------------------------------------------------
AT&T Corp. - Liberty Media Group - Class A(a) 154,000 5,659,500
- ----------------------------------------------------------------------
Chancellor Media Corp. - Class A(a) 73,072 4,028,094
- ----------------------------------------------------------------------
Cox Communications, Inc. - Class A(a) 24,000 883,500
- ----------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 47,100 3,573,713
- ----------------------------------------------------------------------
TCA Cable TV, Inc. 30,400 1,687,200
- ----------------------------------------------------------------------
Univision Communications, Inc.(a) 74,900 4,943,400
- ----------------------------------------------------------------------
USA Networks, Inc.(a) 59,600 2,391,450
- ----------------------------------------------------------------------
26,348,107
- ----------------------------------------------------------------------
BUILDING MATERIALS - 0.23%
Masco Corp. 62,400 1,801,800
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMENT - 7.02%
ADC Telecommunications, Inc.(a) 76,000 $ 3,462,750
- ----------------------------------------------------------------------
Comverse Technology, Inc.(a) 76,650 5,787,075
- ----------------------------------------------------------------------
Corning, Inc. 163,200 11,444,400
- ----------------------------------------------------------------------
General Instrument Corp.(a) 95,000 4,037,500
- ----------------------------------------------------------------------
Lucent Technologies, Inc. 196,185 13,230,226
- ----------------------------------------------------------------------
Motorola, Inc. 40,000 3,790,000
- ----------------------------------------------------------------------
QUALCOMM, Inc.(a) 25,700 3,687,950
- ----------------------------------------------------------------------
Scientific-Atlanta, Inc. 99,300 3,574,800
- ----------------------------------------------------------------------
Uniphase Corp.(a) 35,300 5,859,800
- ----------------------------------------------------------------------
54,874,501
- ----------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.69%
Apple Computer, Inc.(a) 50,500 2,338,781
- ----------------------------------------------------------------------
Comdisco, Inc. 118,600 3,039,125
- ----------------------------------------------------------------------
5,377,906
- ----------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.28%
VeriSign, Inc.(a) 25,300 2,182,125
- ----------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.58%
Adaptec, Inc.(a) 102,200 3,608,938
- ----------------------------------------------------------------------
EMC Corp.(a) 178,000 9,790,000
- ----------------------------------------------------------------------
Lexmark International Group, Inc.(a) 102,400 6,764,800
- ----------------------------------------------------------------------
20,163,738
- ----------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 9.46%
America Online, Inc. 38,000 4,199,000
- ----------------------------------------------------------------------
At Home Corp.(a) 50,000 2,696,872
- ----------------------------------------------------------------------
BMC Software, Inc.(a) 204,600 11,048,400
- ----------------------------------------------------------------------
Citrix Systems, Inc.(a) 153,400 8,667,100
- ----------------------------------------------------------------------
Compuware Corp.(a) 254,600 8,099,462
- ----------------------------------------------------------------------
Electronic Arts, Inc.(a) 51,000 2,766,750
- ----------------------------------------------------------------------
Electronics for Imaging, Inc.(a) 97,300 4,998,787
- ----------------------------------------------------------------------
Intuit, Inc.(a) 55,000 4,956,875
- ----------------------------------------------------------------------
Lycos, Inc.(a) 61,000 5,604,375
- ----------------------------------------------------------------------
Novell, Inc.(a) 96,800 2,565,200
- ----------------------------------------------------------------------
RealNetworks, Inc.(a) 29,000 1,997,375
- ----------------------------------------------------------------------
Siebel Systems, Inc.(a) 30,000 1,991,250
- ----------------------------------------------------------------------
Sterling Software, Inc.(a) 63,600 1,697,325
- ----------------------------------------------------------------------
Synopsys, Inc.(a) 77,000 4,249,437
- ----------------------------------------------------------------------
Verio, Inc.(a) 35,000 2,432,500
- ----------------------------------------------------------------------
Veritas Software Corp.(a) 63,200 6,000,050
- ----------------------------------------------------------------------
73,970,758
- ----------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
28
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.07%
Action Performance Companies, Inc.(a) 16,000 $ 528,000
- -------------------------------------------------------------------
CONSUMER FINANCE - 2.38%
Capital One Financial Corp. 121,800 6,782,737
- -------------------------------------------------------------------
Countrywide Credit Industries, Inc. 32,500 1,389,375
- -------------------------------------------------------------------
Providian Financial Corp. 86,300 8,069,050
- -------------------------------------------------------------------
SLM Holding Corp. 51,050 2,338,728
- -------------------------------------------------------------------
18,579,890
- -------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.20%
Patterson Dental Co.(a) 7,300 253,675
- -------------------------------------------------------------------
U.S. Foodservice(a) 31,200 1,329,900
- -------------------------------------------------------------------
1,583,575
- -------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.82%
American Power Conversion Corp.(a) 254,600 5,123,825
- -------------------------------------------------------------------
Conexant Systems, Inc.(a) 57,000 3,309,562
- -------------------------------------------------------------------
Sanmina Corp.(a) 48,300 3,664,762
- -------------------------------------------------------------------
Solectron Corp.(a) 153,400 10,229,862
- -------------------------------------------------------------------
Symbol Technologies, Inc. 133,875 4,936,641
- -------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 125,000 2,625,000
- -------------------------------------------------------------------
29,889,652
- -------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.86%
PE Corp-PE Biosystems Group 40,000 4,590,000
- -------------------------------------------------------------------
Waters Corp.(a) 40,000 2,125,000
- -------------------------------------------------------------------
6,715,000
- -------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 7.13%
Altera Corp.(a) 134,400 4,947,600
- -------------------------------------------------------------------
Analog Devices, Inc.(a) 151,600 7,608,425
- -------------------------------------------------------------------
Atmel Corp.(a) 48,400 1,267,475
- -------------------------------------------------------------------
Cypress Semiconductor Corp.(a) 96,200 1,587,300
- -------------------------------------------------------------------
Linear Technology Corp. 102,000 6,859,500
- -------------------------------------------------------------------
LSI Logic Corp.(a) 100,700 4,644,787
- -------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 76,600 5,093,900
- -------------------------------------------------------------------
Microchip Technology, Inc.(a) 69,100 3,273,612
- -------------------------------------------------------------------
National Semiconductor Corp.(a) 105,000 2,657,812
- -------------------------------------------------------------------
PMC-Sierra, Inc.(a) 153,000 9,017,437
- -------------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 43,100 2,906,556
- -------------------------------------------------------------------
Xilinx, Inc.(a) 102,200 5,850,950
- -------------------------------------------------------------------
55,715,354
- -------------------------------------------------------------------
ENTERTAINMENT - 0.49%
SFX Entertainment, Inc. - Class A(a) 60,000 3,840,000
- -------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 1.67%
Applied Materials, Inc.(a) 43,900 3,243,112
- -------------------------------------------------------------------
KLA-Tencor Corp.(a) 59,200 3,840,600
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
EQUIPMENT (SEMICONDUCTOR) - CONTINUED
Novellus Systems, Inc.(a) 22,000 $ 1,501,500
- ---------------------------------------------------------------------
Teradyne, Inc.(a) 62,600 4,491,550
- ---------------------------------------------------------------------
13,076,762
- ---------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.66%
FINOVA Group, Inc. 54,600 2,873,325
- ---------------------------------------------------------------------
MGIC Investment Corp. 46,633 2,267,530
- ---------------------------------------------------------------------
5,140,855
- ---------------------------------------------------------------------
FOODS - 0.24%
Keebler Foods Co.(a) 61,600 1,871,100
- ---------------------------------------------------------------------
FOOTWEAR - 0.51%
Nike, Inc. - Class B 63,200 4,001,350
- ---------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.34%
Mandalay Resort Group(a) 91,600 1,935,050
- ---------------------------------------------------------------------
MGM Grand, Inc.(a) 15,200 744,800
- ---------------------------------------------------------------------
2,679,850
- ---------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.68%
Alpharma, Inc. - Class A 44,750 1,591,422
- ---------------------------------------------------------------------
Forest Laboratories, Inc.(a) 22,400 1,036,000
- ---------------------------------------------------------------------
Jones Pharma Inc. 120,500 4,744,687
- ---------------------------------------------------------------------
Medicis Pharmaceutical Corp. - Class A(a) 64,050 1,625,269
- ---------------------------------------------------------------------
MedImmune, Inc.(a) 30,000 2,032,500
- ---------------------------------------------------------------------
Mylan Laboratories, Inc. 30,400 805,600
- ---------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 38,100 1,335,881
- ---------------------------------------------------------------------
13,171,359
- ---------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.57%
Health Management Associates, Inc. - Class A(a) 109,002 1,226,272
- ---------------------------------------------------------------------
Universal Health Services, Inc. - Class B(a) 68,400 3,266,100
- ---------------------------------------------------------------------
4,492,372
- ---------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.73%
Express Scripts, Inc. - Class A(a) 71,600 4,309,425
- ---------------------------------------------------------------------
Trigon Healthcare, Inc.(a) 38,300 1,393,162
- ---------------------------------------------------------------------
5,702,587
- ---------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 2.31%
Bausch & Lomb, Inc. 51,100 3,909,150
- ---------------------------------------------------------------------
Biomet, Inc. 114,200 4,539,450
- ---------------------------------------------------------------------
Guidant Corp. 79,200 4,073,850
- ---------------------------------------------------------------------
Henry Schein, Inc.(a) 34,985 1,108,587
- ---------------------------------------------------------------------
Stryker Corp. 50,600 3,042,325
- ---------------------------------------------------------------------
Sybron International Corp.(a) 51,400 1,416,712
- ---------------------------------------------------------------------
18,090,074
- ---------------------------------------------------------------------
HOMEBUILDING - 0.11%
Clayton Homes, Inc. 78,525 898,130
- ---------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
29
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOUSEHOLD FURNISHING & APPLIANCES - 0.66%
Leggett & Platt, Inc. 102,200 $ 2,842,437
- ---------------------------------------------------------------
Maytag Corp. 33,800 2,355,438
- ---------------------------------------------------------------
5,197,875
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.25%
Dial Corp. (The) 53,000 1,970,937
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.80%
AFLAC, Inc. 47,200 2,259,700
- ---------------------------------------------------------------
Provident Companies, Inc. 76,600 3,064,000
- ---------------------------------------------------------------
Torchmark Corp. 28,000 955,500
- ---------------------------------------------------------------
6,279,200
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 2.55%
Bear Stearns Companies, Inc. 60,000 2,805,000
- ---------------------------------------------------------------
Lehman Brothers Holdings, Inc. 27,000 1,680,750
- ---------------------------------------------------------------
Schwab (Charles) Corp. 117,500 12,910,312
- ---------------------------------------------------------------
TD Waterhouse Group, Inc.(a) 100,000 2,506,245
- ---------------------------------------------------------------
19,902,307
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT - 1.09%
Federated Investors, Inc. - Class B 105,400 1,890,613
- ---------------------------------------------------------------
Franklin Resources, Inc. 60,000 2,437,500
- ---------------------------------------------------------------
T. Rowe Price Associates, Inc. 109,800 4,213,575
- ---------------------------------------------------------------
8,541,688
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 1.59%
Callaway Golf Co. 106,700 1,560,488
- ---------------------------------------------------------------
Harley-Davidson, Inc. 120,000 6,525,000
- ---------------------------------------------------------------
Hasbro, Inc. 50,000 1,396,875
- ---------------------------------------------------------------
Mattel, Inc. 104,000 2,749,500
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 5,600 220,150
- ---------------------------------------------------------------
12,452,013
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.15%
Pentair, Inc. 25,500 1,166,625
- ---------------------------------------------------------------
NATURAL GAS - 0.31%
El Paso Energy Corp. 68,000 2,392,750
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 3.15%
Baker Hughes, Inc. 105,000 3,517,500
- ---------------------------------------------------------------
BJ Services Co.(a) 102,000 3,002,625
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 125,000 4,632,812
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 40,000 1,135,000
- ---------------------------------------------------------------
Global Industries Ltd.(a) 143,000 1,832,188
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 115,000 2,120,313
- ---------------------------------------------------------------
Smith International, Inc.(a) 85,000 3,692,188
- ---------------------------------------------------------------
Transocean Offshore, Inc. 50,000 1,312,500
- ---------------------------------------------------------------
Varco International, Inc.(a) 140,000 1,531,250
- ---------------------------------------------------------------
Weatherford International, Inc.(a) 50,000 1,831,250
- ---------------------------------------------------------------
24,607,626
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION) - 0.41%
Apache Corp. 67,000 $ 2,613,000
- ------------------------------------------------------------------
Santa Fe Snyder Corp.(a) 80,000 610,000
- ------------------------------------------------------------------
3,223,000
- ------------------------------------------------------------------
PUBLISHING - 0.69%
Reader's Digest Association, Inc. - Class A 60,000 2,385,000
- ------------------------------------------------------------------
The McGraw-Hill Companies, Inc. 56,200 3,031,288
- ------------------------------------------------------------------
5,416,288
- ------------------------------------------------------------------
RAILROADS - 0.90%
Kansas City Southern Industries, Inc. 110,000 7,019,375
- ------------------------------------------------------------------
RESTAURANTS - 1.53%
Brinker International, Inc.(a) 102,200 2,778,563
- ------------------------------------------------------------------
Outback Steakhouse, Inc.(a) 99,800 3,923,388
- ------------------------------------------------------------------
Papa John's International, Inc.(a) 31,100 1,389,781
- ------------------------------------------------------------------
Starbucks Corp.(a) 103,200 3,876,450
- ------------------------------------------------------------------
11,968,182
- ------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.51%
Lowe's Companies, Inc. 70,000 3,968,125
- ------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 2.34%
Best Buy Co., Inc.(a) 116,000 7,830,000
- ------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 103,000 4,532,000
- ------------------------------------------------------------------
Circuit City Stores-Circuit City Group 63,400 5,896,200
- ------------------------------------------------------------------
18,258,200
- ------------------------------------------------------------------
RETAIL (DEPARTMENT STORES) - 0.83%
Federated Department Stores, Inc.(a) 30,000 1,588,125
- ------------------------------------------------------------------
Kohl's Corp.(a) 64,000 4,940,000
- ------------------------------------------------------------------
6,528,125
- ------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 1.95%
Consolidated Stores Corp.(a) 100,200 2,705,400
- ------------------------------------------------------------------
Dollar General Corp. 83,300 2,415,700
- ------------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 92,475 4,068,900
- ------------------------------------------------------------------
Family Dollar Stores, Inc. 145,600 3,494,400
- ------------------------------------------------------------------
Ross Stores, Inc. 51,400 2,589,275
- ------------------------------------------------------------------
15,273,675
- ------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.37%
Kroger Co.(a) 103,400 2,888,738
- ------------------------------------------------------------------
RETAIL (SPECIALTY) - 2.62%
Bed Bath & Beyond, Inc.(a) 140,000 5,390,000
- ------------------------------------------------------------------
eToys, Inc.(a) 32,500 1,324,375
- ------------------------------------------------------------------
Linens 'N Things, Inc.(a) 66,600 2,913,750
- ------------------------------------------------------------------
Payless ShoeSource, Inc.(a) 25,000 1,337,500
- ------------------------------------------------------------------
Staples, Inc.(a) 306,781 9,491,022
- ------------------------------------------------------------------
20,456,647
- ------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
30
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL) - 2.08%
Abercrombie & Fitch Co. - Class A(a) 50,000 $ 2,400,000
- ---------------------------------------------------------------------
Gap, Inc. (The) 38,963 1,962,736
- ---------------------------------------------------------------------
Intimate Brands, Inc. 65,730 3,113,959
- ---------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 117,625 2,999,438
- ---------------------------------------------------------------------
Talbots, Inc. 25,800 983,625
- ---------------------------------------------------------------------
TJX Companies, Inc. 144,300 4,806,994
- ---------------------------------------------------------------------
16,266,752
- ---------------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.91%
Astoria Financial Corp. 50,000 2,196,875
- ---------------------------------------------------------------------
Dime Bancorp, Inc. 129,800 2,612,225
- ---------------------------------------------------------------------
GreenPoint Financial Corp. 70,000 2,296,875
- ---------------------------------------------------------------------
7,105,975
- ---------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 2.44%
Interpublic Group of Companies, Inc. 25,500 2,208,938
- ---------------------------------------------------------------------
Lamar Advertising Co.(a) 116,000 4,748,750
- ---------------------------------------------------------------------
Omnicom Group, Inc. 127,300 10,184,000
- ---------------------------------------------------------------------
TMP Worldwide, Inc.(a) 30,000 1,905,000
- ---------------------------------------------------------------------
19,046,688
- ---------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 1.81%
Apollo Group, Inc. - Class A(a) 65,500 1,739,844
- ---------------------------------------------------------------------
ChoicePoint, Inc.(a) 31,500 2,114,438
- ---------------------------------------------------------------------
Cintas Corp. 77,100 5,180,156
- ---------------------------------------------------------------------
Convergys Corp.(a) 37,800 727,650
- ---------------------------------------------------------------------
Galileo International, Inc. 40,000 2,137,500
- ---------------------------------------------------------------------
Viad Corp. 74,100 2,292,469
- ---------------------------------------------------------------------
14,192,057
- ---------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 0.68%
Ciber, Inc.(a) 49,300 942,863
- ---------------------------------------------------------------------
Policy Management Systems Corp.(a) 29,100 873,000
- ---------------------------------------------------------------------
SunGard Data Systems, Inc.(a) 102,200 3,525,900
- ---------------------------------------------------------------------
5,341,763
- ---------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 4.25%
Affiliated Computer Services, Inc. - Class A(a) 51,500 2,607,188
- ---------------------------------------------------------------------
Ceridian Corp.(a) 108,400 3,543,325
- ---------------------------------------------------------------------
Concord EFS, Inc.(a) 229,800 9,723,413
- ---------------------------------------------------------------------
CSG Systems International, Inc.(a) 109,300 2,862,294
- ---------------------------------------------------------------------
DST Systems, Inc.(a) 30,300 1,905,113
- ---------------------------------------------------------------------
Equifax, Inc. 44,100 1,573,819
- ---------------------------------------------------------------------
Fiserv, Inc.(a) 192,225 6,019,045
- ---------------------------------------------------------------------
National Data Corp. 48,000 2,052,000
- ---------------------------------------------------------------------
Paychex, Inc. 92,962 2,963,164
- ---------------------------------------------------------------------
33,249,361
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPECIALTY PRINTING - 0.25%
Valassis Communications, Inc.(a) 52,500 $ 1,922,813
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.72%
Crown Castle International Corp.(a) 130,000 2,705,626
- -------------------------------------------------------------------------------
Metromedia Fiber Network, Inc. - Class A(a) 81,000 2,910,938
- -------------------------------------------------------------------------------
5,616,564
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.80%
Global TeleSystems Group, Inc.(a) 77,000 6,237,000
- -------------------------------------------------------------------------------
TELEPHONE - 0.99%
CenturyTel, Inc. 114,900 4,567,275
- -------------------------------------------------------------------------------
Cincinnati Bell, Inc. 37,800 942,638
- -------------------------------------------------------------------------------
NTL Inc.(a) 25,500 2,197,781
- -------------------------------------------------------------------------------
7,707,694
- -------------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.91%
Jones Apparel Group, Inc.(a) 127,800 4,385,138
- -------------------------------------------------------------------------------
Tommy Hilfiger Corp.(a) 36,900 2,712,150
- -------------------------------------------------------------------------------
7,097,288
- -------------------------------------------------------------------------------
TEXTILES (HOME FURNISHINGS) - 0.16%
Shaw Industries, Inc.(a) 77,000 1,270,500
- -------------------------------------------------------------------------------
WASTE MANAGEMENT - 0.27%
Waste Management, Inc. 38,775 2,084,156
- -------------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $475,881,299) 715,646,680
- -------------------------------------------------------------------------------
FOREIGN STOCKS - 1.54%
FINLAND - 0.89%
Nokia Oyj A.B. - Class A - ADR (Communications Equipment) 75,800 6,940,437
- -------------------------------------------------------------------------------
FRANCE - 0.05%
Coflexip S.A.-ADR Manufacturing (Specialized) 10,100 439,350
- -------------------------------------------------------------------------------
ISRAEL - 0.26%
Check Point Software Technologies Ltd.
(Computers - Software & Services)(a) 37,500 2,010,938
- -------------------------------------------------------------------------------
NETHERLANDS - 0.26%
ASM Lithography Holding N.V. (Electronics -
Semiconductors)(a) 34,000 2,018,750
- -------------------------------------------------------------------------------
UNITED KINGDOM - 0.08%
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration &
Production)(a) 40,000 435,000
- -------------------------------------------------------------------------------
Stolt Comex Seaway, S.A.-ADR (Oil & Gas - Exploration &
Production)(a) 20,000 215,000
- -------------------------------------------------------------------------------
650,000
- -------------------------------------------------------------------------------
Total Foreign Stocks (Cost $5,915,783) 12,059,475
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
31
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TIME DEPOSIT - 4.48%
CIBC Oppenheimer Corp.,
5.50%, 07/01/99 (Cost $35,000,000) $35,000,000 $ 35,000,000
- --------------------------------------------------------------------------
REPURCHASE AGREEMENT(b) - 2.30%
CIBC Oppenheimer Corp., 5.00%, 07/01/99(c) (Cost
$17,964,962) 17,964,962 17,964,962
- --------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.85% 780,671,117
==========================================================================
OTHER ASSETS LESS LIABILITIES - 0.15% 1,157,305
==========================================================================
NET ASSETS - 100.00% $781,828,422
==========================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements is taken into possession by the Fund upon
entering into the repurchase agreement. The Collateral is marked to market
daily to insure 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 06/30/99 with a maturing value of
$50,006,945. Collateralized by U.S. Government obligations.
Abbreviation:
ADR - American Depositary Receipt
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
32
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $534,762,044) $780,671,117
- ----------------------------------------------------------------------
Receivables for:
Investments sold 3,247,035
- ----------------------------------------------------------------------
Capital stock sold 121,724
- ----------------------------------------------------------------------
Dividends and interest 209,154
- ----------------------------------------------------------------------
Investment for deferred compensation plan 25,924
- ----------------------------------------------------------------------
Other assets 3,586
- ----------------------------------------------------------------------
Total assets 784,278,540
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,013,059
- ----------------------------------------------------------------------
Capital stock reacquired 979,481
- ----------------------------------------------------------------------
Deferred compensation plan 25,924
- ----------------------------------------------------------------------
Options written (Premiums received $55,014) 48,138
- ----------------------------------------------------------------------
Accrued advisory fees 378,472
- ----------------------------------------------------------------------
Accrued directors' fees 2,600
- ----------------------------------------------------------------------
Accrued administrative services fees 1,543
- ----------------------------------------------------------------------
Accrued operating expenses 901
- ----------------------------------------------------------------------
Total liabilities 2,450,118
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $781,828,422
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 28,331,017
- ----------------------------------------------------------------------
Net asset value, offering and redemption price per share $ 27.60
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 1,528,477
- -----------------------------------------------------------------------------
Dividends (net of $11,410 foreign withholding tax) 1,130,620
- -----------------------------------------------------------------------------
Total investment income 2,659,097
- -----------------------------------------------------------------------------
EXPENSES:
Advisory fees 2,192,484
- -----------------------------------------------------------------------------
Administrative services fees 81,413
- -----------------------------------------------------------------------------
Custodian fees 40,019
- -----------------------------------------------------------------------------
Directors' fees and expenses 6,556
- -----------------------------------------------------------------------------
Other 56,683
- -----------------------------------------------------------------------------
Total expenses 2,377,155
- -----------------------------------------------------------------------------
Less: Expenses paid indirectly (653)
- -----------------------------------------------------------------------------
Net expenses 2,376,502
- -----------------------------------------------------------------------------
Net investment income 282,595
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 10,924,678
- -----------------------------------------------------------------------------
Option contracts 56,376
- -----------------------------------------------------------------------------
10,981,054
- -----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 55,741,424
- -----------------------------------------------------------------------------
Foreign currencies (59)
- -----------------------------------------------------------------------------
Option contracts 6,877
- -----------------------------------------------------------------------------
55,748,242
- -----------------------------------------------------------------------------
Net gain from investment securities, foreign currencies and
option contracts 66,729,296
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations $67,011,891
=============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
33
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 282,595 $ 631,581
- -------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and option contracts 10,981,054 22,808,693
- -------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option
contracts 55,748,242 78,385,559
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 67,011,891 101,825,833
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment
income -- (922,615)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (16,345,246)
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 67,568,528 39,909,953
- -------------------------------------------------------------------------------
Net increase in net assets 134,580,419 124,467,925
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 647,248,003 522,780,078
- -------------------------------------------------------------------------------
End of year $781,828,422 $647,248,003
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $501,871,979 $434,303,451
- -------------------------------------------------------------------------------
Undistributed net investment income 982,957 700,362
- -------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 33,057,595 22,076,541
- -------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 245,915,891 190,167,649
- -------------------------------------------------------------------------------
$781,828,422 $647,248,003
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 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 closing bid price on that day. 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 closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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 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
AIM V.I. CAPITAL APPRECIATION FUND
34
<PAGE>
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. Such distributions are
declared and paid annually.
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 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
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. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign 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 foreign 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 foreign 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.
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.
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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $24,338 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$3,785 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. CAPITAL APPRECIATION FUND
35
<PAGE>
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $653 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $653 during the six months ended June 30, 1999.
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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during six months ended June 30, 1999 was
$303,472,725 and $210,334,406, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $254,151,392
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (8,651,958)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $245,499,434
===========================================================================
</TABLE>
Cost of investments for tax purposes is $535,171,683.
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1999
and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold 7,045,261 $ 179,792,985 4,333,736 $ 99,858,597
- -------------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 740,474 17,267,861
- -------------------------------------------------------------------------------
Reacquired (4,403,773) (112,224,457) (3,416,071) (77,216,505)
- -------------------------------------------------------------------------------
2,641,488 $ 67,568,528 1,658,139 $ 39,909,953
- -------------------------------------------------------------------------------
</TABLE>
NOTE 8 - CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended June 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION
CONTRACTS
--------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of period -- $ --
- ------------------------------------------
Written 803 123,950
- ------------------------------------------
Closed (383) (45,713)
- ------------------------------------------
Expired (165) (23,223)
- ------------------------------------------
End of period 255 $ 55,014
==========================================
</TABLE>
Open call option contracts written at June 30, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30,
CONTRACT STRIKE NUMBER OF PREMIUMS 1999 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
- --------------------- -------- ------ --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Nike Inc. - Class B Aug 99 $70 255 $55,014 $48,137 $6,877
- -----------------------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND
36
<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, 1999, each of the years in the three-year
period ended December 31, 1998, the eleven months ended December 31, 1995 and
the year ended January 31, 1995.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, JANUARY 31,
--------- -------------------------------------- -----------
1999 1998 1997 1996 1995 1995
--------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05 $ 12.58
- ----------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.01 0.02 0.03 0.02 0.04 0.05
- ----------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 2.39 4.12 2.58 2.89 4.46 (0.54)
- ----------------------------------------------------------------------------------------------
Total from investment
operations 2.40 4.14 2.61 2.91 4.50 (0.49)
- ----------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.04) (0.02) (0.03) -- (0.04)
- ----------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.65) (0.27) -- -- --
- ----------------------------------------------------------------------------------------------
Total distributions -- (0.69) (0.29) (0.03) -- (0.04)
- ----------------------------------------------------------------------------------------------
Net asset value, end of
period $ 27.60 $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05
==============================================================================================
Total return(a) 9.53% 19.30% 13.51% 17.58% 37.38% (3.91)%
==============================================================================================
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000s omitted) $ 781,828 $647,248 $522,642 $370,063 $212,152 $88,177
==============================================================================================
Ratio of expenses to
average net assets 0.67%(b) 0.67% 0.68% 0.73% 0.75%(c) 0.84%
==============================================================================================
Ratio of net investment
income to average net
assets 0.08%(b) 0.11% 0.18% 0.18% 0.39%(c) 0.46%
==============================================================================================
Portfolio turnover rate 32% 83% 65% 59% 37% 81%
==============================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $716,051,232.
(c) Annualized.
AIM V.I. CAPITAL APPRECIATION FUND
37
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Managers' Overview
SMALL CAPS SURGE LATE IN
REPORTING PERIOD
Q. SMALL-CAP STOCKS MADE A COMEBACK stocks of very large companies because ----------------
DURING THE REPORTING PERIOD. HOW DID of their relative safety and liquidity.
AIM V.I. CAPITAL DEVELOPMENT The markets were quite narrow, with Healthy consumer spending
FUND PERFORM? most of the growth in the first
A. The upswing in small-cap stocks quarter of the year coming from just meant strong performance by
didn't occur until the second half of a handful of stocks.
the reporting period, so the fund's Markets also fretted about the retail stocks, particularly those of
total return for the six months ended Federal Reserve Board (the Fed) raising
June 30, 1999, was a disappointing interest rates to cool off the rapidly specialty and specialty-apparel chains.
1.95%. In comparison, the Russell 2000 growing economy. During the first
returned 9.28% and the Lipper quarter of 1999, the economy grew at ----------------
Small-Cap Growth Funds Index, 10.53%. an annualized rate of 4.1%. But
For the three months ended the Fed left rates unchanged until the reporting period closed. Net assets
June 30, 1999, the fund's total return very close of the reporting period, under management stood at $4.9 million,
was an impressive 10.34%. Such wide and small-cap stocks began to rally up from $3.2 million six months earlier.
swings in performance can be expected during the spring.
of an aggressive growth fund such as Q. WHAT WERE SOME TRENDS IN THE
AIM V.I. Capital Development Fund. Q. HOW WAS THE PORTFOLIO STRUCTURED AT CONSUMER-CYCLICAL SECTOR?
THE END OF THE REPORTING PERIOD? A. Within this sector, we found good
Q. WHAT PRODUCED SUCH A PRONOUNCED A. We continued to emphasize the opportunities among retailers. Low
CHANGE IN MARKETS? consumer-cyclical and technology unemployment, rising wages and subdued
A. Early in 1999, investors were sectors, both of which represented more inflation have bolstered consumer
worried about a host of economic than 10% of the portfolio at the close confidence, and that was great news
problems worldwide, exemplified by the of the reporting period. We expanded for the nation's retailers. Healthy
Brazilian currency crisis in January. our holdings in other areas such as consumer spending meant strong
Such uncertainty often leads to what's electrical equipment. The fund had 240 performance by retail stocks,
called a "flight to quality," and it holdings in its portfolio as the particularly those of specialty and
did this time. Investors favored specialty-apparel chains.
Good retail holdings included
PORTFOLIO HOLDINGS Linens 'N Things, the nation's second
largest household-goods chain with
As of 6/30/99, based on total net assets nearly 200 stores in 38 states; and
AnnTaylor Stores, which continues to
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES report solid growth in same-store sales.
1. Quanta Services, Inc. 0.99% 1. Computers (Software & Services) 6.32% Q. WHAT ABOUT TECHNOLOGY STOCKS? HOW DID
2. InfoCure Corp. 0.97 2. Services (Commercial & Consumer) 5.73 THEY PERFORM?
3. Comverse Technology, Inc. 0.85 3. Retail (Specialty) 4.98 A. After a sterling performance during
4. Mylan Laboratories, Inc. 0.81 4. Electrical Equipment 4.17 1998, technology stocks lost some of
5. Cree Research, Inc. 0.79 5. Services (Advertising/Marketing) 3.83 their luster during the first part of the
6. BISYS Group, Inc. 0.78 6. Broadcasting (Television, Radio 3.23 reporting period. Many worried
7. Microchip Technology, Inc. 0.77 & Cable) about a speculative bubble developing
8. IXC Communications, Inc. 0.72 7. Health Care (Specialized Services) 3.10 in Internet stocks. Many Internet
9. NETWORK PLUS CORP. 0.68 8. Communications Equipment 3.09 companies did not meet our earnings
10. Alpha Industries, Inc. 0.68 9. Services (Data Processing) 2.79 criteria for ownership of their stocks
10. Telecommunications (Long Distance) 2.60 they had no earnings. Moreover, in some
instances, their market capitalizations
The fund's portfolio composition is subject to change, and there is no assurance that quickly reached the
the fund will continue to hold any particular security.
</TABLE>
38 AIM V.I. CAPITAL DEVELOPMENT FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
point where they no longer qualified for Q. WHAT IS YOUR OUTLOOK? It is difficult to tell how long this
inclusion in a fund that invests primarily A. As mentioned earlier, there was a change in market sentiment will last,
in smaller companies. pronounced change in market sentiment but we believe that funds that invest
Our holdings in the communications- during the second half of the reporting in small-capitalization stocks may enjoy
equipment industry grew over the period. Markets broadened considerably as some good times for the rest of this
reporting period; this is one of the investors began looking beyond the huge year. Many smaller companies are enjoying
industries providing the infrastructure companies that have dominated market greater earnings growth than their
for the rapidly growing Internet. Holdings indexes for the past few years. The rally larger counterparts, and in addition
included Comverse Technology, a maker of continued after the reporting period closed. they remain favorably priced. We will
enhanced telecommunications systems; and Markets reacted very favorably to the small continue to search out reasonably priced
IXC Communications, a provider of high- increase in short-term interest rates stocks of smaller companies with
bandwidth communications services. enacted June 30, which was coupled with outstanding growth prospects for
Expansion of bandwidth is the major the announcement that the Fed had shifted inclusion in the fund's portfolio.
driver in the technology sector today. into neutral gear as far as further
This sector has gone through three waves rate rises are concerned.
of development. The first was the
introduction of the microprocessor and [GRAPH APPEARS HERE]
computer chip. The second, the development
of computer hardware and software, gave RESULTS OF A $10,000 INVESTMENT
rise to the prevalence of the personal -------------------------------
computer. The third is bandwidth 5/1/98 - 6/30/99
improvement.
Bandwidth is a measure of the volume AVERAGE ANNUAL TOTAL RETURN
of information that can be transmitted As of 6/30/99
over a network at a given time, and
increasing bandwidth is necessary for Inception (5/1/98) -4.92%
the evolution of information exchange 1 Year -1.05
and Internet commerce. If you think of
a computer network as a water pipe, the AIM V.I. LIPPER
higher the bandwidth (the larger the CAPITAL SMALL-CAP
diameter of the pipe), the more data DEVELOPMENT RUSSELL FUNDS
(water) can pass over the network (In thousands) FUND 2000 INDEX
(through the pipe). This growth is not ---------------------------------
limited only to the Internet but 5/1/98 10,000 10,000 10,000
involves all the companies that support 6/30/98 9,530 9,481 9,574
and build demand for Internet use. Oak 9/30/98 7,760 9,212 7,525
Industries and SCI Systems are other 12/31/98 9,249 8,806 8,917
companies in the portfolio producing 3/31/99 8,546 8,328 8,496
bandwidth-related products. 6/30/99 9,430 9,624 9,758
Q. WHAT OTHER STOCKS DID YOU LIKE? MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE.
A. Quanta Services, our largest holding, RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY
designs, installs and maintains traffic- FROM THE HISTORICAL PERFORMANCE SHOWN.
control lights and highway lighting. It
also installs lines for electric utilities, The performance figures shown represent AIM V.I. Capital Development
cell-phone service providers and cable Fund and are not intended to reflect actual annuity values, and do not
television. InfoCure, our second-largest reflect charges at the separate account level, which, if applied, would lower
holding, is a leading provider of software the performance results. AIM V.I. Capital Development Fund performance
and services for the management of figures are historical and reflect reinvestment of all distributions and
medical practices. changes in net asset value. The fund's investment return and principal value
will fluctuate so an investor's shares, when redeemed, may be worth more or
less than their original cost. Sources: Towers Data Systems HYPO--Registered
Trademark--, Lipper Inc.
Had fees and expenses not been waived during the reporting period,
returns would have been lower.
The unmanaged Lipper Small-Cap Growth Funds Index represents an average
of the performance of small-capitalization growth funds.
The Russell 2000 Stock Index is an unmanaged index generally considered
representative of small-capitalization stocks. Data for indexes are for the
period 4/30/98-6/30/99.
An investment cannot be made in any index listed. Unless otherwise
noted, index results include reinvested dividends.
AIM V.I. CAPITAL DEVELOPMENT FUND 39
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCK & OTHER EQUITY
INTERESTS - 91.38%
AEROSPACE/DEFENSE - 0.67%
HEICO Corp. 800 $ 19,400
- --------------------------------------------------------------------
Kroll-O'Gara Co. (The)(a) 600 13,237
- --------------------------------------------------------------------
32,637
- --------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.98%
Dura Automotive Systems, Inc.(a) 700 23,275
- --------------------------------------------------------------------
Keystone Automotive Industries, Inc.(a) 800 13,900
- --------------------------------------------------------------------
Stoneridge, Inc.(a) 800 10,800
- --------------------------------------------------------------------
47,975
- --------------------------------------------------------------------
BANKS (REGIONAL) - 2.13%
Banco Santandr Puerto Rico 600 10,837
- --------------------------------------------------------------------
Bank United Corp. - Class A 700 28,131
- --------------------------------------------------------------------
Colonial BancGroup, Inc. (The) 1,900 26,481
- --------------------------------------------------------------------
Independence Community Bank Corp. 1,600 21,600
- --------------------------------------------------------------------
North Fork Bancorporation, Inc. 800 17,050
- --------------------------------------------------------------------
104,099
- --------------------------------------------------------------------
BEVERAGES (ALCOHOLIC) - 0.54%
Canandaigua Brands, Inc. - Class A(a) 500 26,219
- --------------------------------------------------------------------
BIOTECHNOLOGY - 0.72%
IDEXX Laboratories, Inc.(a) 800 18,650
- --------------------------------------------------------------------
Pharmaceutical Product Development, Inc.(a) 600 16,425
- --------------------------------------------------------------------
35,075
- --------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.23%
Citadel Communications Corp.(a) 600 21,712
- --------------------------------------------------------------------
Cox Radio, Inc. - Class A(a) 500 27,125
- --------------------------------------------------------------------
Emmis Communications Corp.(a) 400 19,750
- --------------------------------------------------------------------
Entercom Communications Corp.(a) 600 25,650
- --------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 300 22,762
- --------------------------------------------------------------------
Metro Networks, Inc.(a) 400 21,350
- --------------------------------------------------------------------
Univision Communications, Inc.(a) 300 19,800
- --------------------------------------------------------------------
158,149
- --------------------------------------------------------------------
BUILDING MATERIALS - 0.36%
TJ International, Inc. 300 9,300
- --------------------------------------------------------------------
White Cap Industries, Inc.(a) 700 8,269
- --------------------------------------------------------------------
17,569
- --------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.56%
W.R. Grace & Co.(a) 1,500 27,562
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMEN - 3.09%
Comverse Technology, Inc.(a) 550 $ 41,525
- --------------------------------------------------------------------
Digital Microwave Corp.(a) 1,000 12,750
- --------------------------------------------------------------------
General Instrument Corp.(a) 700 29,750
- --------------------------------------------------------------------
Gilat Satellite Networks Ltd.(a) 400 21,000
- --------------------------------------------------------------------
NorthEast Optic Network, Inc.(a) 1,100 16,569
- --------------------------------------------------------------------
PairGain Technologies, Inc.(a) 1,300 14,950
- --------------------------------------------------------------------
REMEC, Inc.(a) 900 14,512
- --------------------------------------------------------------------
151,056
- --------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.31%
Bell & Howell Co.(a) 400 15,125
- --------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 1.53%
Actel Corp.(a) 1,000 14,750
- --------------------------------------------------------------------
DSP Communications, Inc.(a) 1,000 28,875
- --------------------------------------------------------------------
Jabil Circuit, Inc.(a) 400 18,050
- --------------------------------------------------------------------
QLogic Corp.(a) 100 13,200
- --------------------------------------------------------------------
74,875
- --------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 6.10%
AppNet Systems, Inc.(a) 400 5,375
- --------------------------------------------------------------------
Avant! Corp.(a) 800 10,100
- --------------------------------------------------------------------
Best Software, Inc.(a) 650 10,481
- --------------------------------------------------------------------
Dendrite International, Inc.(a) 500 18,062
- --------------------------------------------------------------------
Eclipsys Corp.(a) 100 2,394
- --------------------------------------------------------------------
Genesys Tellecommunications Laboratories, Inc.(a) 400 10,000
- --------------------------------------------------------------------
HNC Software, Inc.(a) 300 9,244
- --------------------------------------------------------------------
InfoCure Corp.(a) 900 47,644
- --------------------------------------------------------------------
Lycos, Inc.(a) 200 18,375
- --------------------------------------------------------------------
Mentor Graphics Corp.(a) 1,500 19,219
- --------------------------------------------------------------------
Mercury Interactive Corp.(a) 400 14,150
- --------------------------------------------------------------------
Peregrine Systems, Inc.(a) 1,000 25,687
- --------------------------------------------------------------------
Rational Software Corp.(a) 600 19,762
- --------------------------------------------------------------------
Structural Dynamics Research Corp.(a) 1,200 22,275
- --------------------------------------------------------------------
Symantec Corp.(a) 1,300 33,150
- --------------------------------------------------------------------
Transaction Systems Architects, Inc. - Class A(a) 500 19,500
- --------------------------------------------------------------------
Unigraphics Solutions, Inc.(a) 700 13,169
- --------------------------------------------------------------------
298,587
- --------------------------------------------------------------------
CONSUMER FINANCE - 0.96%
American Capital Strategies, Ltd. 200 3,650
- --------------------------------------------------------------------
AmeriCredit Corp.(a) 1,500 24,000
- --------------------------------------------------------------------
Cash America International, Inc. 1,500 19,312
- --------------------------------------------------------------------
46,962
- --------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL DEVELOPMENT FUND
40
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD & HEALTH) - 0.39%
Performance Food Group Co.(a) 700 $ 19,031
- --------------------------------------------------------
ELECTRIC COMPANIES - 0.50%
Avista Corp. 1,500 24,375
- --------------------------------------------------------
ELECTRICAL EQUIPMENT - 4.17%
Conexant Systems, Inc.(a) 500 29,031
- --------------------------------------------------------
Cree Research, Inc.(a) 500 38,469
- --------------------------------------------------------
DII Group, Inc.(a) 600 22,387
- --------------------------------------------------------
Oak Industries, Inc.(a) 500 21,844
- --------------------------------------------------------
PCD, Inc.(a) 300 3,300
- --------------------------------------------------------
Pinnacle Systems, Inc.(a) 600 20,175
- --------------------------------------------------------
Sawtek, Inc.(a) 500 22,937
- --------------------------------------------------------
SCI Systems, Inc.(a) 400 19,000
- --------------------------------------------------------
SLI, Inc.(a) 1,000 27,000
- --------------------------------------------------------
204,143
- --------------------------------------------------------
ELECTRONICS (DEFENSE) - 0.61%
Aeroflex, Inc.(a) 1,500 29,625
- --------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 2.14%
Alpha Industries, Inc.(a) 700 33,337
- --------------------------------------------------------
Methode Electronics, Inc. - Class A 500 11,437
- --------------------------------------------------------
Quanta Services, Inc.(a) 1,100 48,400
- --------------------------------------------------------
Varian, Inc.(a) 300 4,050
- --------------------------------------------------------
Varian Medical Systems, Inc. 300 7,575
- --------------------------------------------------------
104,799
- --------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 1.76%
Micrel, Inc.(a) 300 22,200
- --------------------------------------------------------
Microchip Technology, Inc.(a) 800 37,900
- --------------------------------------------------------
Unitrode Corp.(a) 900 25,819
- --------------------------------------------------------
85,919
- --------------------------------------------------------
ENTERTAINMENT - 1.28%
LodgeNet Entertainment Corp.(a) 400 5,575
- --------------------------------------------------------
Loews Cineplex Entertainment Corp.(a) 1,300 14,137
- --------------------------------------------------------
Pixar, Inc.(a) 400 17,250
- --------------------------------------------------------
SFX Entertainment, Inc. - Class A(a) 400 25,600
- --------------------------------------------------------
62,562
- --------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.39%
DuPont Photomasks, Inc.(a) 100 4,787
- --------------------------------------------------------
Teradyne, Inc.(a) 200 14,350
- --------------------------------------------------------
19,137
- --------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.00%
FINOVA Group, Inc. 400 21,050
- --------------------------------------------------------
MicroFinancial, Inc. 700 10,019
- --------------------------------------------------------
SEI Investments Co. 200 17,650
- --------------------------------------------------------
48,719
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOODS - 1.14%
American Italian Pasta Co. - Class A(a) 850 $ 25,819
- --------------------------------------------------------------------
Keebler Foods Co.(a) 500 15,187
- --------------------------------------------------------------------
United Natural Foods, Inc.(a) 600 14,850
- --------------------------------------------------------------------
55,856
- --------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.13%
Alpharma, Inc. - Class A 700 24,894
- --------------------------------------------------------------------
Barr Laboratories, Inc.(a) 600 23,925
- --------------------------------------------------------------------
Jones Pharma, Inc. 400 15,750
- --------------------------------------------------------------------
Mylan Laboratories, Inc. 1,500 39,750
- --------------------------------------------------------------------
104,319
- --------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.62%
Health Management Associates, Inc. - Class A(a) 900 10,125
- --------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 1,500 20,156
- --------------------------------------------------------------------
30,281
- --------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.25%
Express Scripts, Inc.-Class A(a) 200 12,037
- --------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.39%
Cyberonics, Inc.(a) 600 7,500
- --------------------------------------------------------------------
Henry Schein, Inc.(a) 1,000 31,687
- --------------------------------------------------------------------
Lifecore Biomedical, Inc.(a) 600 6,900
- --------------------------------------------------------------------
Sybron International Corp.(a) 800 22,050
- --------------------------------------------------------------------
68,137
- --------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 3.10%
Advance Paradigm, Inc.(a) 400 24,400
- --------------------------------------------------------------------
Cairage Services, Inc., Gtd. Conv. Pfd.,
7.00%(a) (Acquired 05/27/99; Cost $20,000)(b) 400 22,150
- --------------------------------------------------------------------
Capital Senior Living Corp.(a) 800 8,000
- --------------------------------------------------------------------
CareInsite, Inc.(a) 100 4,725
- --------------------------------------------------------------------
Omnicare, Inc. 800 10,100
- --------------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 1,600 22,600
- --------------------------------------------------------------------
Renal Care Group, Inc.(a) 600 15,525
- --------------------------------------------------------------------
Renex Corp.(a) 300 1,631
- --------------------------------------------------------------------
United Payors & United Providers, Inc.(a) 1,100 25,506
- --------------------------------------------------------------------
Ventana Medical Systems, Inc.(a) 900 17,213
- --------------------------------------------------------------------
151,850
- --------------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES - 0.49%
Service Experts, Inc.(a) 1,100 24,131
- --------------------------------------------------------------------
HOUSEWARES - 0.34%
Windmere-Durable Holdings, Inc.(a) 1,000 16,875
- --------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 1.20%
Nationwide Financial Services, Inc. -Class A 400 18,100
- --------------------------------------------------------------------
Scottish Annuity & Life Holdings, Ltd. 1,200 12,900
- --------------------------------------------------------------------
UICI(a) 1,000 27,625
- --------------------------------------------------------------------
58,625
- --------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL DEVELOPMENT FUND
41
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE) - 0.30%
Century Business Services, Inc.(a) 1,000 $ 14,500
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 1.06%
CNA Surety Corp. 800 12,250
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 900 20,419
- ---------------------------------------------------------------
Radian Group, Inc. 393 19,183
- ---------------------------------------------------------------
51,852
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.38%
Hambrecht & Quist Group(a) 500 18,563
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.86%
Affiliated Managers Group, Inc.(a) 800 24,150
- ---------------------------------------------------------------
Knight/Trimark Group, Inc. - Class A(a) 300 18,094
- ---------------------------------------------------------------
42,244
- ---------------------------------------------------------------
LODGING-HOTELS - 0.32%
Prime Hospitality Corp.(a) 1,300 15,600
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED) - 0.45%
Applied Power, Inc. - Class A 800 21,850
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.32%
Spartech Corp. 500 15,813
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 1.58%
Alpine Group, Inc. (The)(a) 1,000 16,063
- ---------------------------------------------------------------
American Bank Note Holographics, Inc.(a) 1,000 2,750
- ---------------------------------------------------------------
Armor Holdings, Inc.(a) 1,500 15,656
- ---------------------------------------------------------------
Howmet International, Inc.(a) 100 1,719
- ---------------------------------------------------------------
Mettler-Toledo International, Inc.(a) 1,100 27,294
- ---------------------------------------------------------------
Superior TeleCom, Inc. 550 13,750
- ---------------------------------------------------------------
77,232
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.33%
School Specialty, Inc.(a) 1,000 16,063
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 2.18%
BJ Services Co.(a) 800 23,550
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 400 14,825
- ---------------------------------------------------------------
Key Energy Group, Inc.(a) 8,000 28,500
- ---------------------------------------------------------------
Newpark Resources, Inc.(a) 1,500 13,313
- ---------------------------------------------------------------
Transocean Offshore, Inc. 1,000 26,250
- ---------------------------------------------------------------
106,438
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 2.16%
Anadarko Petroleum Corp. 400 14,725
- ---------------------------------------------------------------
Apache Corp. 600 23,400
- ---------------------------------------------------------------
Basin Exploration, Inc.(a) 1,100 22,069
- ---------------------------------------------------------------
Devon Energy Corp. 800 28,600
- ---------------------------------------------------------------
Newfield Exploration Co.(a) 600 17,063
- ---------------------------------------------------------------
105,857
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS - 0.68%
Potlatch Corp. 300 $ 13,181
- ------------------------------------------------------------------
Rayonier, Inc. 400 19,925
- ------------------------------------------------------------------
33,106
- ------------------------------------------------------------------
PERSONAL CARE - 1.18%
Chattem, Inc.(a) 900 28,631
- ------------------------------------------------------------------
Playtex Products, Inc.(a) 500 7,781
- ------------------------------------------------------------------
Steiner Leisure Ltd.(a) 700 21,219
- ------------------------------------------------------------------
57,631
- ------------------------------------------------------------------
PUBLISHING - 0.37%
IDG Books Worldwide, Inc. - Class A(a) 1,000 18,250
- ------------------------------------------------------------------
RAILROADS - 0.54%
MotivePower Industries, Inc.(a) 1,000 18,500
- ------------------------------------------------------------------
Westinghouse Air Brake Co. 300 7,781
- ------------------------------------------------------------------
26,281
- ------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 1.51%
AMRESCO Capital Trust, Inc. 550 5,225
- ------------------------------------------------------------------
Apartment Investment & Management Co. - Class A 600 25,650
- ------------------------------------------------------------------
Colonial Properties Trust 600 16,950
- ------------------------------------------------------------------
Correctional Properties Trust 1,000 15,750
- ------------------------------------------------------------------
Manufactured Home Communities, Inc. 400 10,400
- ------------------------------------------------------------------
73,975
- ------------------------------------------------------------------
RESTAURANTS - 1.33%
CEC Entertainment, Inc.(a) 750 31,688
- ------------------------------------------------------------------
Dave & Buster's, Inc.(a) 1,000 29,000
- ------------------------------------------------------------------
Luby's, Inc. 300 4,500
- ------------------------------------------------------------------
65,188
- ------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 0.45%
CDW Computer Centers, Inc.(a) 500 22,000
- ------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 0.29%
Family Dollar Stores, Inc. 600 14,400
- ------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 1.02%
BJ's Wholesale Club, Inc.(a) 800 24,050
- ------------------------------------------------------------------
Wild Oats Markets, Inc.(a) 850 25,792
- ------------------------------------------------------------------
49,842
- ------------------------------------------------------------------
RETAIL (SPECIALTY) - 4.98%
Claire's Stores, Inc. 300 7,688
- ------------------------------------------------------------------
CSK Auto Corp.(a) 1,000 27,000
- ------------------------------------------------------------------
Electronics Boutique Holdings Corp.(a) 300 4,275
- ------------------------------------------------------------------
Footstar, Inc.(a) 400 14,875
- ------------------------------------------------------------------
General Nutrition Companies, Inc.(a) 1,200 27,975
- ------------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 800 17,600
- ------------------------------------------------------------------
Linens 'N Things, Inc.(a) 700 30,625
- ------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL DEVELOPMENT FUND
42
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY) - (CONTINUED)
Lithia Motors, Inc. - Class A(a) 600 $ 12,300
- -----------------------------------------------------------
Michaels Stores, Inc.(a) 900 27,563
- -----------------------------------------------------------
Rainbow Rentals, Inc.(a) 600 6,900
- -----------------------------------------------------------
Rent-A-Center, Inc.(a) 800 19,200
- -----------------------------------------------------------
Rent-Way, Inc.(a) 876 21,572
- -----------------------------------------------------------
Zale Corp.(a) 650 26,000
- -----------------------------------------------------------
243,573
- -----------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 1.18%
AnnTaylor Stores Corp.(a) 400 18,000
- -----------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 1,100 28,050
- -----------------------------------------------------------
Wet Seal, Inc. - Class A(a) 400 11,450
- -----------------------------------------------------------
57,500
- -----------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.59%
Allied Capital Corp. 1,200 28,800
- -----------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 3.83%
ACNielsen Corp.(a) 800 24,200
- -----------------------------------------------------------
Acxiom Corp.(a) 920 22,943
- -----------------------------------------------------------
Forrester Research, Inc.(a) 200 5,000
- -----------------------------------------------------------
HA-LO Industries, Inc.(a) 1,650 16,294
- -----------------------------------------------------------
Lamar Advertising Co.(a) 550 22,516
- -----------------------------------------------------------
Nielsen Media Research(a) 933 27,290
- -----------------------------------------------------------
Penton Media, Inc. 600 14,550
- -----------------------------------------------------------
Snyder Communications, Inc.(a) 700 22,925
- -----------------------------------------------------------
TeleTech Holdings, Inc.(a) 900 9,113
- -----------------------------------------------------------
Young & Rubicam, Inc. 500 22,719
- -----------------------------------------------------------
187,550
- -----------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 5.64%
Central Parking Corp. 700 23,975
- -----------------------------------------------------------
Copart, Inc.(a) 800 17,000
- -----------------------------------------------------------
F.Y.I., Inc.(a) 600 18,825
- -----------------------------------------------------------
INSpire Insurance Solutions, Inc.(a) 1,000 14,500
- -----------------------------------------------------------
Iron Mountain, Inc.(a) 1,050 30,056
- -----------------------------------------------------------
Jones Lang LaSalle Inc.(a) 300 8,944
- -----------------------------------------------------------
MAXIMUS, Inc.(a) 700 20,125
- -----------------------------------------------------------
Pegasus Systems, Inc.(a) 500 18,719
- -----------------------------------------------------------
Pre-Paid Legal Services, Inc.(a) 900 24,469
- -----------------------------------------------------------
Primark Corp.(a) 700 19,644
- -----------------------------------------------------------
Regis Corp. 1,250 23,984
- -----------------------------------------------------------
Stamps.com(a) 300 5,250
- -----------------------------------------------------------
Stewart Enterprises, Inc. - Class A 1,100 16,019
- -----------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 900 24,469
- -----------------------------------------------------------
Trammell Crow Co.(a) 600 9,863
- -----------------------------------------------------------
275,842
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMPUTER SYSTEMS) - 2.01%
Insight Enterprises, Inc.(a) 675 $ 16,706
- -----------------------------------------------------------------
Policy Management Systems Corp.(a) 500 15,000
- -----------------------------------------------------------------
Safeguard Scientifics, Inc.(a) 200 12,400
- -----------------------------------------------------------------
SunGard Data Systems, Inc.(a) 800 27,600
- -----------------------------------------------------------------
Sykes Enterprises, Inc.(a) 800 26,700
- -----------------------------------------------------------------
98,406
- -----------------------------------------------------------------
SERVICES (DATA PROCESSING) - 2.79%
BISYS Group, Inc.(a) 650 38,025
- -----------------------------------------------------------------
CSG Systems International, Inc.(a) 700 18,331
- -----------------------------------------------------------------
Lason Holdings, Inc.(a) 500 24,813
- -----------------------------------------------------------------
MedQuist, Inc.(a) 600 26,250
- -----------------------------------------------------------------
National Data Corp. 400 17,100
- -----------------------------------------------------------------
4Front Technologies, Inc.(a) 1,200 11,850
- -----------------------------------------------------------------
136,369
- -----------------------------------------------------------------
SERVICES (EMPLOYMENT) - 1.30%
Heidrick & Sttuggles International, Inc.(a) 1,600 30,400
- -----------------------------------------------------------------
Korn/Ferry International(a) 1,000 17,000
- -----------------------------------------------------------------
Labor Ready, Inc.(a) 500 16,250
- -----------------------------------------------------------------
63,650
- -----------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL) - 2.20%
Casella Waste Systems, Inc.(a) 1,100 28,600
- -----------------------------------------------------------------
Cornell Corrections, Inc.(a) 1,100 18,081
- -----------------------------------------------------------------
Tetra Tech, Inc.(a) 900 14,850
- -----------------------------------------------------------------
Wackenhut Corrections Corp.(a) 1,100 21,794
- -----------------------------------------------------------------
Waste Connections, Inc.(a) 800 24,400
- -----------------------------------------------------------------
107,725
- -----------------------------------------------------------------
SPECIALTY PRINTING - 0.56%
World Color Press, Inc.(a) 1,000 27,500
- -----------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.80%
Powerwave Technologies, Inc.(a) 800 25,800
- -----------------------------------------------------------------
Western Wireless Corp. - Class A(a) 500 13,500
- -----------------------------------------------------------------
39,300
- -----------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 2.60%
CapRock Communications Corp.(a) 400 16,200
- -----------------------------------------------------------------
ITC DeltaCom, Inc.(a) 900 25,200
- -----------------------------------------------------------------
IXC Communications, Inc.(a) 900 35,381
- -----------------------------------------------------------------
Network Plus Corp.(a) 1,600 33,400
- -----------------------------------------------------------------
Viatel, Inc.(a) 300 16,838
- -----------------------------------------------------------------
127,019
- -----------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL DEVELOPMENT FUND
43
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT - 1.51%
Catalytica, Inc.(a) 1,700 $ 23,800
- ---------------------------------------------------------------------------------
Safety-Kleen Corp.(a) 1,400 25,375
- ---------------------------------------------------------------------------------
U.S. Liquids, Inc.(a) 1,000 20,875
- ---------------------------------------------------------------------------------
Waste Industries, Inc.(a) 200 3,575
- ---------------------------------------------------------------------------------
73,625
- ---------------------------------------------------------------------------------
Total Common Stocks & Other Equity Interests (Cost
$3,948,620) 4,469,855
- ---------------------------------------------------------------------------------
FOREIGN STOCKS - 1.81%
BERMUDA - 0.32%
Annuity and Life Reassurance (Holdings), Ltd. (Insurance -
Life/Health) 700 15,706
- ---------------------------------------------------------------------------------
CANADA - 0.67%
Biovail Corp. International (Health Care - Drugs - Generic
& Other)(a) 300 15,319
- ---------------------------------------------------------------------------------
Celestica Inc. (Electronics-Semiconductors)(a) 400 17,325
- ---------------------------------------------------------------------------------
32,644
- ---------------------------------------------------------------------------------
IRELAND - 0.54%
Ryanair Holdings PLC-ADR (Airlines)(a) 500 26,500
- ---------------------------------------------------------------------------------
ISRAEL - 0.22%
Check Point Software Technologies Ltd. (Computers -
Software & Services)(a) 200 10,725
- ---------------------------------------------------------------------------------
UNITED KINGDOM - 0.06%
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration &
Production)(a) 250 2,719
- ---------------------------------------------------------------------------------
Total Foreign Stocks (Cost $69,988) 88,294
- ---------------------------------------------------------------------------------
Total Investments, Excluding Repurchase Agreements (Cost
$4,018,608) 4,558,149
- ---------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT - 15.01%(c)
Dean Witter Reynolds, Inc., 4.85%, 07/01/99(d)
(Cost $734,156) $ 734,156 734,156
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS - 108.20% 5,292,305
=================================================================================
LIABILITIES LESS OTHER ASSETS - (8.20%) (400,974)
=================================================================================
NET ASSETS - 100.00% $4,891,331
=================================================================================
</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 at 06/30/99 represents 0.45% of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value is at least 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.
(d) Joint repurchase agreement entered into 6/30/99 with a maturing value of
$100,013,472. Collateralized by U.S. Government obligations.
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Gtd - Guaranteed
Pfd - Preferred
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
44
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding Repurchase Agreement, at market
value (cost $4,018,608) $ 4,558,149
- ----------------------------------------------------------------------
Repurchase Agreement (cost $734,156) 734,156
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 14,995
- ----------------------------------------------------------------------
Dividends and interest 1,072
- ----------------------------------------------------------------------
Investments sold 68,687
- ----------------------------------------------------------------------
Reimbursement from advisor 4,967
- ----------------------------------------------------------------------
Investment for deferred compensation plan 4,108
- ----------------------------------------------------------------------
Total assets 5,386,134
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 479,625
- ----------------------------------------------------------------------
Deferred compensation plan 4,108
- ----------------------------------------------------------------------
Accrued directors' fees 1,844
- ----------------------------------------------------------------------
Accrued operating expenses 9,226
- ----------------------------------------------------------------------
Total liabilities 494,803
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $ 4,891,331
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 521,151
======================================================================
Net asset value, offering and redemption price per share $ 9.39
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 10,230
- --------------------------------------------------------------------
Dividends (net of $26 foreign withholding tax) 5,882
- --------------------------------------------------------------------
Total investment income 16,112
- --------------------------------------------------------------------
EXPENSES:
Advisory fees 13,222
- --------------------------------------------------------------------
Administrative services fees 18,686
- --------------------------------------------------------------------
Custodian fees 19,706
- --------------------------------------------------------------------
Directors' fees and expenses 3,648
- --------------------------------------------------------------------
Professional fees 11,251
- --------------------------------------------------------------------
Other 2,666
- --------------------------------------------------------------------
Total expenses 69,179
- --------------------------------------------------------------------
Less: Fees waived and reimbursed by advisor (48,201)
- --------------------------------------------------------------------
Expenses paid indirectly (59)
- --------------------------------------------------------------------
Net expenses 20,919
- --------------------------------------------------------------------
Net investment income (loss) (4,807)
- --------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (77,077)
- --------------------------------------------------------------------
Option contracts (1,254)
- --------------------------------------------------------------------
Foreign currencies (30)
- --------------------------------------------------------------------
(78,361)
- --------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 244,592
- --------------------------------------------------------------------
Foreign currencies (4)
- --------------------------------------------------------------------
244,588
- --------------------------------------------------------------------
Net gain from investment securities and futures contracts 166,227
- --------------------------------------------------------------------
Net increase in net assets resulting from operations $161,420
====================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
45
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the period May 1, 1998 (date
operations commenced) through December 31, 1998
(Unaudited)
<TABLE>
<S> <C> <C>
JUNE 30, DECEMBER 31,
OPERATIONS: 1999 1998
---------- ------------
Net investment income (loss) $ (4,807) $ 8,126
- ---------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts (78,361) (254,021)
- ---------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 244,588 294,948
- ---------------------------------------------------------------------------------
Net increase in net assets resulting from operations 161,420 49,053
- ---------------------------------------------------------------------------------
Dividends to shareholders from net investment income -- (12,074)
- ---------------------------------------------------------------------------------
Net increase from capital stock transactions 1,557,443 3,135,489
- ---------------------------------------------------------------------------------
Net increase in net assets 1,718,863 3,172,468
- ---------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,172,468 --
- ---------------------------------------------------------------------------------
End of period $4,891,331 $3,172,468
=================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,692,073 $3,134,630
- ---------------------------------------------------------------------------------
Undistributed net investment income (loss) (7,868) (3,061)
- ---------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and futures contracts (332,410) (254,049)
- ---------------------------------------------------------------------------------
Unrealized appreciation of investment securities 539,536 294,948
- ---------------------------------------------------------------------------------
$4,891,331 $3,172,468
=================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 Development Fund (the "Fund"). The Fund's investment
objective is long-term capital appreciation. The Fund commenced operations on
May 1, 1998. 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 closing bid price on that day. 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 closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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
AIM V.I. CAPITAL DEVELOPMENT FUND
46
<PAGE>
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. Such distributions are
declared and paid annually.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $204,323 as of December 31, 1998, which expires,
if not previously utilized, through the year 2006. The Fund cannot
distribute capital gains to shareholders until the tax loss carryforwards
have been utilized.
D. 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. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
E. Foreign Currency Contracts - A foreign 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 foreign 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 foreign 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.
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.
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 $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. During the six
months ended June 30, 1999, AIM waived advisory fees and reimbursed expenses
of $48,201.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $18,686 for accounting and administrative services rendered
by AIM.
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.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $59 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $59 during the six months ended June 30, 1999.
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.
AIM V.I. CAPITAL DEVELOPMENT FUND
47
<PAGE>
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the six months ended June 30, 1999 was
$3,786,427 and $2,277,019, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 641,969
- -----------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (107,928)
- -----------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 534,041
=======================================================================
</TABLE>
Cost of investments for tax purposes is $4,024,108.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the period ended June 30, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION
CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of Period - $ -
- ---------------------------------------
Written 9 912
- ---------------------------------------
Closed (7) (756)
- ---------------------------------------
Expired (2) (156)
- ---------------------------------------
End of Period - $ -
=======================================
</TABLE>
NOTE 8 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1999
and the period May 1, 1998 (date operations commenced) through December 31,
1998 as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Sold 197,937 $1,740,318 403,978 $3,617,838
- --------------------------------------------------------------------
Issued as reinvestment of
distributions - - 1,426 12,074
- --------------------------------------------------------------------
Reacquired (21,236) (182,875) (60,954) (494,423)
- --------------------------------------------------------------------
176,701 $1,557,443 344,450 $3,135,489
====================================================================
</TABLE>
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1999, and the period May 1, 1998 (date
operations commenced) through December 31, 1998.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999(a) 1998
-------- ------------
<S> <C> <C>
Net asset value, beginning of period $ 9.21 $10.00
- ----------------------------------------------------- ------ ------
Income from investment operations:
Net investment income (0.01) 0.03 (a)
- ----------------------------------------------------- ------ ------
Net gains (losses) on securities (both realized and
unrealized) 0.19 (0.78)
- ----------------------------------------------------- ------ ------
Total from investment operations 0.18 (0.75)
- ----------------------------------------------------- ------ ------
Less distributions:
Dividends from net investment income - (0.04)
- ----------------------------------------------------- ------ ------
Net asset value, end of period $ 9.39 $ 9.21
===================================================== ====== ======
Total return(b) 1.95% (7.51)%
===================================================== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $4,891 $3,172
===================================================== ====== ======
Ratio of expenses to average net assets(c) 1.19%(d) 1.21%
===================================================== ====== ======
Ratio of net investment income (loss) to average net
assets(e) (0.27)%(d) 0.62%
===================================================== ====== ======
Portfolio turnover rate 49% 45%
===================================================== ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns is not annualized for periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
3.92% (annualized) and 5.80% (annualized) for 1999-1998 respectively.
(d) Ratios are annualized and based on average net assets of $3,555,211.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursement were (3.01)% (annualized) and (3.97)% (annualized) for 1999-
1998 respectively.
AIM V.I. CAPITAL DEVELOPMENT FUND
48
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
INTEREST-RATE CONCERNS
RATTLE BOND MARKET
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. BOND PRICES GENERALLY DECLINED investment-grade bonds, 32.16%; raised the federal funds rate from 4.75%
DURING THE REPORTING PERIOD. HOW DID high-yield bonds, 30.13%; foreign to 5%. At the same time, the Fed
AIM V. I. DIVERSIFIED INCOME investment grade bonds, 28.38%; announced that it had shifted from a
FUND PERFORM? and other assets, 9.33%. The fund's tightening to a neutral bias,
A. The general drop in bond prices corporate holdings spanned a wide range indicating it planned no further
was reflected in the fund's -2.01% total of industries. We believe this rate hikes in the near future.
return for the six-month period ended diversified investment strategy That sparked a "relief rally" in the bond
June 30. While the weakness in the bond can reduce risk and enhance potential market, dropping the yield on the
market has adversely affected the fund's returns. 30-year Treasury to 5.97% at the close
short-term performance, its long-term of the reporting period.
track record remains solid (see chart). Q. HOW DID U.S. DOMESTIC Rising interest rates and an
INVESTMENT-GRADE BONDS FARE? overabundance of new issues hurt the
Q. WHAT WAS YOUR REACTION TO A. U.S. Treasury securities performed performance of investment-grade corporate
THE SELLOFF IN THE BOND MARKET? poorly because of heightened concerns bonds. Still, investment-grade corporate
A. We used it as an opportunity to buy that the Federal Reserve Board (the Fed) bonds outperformed Treasuries. Yield
attractive bonds at reduced prices. would raise interest rates to slow differentials between Treasuries and
Additionally, in an effort to lower economic growth and combat inflation. investment-grade corporate bonds narrowed,
volatility, we reduced the fund's The primary impetus for these concerns but remained relatively wide at the end
weighted average maturity and duration. was the unexpected rise in the inflation of the reporting period.
The fund maintained an average rate in April.
portfolio quality rating of BBB/Baa Uncertainty concerning the extent to Q. WHAT ABOUT HIGH-YIELD BONDS?
as measured by Standard & Poor's which the Fed might raise interest A. High-yield securities were among
Corporation and Moody's Investor Service rates eroded Treasury prices in May the best-performing segments of the bond
and other widely known credit-rating and June, sending their yields higher. market. High-yield bonds are less
agencies. These ratings are historical The yield of the benchmark 30-year sensitive to rising interest rates. The
and are based on analysis of the credit U.S. Treasury bond soared from 5.09% at value of a high-yield bond is largely
quality of the individual securities in the beginning of the reporting period dependent on the ability of its issuer
the fund's portfolio. to 6.16% on June 24, its highest level to meet its debt obligations. When the
At the end of the reporting period, since 1997. economy is booming and companies are
the fund's total assets were divided Speculation surrounding the Fed's taking in more revenue, this
as follows: domestic possible action did not end until generally bodes well for the issuers of
June 30, when the central bank high-yield bonds.
PORTFOLIO COMPOSITION
As of 6/30/99, based on total net assets
TOP FIVE BOND HOLDINGS
COUPON MATURITY % [PIE CHART APPEARS HERE]
1. ConAgra, Inc 7.125% 10/2026 1.46%
2. Treuhandanstalt 6.00% 11/2003 1.27 High-Yield Bonds 30.13%
3. Niagara Mohawk Power Corp. 7.75% 10/2008 1.15 Foreign Investment-Grade Bonds 28.38%
4. Time Warner, Inc. 9.125% 01/2013 1.15 Other - 9.33%
5. WMX Technologies, Inc. 7.10% 08/2026 1.13 Domestic Investment-Grade Bonds 32.16%
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND 49
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Q. WHAT WERE SOME OF THE KEY TRENDS IN [GRAPH APPEARS HERE]
FOREIGN-BOND MARKETS?
A. In most developed countries, the yields RESULTS OF A $10,000 INVESTMENT
of government bonds rose, following the -------------------------------
trend of U.S. Treasury yields. Other types 5/5/93 - 6/30/99 AIM V.I. DIVERSIFIED INCOME FUND
of bonds generally outperformed government LEHMAN AGGREGATE BOND INDEX
issues, and lower-rated bonds outperformed AVERAGE ANNUAL TOTAL RETURNS
higher-rated securities. Foreign bond As of 6/30/99 including sales charges
markets were the beneficiaries of
relatively low inflation and interest Inception (5/5/93) 6.41%
rates. In Europe, sluggish economic 5 Years 7.69
growth caused the European Central Bank
to cut interest rates in April. The AIM V.I. LEHMAN
advent of the European Economic and DIVERSIFIED AGGREGATE
Monetary Union (the EMU) on January 1 (In thousands) INCOME FUND BOND INDEX
proved to be a stimulus to the corporate -------------------------
bond markets in the 11 member nations-- 5/5/93 10,000 10,000
Austria, Belgium, Finland, France, 12/93 10,605 10,466
Germany, Ireland, Italy, Luxembourg, the 12/94 10,068 10,160
Netherlands, Portugal and Spain. 12/95 11,982 12,037
Emerging-market debt, hurt by a 12/96 13,204 12,474
succession of crises in developing 12/97 14,444 13,679
nations such as Russia and Brazil, 12/98 14,961 14,867
rebounded toward the end of the reporting 6/99 14,660 14,664
period. Despite an improvement in
performance, emerging-market debt remained MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
volatile. However, this was of little INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
consequence for the fund since it SHOWN.
invests primarily in developed markets.
Foreign bond markets we liked The performance figures shown represent the AIM V.I. Diversified Income Fund
included the United Kingdom, Canada and are not intended to reflect actual annuity values, and do not reflect
and Germany. charges at the separate account level which, if applied, would lower the
For most of the reporting period, the performance results. The Fund's performance figures are historical and
U.S. dollar was strong against most reflect reinvestment of all distributions and changes in net asset value. The
major currencies, particularly the euro, Fund's investment return and principal value will fluctuate so that Fund
the new EMU currency. The fund mitigated shares, when redeemed, may be worth more or less than their original cost.
the effect of a strong dollar by Source: Towers Data Systems HYPO--Registered Trademark--.
selectively hedging some of its The Lehman Aggregate Bond Index is an unmanaged index generally
currency exposure. considered representative of treasury, agency, corporate, and mortgage-backed
debt securities. Index performance is from 4/30/93 through 6/30/99. Source:
Q. WHAT IS YOUR OUTLOOK? Lehman Brothers.
A. In the United States, the economic An investment cannot be made in any index listed. Index results include
climate appears to be favorable for reinvested dividends.
bonds. Although there is still some Higher-yielding, lower-rated corporate bonds, commonly known as "junk
question about the Fed's future actions, bonds," have a greater risk of price fluctuation and loss of principal and
inflation remains low. Economic growth income than U.S. Treasury securities, which offer a government guarantee as
is strong, corporate earnings are to the repayment of principal and interest if held to maturity. Purchasers
solid and the country enjoys nearly should carefully assess the risks associated with an investment in this Fund.
full employment. Moreover, bond yields International investing presents certain risks not associated with
have risen nearly 1% since the beginning investing solely in the United States. These include risks relating to
of the reporting period. This development fluctuations in the value of the U.S. dollar relative to the values of other
could make bonds more attractive to currencies, the custody arrangements made for the Fund's foreign holdings,
investors seeking a steady differences in accounting, political risks, and the lesser degree of public
source of income. information required to be provided by non-U.S. companies.
In most other developed countries, -------------------------------------------------------------------------------------
conditions are also "bond friendly." In Europe, for example, inflation Regardless, we believe that the fund
remains low. Additionally, the will be in a good position to take
corporate mergers and restructurings advantage of market trends. We plan
now taking place in Europe should to adhere to our three-faceted strategy
increase profitability. We expect the of investing in domestic investment-grade,
EMU to continue to act as a stimulus high-yield and foreign bonds. Because
for the development of the corporate these bonds tend to react differently to
bond market in Europe, potentially various economic and market conditions,
increasing the fund's investment options. we believe our strategy can enhance
returns and reduce risk over
the long term.
</TABLE>
50 AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS & NOTES -
65.23%
AGRICULTURAL PRODUCTS - 0.52%
Cargill, Inc., Notes, 6.875%,
05/01/28 (Acquired 03/12/99; Cost $499,010)(b) $ 500,000 $ 465,170
- -------------------------------------------------------------------------------
AIR FREIGHT - 0.46%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 400,000 411,000
- -------------------------------------------------------------------------------
AIRLINES - 3.22%
Airplanes Pass Through Trust, Series D Gtd. Sub. Bonds,
10.875%, 03/15/19 300,000 289,093
- -------------------------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 825,000 900,537
- -------------------------------------------------------------------------------
10.375%, 12/15/22 600,000 745,404
- -------------------------------------------------------------------------------
Dunlop Stand Aero Holdings, Sr. Notes, 11.875%,
05/15/09 (Acquired 05/07/99; Cost $458,008)(b) 460,000 469,200
- -------------------------------------------------------------------------------
United Air Lines, Inc., Pass Through Ctfs., 9.56%,
10/19/18 425,000 476,467
- -------------------------------------------------------------------------------
2,880,701
- -------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.85%
Advance Stores Co., Inc., Series B Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 04/15/08 390,000 374,400
- -------------------------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 380,000 383,800
- -------------------------------------------------------------------------------
758,200
- -------------------------------------------------------------------------------
AUTOMOBILES - 0.51%
General Motors Corp., Deb., 8.80%,
03/01/21 400,000 455,816
- -------------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 0.58%
Regions Financial Corp., Sub. Notes, 7.75%, 09/15/24 500,000 518,815
- -------------------------------------------------------------------------------
BANKS (MONEY CENTER) - 2.54%
Deutsche Bank Financial, Unsec. Gtd. Sub. Deb., 6.70%,
12/13/06 750,000 735,382
- -------------------------------------------------------------------------------
First Union Bancorp, Sub. Deb., 7.50%,
04/15/35 800,000 823,128
- -------------------------------------------------------------------------------
HSBC Holdings PLC (United Kingdom), Sub. Notes, 7.50%,
07/15/09 700,000 707,826
- -------------------------------------------------------------------------------
2,266,336
- -------------------------------------------------------------------------------
BANKS (REGIONAL) - 0.33%
Mercantile Bancorp, Inc., Sub. Notes, 6.375%,
01/15/04 300,000 295,059
- -------------------------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 0.49%
Coca-Cola Enterprises, Inc., Putable Notes, 8.35%,
06/20/20(c) 2,000,000 442,300
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE) - 4.91%
Comcast Cable Communications, Notes, 8.50%, 05/01/27 $ 500,000 $ 557,455
- --------------------------------------------------------------------------------
CSC Holdings, Inc.,
Sr. Unsec. Notes, 7.875%, 12/15/07 500,000 503,760
- --------------------------------------------------------------------------------
Deb., 7.875%, 02/15/18 400,000 388,248
- --------------------------------------------------------------------------------
Deb., 7.625%, 07/15/18 1,000,000 946,580
- --------------------------------------------------------------------------------
Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes
10.25%, 11/01/07(d) 840,000 529,200
- --------------------------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc. Notes, 11.875%,
10/15/07(d) 1,000,000 582,500
- --------------------------------------------------------------------------------
Liberty Media Group, Deb., 7.875%, 07/15/09(b) 400,000 397,616
- --------------------------------------------------------------------------------
USA Networks, Inc., Sr. Unsec. Gtd. Notes, 6.75%,
11/15/05 500,000 480,421
- --------------------------------------------------------------------------------
4,385,780
- --------------------------------------------------------------------------------
CHEMICALS - 1.59%
Airgas, Inc., Medium Term Notes, 7.14%, 03/08/04 750,000 720,840
- --------------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee Deb.,
8.50%, 12/15/12 500,000 556,040
- --------------------------------------------------------------------------------
Sterling Chemicals, Inc., Sr. Unsec. Sub. Notes,
11.75%, 08/15/06 185,000 143,375
- --------------------------------------------------------------------------------
1,420,255
- --------------------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.45%
Rohm and Hass Co., Deb., 7.85%, 07/15/29(b) 400,000 399,708
- --------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.47%
Dialog Corp. PLC (United Kingdom), Series A Sr. Sub.
Yankee Notes, 11.00%, 11/15/07 350,000 318,500
- --------------------------------------------------------------------------------
Northern Telecom (Canada), Yankee Notes, 6.00%,
09/01/03 100,000 98,701
- --------------------------------------------------------------------------------
417,201
- --------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.57%
Exodus Communications, Sr. Unsec. Notes, 11.25%,
07/01/08 480,000 507,600
- --------------------------------------------------------------------------------
CONSUMER FINANCE - 0.90%
GMAC, Notes, 9.00%, 10/15/02 750,000 806,775
- --------------------------------------------------------------------------------
ELECTRIC COMPANIES - 2.52%
Cleveland Electric Illumination, Series D Sr. Sec.
Notes, 7.88%, 11/01/17 500,000 512,468
- --------------------------------------------------------------------------------
El Paso Electric Co.,
Series D Sec. First Mortgage Bonds, 8.90%, 02/01/06 500,000 539,250
- --------------------------------------------------------------------------------
Series E Sec. First Mortgage Bonds, 9.40%,
05/01/11 150,000 168,647
- --------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
51
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
ELECTRIC COMPANIES - (CONTINUED)
Niagara Mohawk Power Corp., Series G Sr. Unsec. Notes,
7.75%, 10/01/08 $1,000,000 $ 1,030,000
- -------------------------------------------------------------------------------
2,250,365
- -------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.19%
Electronic Retailing Systems International, Inc., Sr.
Disc. Notes, 13.25%, 02/01/04(d) 590,000 168,150
- -------------------------------------------------------------------------------
ENTERTAINMENT - 1.44%
Ascent Entertainment Group, Sr. Sec. Disc. Notes,
11.875%, 12/15/04(d) 350,000 253,750
- -------------------------------------------------------------------------------
Time Warner, Inc., Deb., 9.125%, 01/15/13 900,000 1,029,429
- -------------------------------------------------------------------------------
1,283,179
- -------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 2.41%
Associates Corp. of North America, Series B Sr. Deb.,
7.95%, 02/15/10 750,000 794,235
- -------------------------------------------------------------------------------
Finova Capital Corp., Unsec. Notes, 7.40%, 05/06/06 750,000 758,325
- -------------------------------------------------------------------------------
Sumitomo Bank International Finance N.V. (Netherlands),
Gtd. Sub. Notes, 8.50%, 06/15/09 600,000 604,931
- -------------------------------------------------------------------------------
2,157,491
- -------------------------------------------------------------------------------
FOODS - 1.58%
AmeriServe Food Distributors, Inc., Sr. Unsec. Gtd.
Notes, 8.875%, 10/15/06 115,000 106,375
- -------------------------------------------------------------------------------
ConAgra, Inc., Sr. Unsec. Notes, 7.125%, 10/01/26 1,300,000 1,307,774
- -------------------------------------------------------------------------------
1,414,149
- -------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.44%
Venetian Casino Resort LLC, Sec. Gtd. Mortgage Notes,
12.25%, 11/15/04 400,000 394,000
- -------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.33%
ALARIS Medical, Inc., Sr. Unsec. Gtd. Sub. Notes,
9.75%, 12/01/06 300,000 295,500
- -------------------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 0.46%
Team Health, Inc., Sr. Sub. Notes, 12.00%, 03/15/09
(Acquired 03/05/99; Cost $400,000)(b) 400,000 408,000
- -------------------------------------------------------------------------------
HOMEBUILDING - 0.55%
D.R. Horton, Inc., Sr. Unsec. Gtd. Notes, 8.00%,
02/01/09 520,000 494,000
- -------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.44%
Procter & Gamble Co. (The), Putable Deb., 8.00%,
09/01/24 350,000 390,943
- -------------------------------------------------------------------------------
HOUSEWARES - 0.54%
Decora Industries, Inc., Series B Sr. Sec. Gtd. Notes,
11.00%, 05/01/05 500,000 482,500
- -------------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 1.15%
Americo Life, Inc., Sr. Sub. Notes, 9.25%, 06/01/05 75,000 76,125
- -------------------------------------------------------------------------------
Torchmark Corp., Notes, 7.875%,
05/15/23 950,000 950,922
- -------------------------------------------------------------------------------
1,027,047
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
IRON & STEEL - 0.40%
Acme Metals, Inc., Sr. Unsec. Gtd. Notes, 10.875%,
12/15/07(e) $ 588,000 $ 67,620
- -------------------------------------------------------------------------------
GS Industries, Inc., Sr. Gtd. Notes, 12.00%, 09/01/04 350,000 290,500
- -------------------------------------------------------------------------------
358,120
- -------------------------------------------------------------------------------
LODGING-HOTELS - 1.34%
Booth Creek Ski Holdings, Sr. Unsec. Gtd. Notes,
12.50%, 03/15/07 390,000 345,150
- -------------------------------------------------------------------------------
John Q. Hammons Hotels, Inc., Sec. First Mortgage
Notes, 9.75%, 10/01/05 550,000 526,625
- -------------------------------------------------------------------------------
Stena Line A.B. (Sweden), Sr. Yankee Notes, 10.625%,
06/01/08 430,000 325,725
- -------------------------------------------------------------------------------
1,197,500
- -------------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.60%
Elgin National Industries, Series B Sr. Unsec. Gtd.
Notes, 11.00%, 11/01/07 240,000 238,800
- -------------------------------------------------------------------------------
Glenoit Corp., Sr. Unsec. Gtd. Sub. Notes, 11.00%,
04/15/07 340,000 300,900
- -------------------------------------------------------------------------------
539,700
- -------------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.44%
MMI Products, Inc., Sr. Unsec. Sub. Notes, 11.25%,
04/15/07 380,000 391,400
- -------------------------------------------------------------------------------
METALS MINING - 0.97%
Centaur Mining & Exploration Ltd. (Australia), Sr. Gtd.
Yankee Notes, 11.00%, 12/01/07 550,000 507,375
- -------------------------------------------------------------------------------
Rio Algom Ltd. (Canada), Yankee Unsec. Deb., 7.05%,
11/01/05 370,000 356,147
- -------------------------------------------------------------------------------
863,522
- -------------------------------------------------------------------------------
NATURAL GAS - 2.38%
Dynegy, Inc., Sr. Unsec. Deb., 7.125%, 05/15/18 500,000 467,460
- -------------------------------------------------------------------------------
Enron Corp.,
Sr. Sub. Deb., 6.75%, 07/01/05 450,000 444,578
- -------------------------------------------------------------------------------
Notes, 6.75%, 08/01/09 750,000 720,390
- -------------------------------------------------------------------------------
K N Energy, Inc., Unsec. Deb., 7.35%, 08/01/26 500,000 493,965
- -------------------------------------------------------------------------------
2,126,393
- -------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.55%
NRG Energy, Inc., Sr. Unsec. Notes, 7.50%, 06/01/09 500,000 493,240
- -------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.90%
Chesapeake Energy Corp., Series B Sr. Unsec. Gtd.
Notes, 9.625%, 05/01/05 175,000 164,500
- -------------------------------------------------------------------------------
Queen Sand Resources, Inc., Sr. Unsec. Gtd. Notes,
12.50%, 07/01/08 240,000 152,400
- -------------------------------------------------------------------------------
Talisman Energy, Inc. (Canada), Yankee Deb., 7.125%,
06/01/07 500,000 488,080
- -------------------------------------------------------------------------------
804,980
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
52
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
OIL & GAS (REFINING & MARKETING) - 0.33%
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes,
11.125%, 07/01/06 $ 330,000 $ 295,350
- -------------------------------------------------------------------------------
PERSONAL CARE - 1.08%
Alberto-Culver Corp., Unsec. Deb., 6.375%, 06/15/28 1,000,000 963,800
- -------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.33%
AES Corp., Sr. Notes, 8.00%, 12/31/08 750,000 708,750
- -------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., Sr. Unsec. Bonds,
8.48%, 09/15/28 450,000 481,847
- -------------------------------------------------------------------------------
1,190,597
- -------------------------------------------------------------------------------
PUBLISHING (NEWSPAPERS) - 1.85%
News America Holdings, Inc.,
Sr. Gtd. Deb., 9.25%, 02/01/13 750,000 845,333
- -------------------------------------------------------------------------------
Putable Bonds, 7.43%, 10/01/26 500,000 506,450
- -------------------------------------------------------------------------------
United News & Media PLC (United Kingdom), Yankee Notes,
7.75%, 07/01/09 300,000 299,448
- -------------------------------------------------------------------------------
1,651,231
- -------------------------------------------------------------------------------
RAILROADS - 1.92%
CSX Corp., Sr. Unsec. Putable Deb.,
6.95%, 05/01/27 300,000 301,128
- -------------------------------------------------------------------------------
7.25%, 05/01/27 750,000 755,025
- -------------------------------------------------------------------------------
Norfolk Southern Corp., Putable Bonds, 7.05%,
05/01/37 650,000 661,778
- -------------------------------------------------------------------------------
1,717,931
- -------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 1.58%
Glenborough Properties, Series B Sr. Unsec. Notes,
7.625%, 03/15/05 800,000 713,142
- -------------------------------------------------------------------------------
Spieker Properties LP, Unsec. Deb., 7.35%, 12/01/17 750,000 696,840
- -------------------------------------------------------------------------------
1,409,982
- -------------------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 0.30%
Plainwell, Inc., Series B Sr. Unsec. Sub. Notes,
11.00%, 03/01/08 330,000 265,650
- -------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 1.64%
CEX Holdings, Inc., Series B Sr. Unsec. Gtd. Sub.
Notes, 9.625%, 06/01/08 370,000 348,725
- -------------------------------------------------------------------------------
CSK Auto Inc., Series A Sr. Gtd. Sub. Notes, 11.00%,
11/01/06 260,000 269,100
- -------------------------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub. Notes, 10.25%,
06/01/08 330,000 339,900
- -------------------------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 08/15/08 500,000 503,750
- -------------------------------------------------------------------------------
1,461,475
- -------------------------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 0.83%
Big 5 Corp., Series B Sr. Unsec. Notes, 10.875%,
11/15/07 500,000 510,000
- -------------------------------------------------------------------------------
J Crew Operating Corp., Sr. Sub. Notes, 10.375%,
10/15/07 240,000 236,400
- -------------------------------------------------------------------------------
746,400
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
SAVINGS & LOAN COMPANIES - 0.91%
Sovereign Bancorp, Inc., Sub. Notes, 8.00%, 03/15/03 $ 800,000 $ 809,832
- ------------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.35%
MDC Corporation, Inc. (Canada), Sr. Unsec. Sub. Yankee
Notes, 10.50%, 12/01/06 300,000 313,500
- ------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.68%
Hydrochem Industrial Service, Series B Sr. Sec. Gtd.
Sub. Notes, 10.375%, 08/01/07 170,000 153,850
- ------------------------------------------------------------------------------
Laidlaw, Inc. (Canada), Yankee Deb., 6.70%, 05/01/08 500,000 454,085
- ------------------------------------------------------------------------------
607,935
- ------------------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.41%
MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.375%, 01/15/08 380,000 370,500
- ------------------------------------------------------------------------------
SHIPPING - 0.31%
Pegasus Shipping Hellas Co. (Bermuda), Series A Sr.
Sec. Gtd. Mortgage Notes, 11.875%, 11/15/04 500,000 277,500
- ------------------------------------------------------------------------------
SOVEREIGN DEBT - 2.57%
Province of Manitoba (Canada), Yankee Bonds, 7.75%,
07/17/16 700,000 755,384
- ------------------------------------------------------------------------------
Province of Quebec (Canada),
Series A Putable Yankee Notes, 5.735%, 03/02/26 750,000 747,285
- ------------------------------------------------------------------------------
Series A Yankee Notes, 6.29%, 03/06/26 800,000 798,472
- ------------------------------------------------------------------------------
2,301,141
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.95%
Clearnet Communications Inc. (Canada), Sr. Yankee
Unsec. Disc. Notes, 14.75%, 12/15/05(d) 110,000 100,650
- ------------------------------------------------------------------------------
Nextel Communications, Inc., Sr. Unsec. Notes, 12.00%,
11/01/08 560,000 638,400
- ------------------------------------------------------------------------------
PageMart Wireless, Inc., Sr. Sub. Disc. Notes, 11.25%,
02/01/08(d) 750,000 311,250
- ------------------------------------------------------------------------------
Powertel, Inc., Sr. Unsec. Notes, 11.125%, 06/01/07 670,000 693,450
- ------------------------------------------------------------------------------
1,743,750
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 4.28%
Bell Canada (Canada), Yankee Deb., 9.50%, 10/15/10 350,000 414,561
- ------------------------------------------------------------------------------
Call-Net Enterprises, Inc. (Canada), Sr. Unsec. Disc.
Yankee Notes, 8.94%, 08/15/08(d) 290,000 163,850
- ------------------------------------------------------------------------------
Centel Capital, Deb., 9.00%, 10/15/19 320,000 376,803
- ------------------------------------------------------------------------------
Econophone, Inc., Sr. Unsec. Notes, 13.50%, 07/15/07 750,000 800,625
- ------------------------------------------------------------------------------
Esprit Telecom Group PLC (United Kingdom), Sr. Unsec.
Yankee Notes, 11.50%, 12/15/07 350,000 381,500
- ------------------------------------------------------------------------------
MCI Communications Corp., Putable Sr. Unsec. Deb.,
7.125%, 06/15/27 1,000,000 1,010,570
- ------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
53
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE) - (CONTINUED)
Tele1 Europe A.B. (Sweden), Sr. Notes, 13.00%,
05/15/09(f) $ 400,000 $ 420,000
- -----------------------------------------------------------------------------
Versatel Telecom B.V. (Netherlands), Sr. Notes,
13.25%, 05/15/08(f) 250,000 260,000
- -----------------------------------------------------------------------------
3,827,909
- -----------------------------------------------------------------------------
TELEPHONE - 2.79%
Cable & Wireless Communications PLC (United Kingdom),
Yankee Notes, 6.75%, 03/06/08 750,000 720,870
- -----------------------------------------------------------------------------
ESAT Telecom Group PLC (Ireland), Sr. Yankee Disc.
Notes, 12.50%, 02/01/07(d) 470,000 336,050
- -----------------------------------------------------------------------------
NTL Communications Corp., Series B Sr. Unsec. Notes,
11.50%, 10/01/08 440,000 487,300
- -----------------------------------------------------------------------------
SBC Communications, Inc., Deb., 7.375%,
07/15/43 750,000 735,795
- -----------------------------------------------------------------------------
Worldwide Fiber, Inc., Sr. Notes, 12.50%,
12/15/05 (Acquired 01/28/99; Cost $215,250)(b) 210,00 212,625
- -----------------------------------------------------------------------------
2,492,640
- -----------------------------------------------------------------------------
TRUCKERS - 0.45%
Travelcenters of America, Inc., Sr. Unsec. Gtd. Sub.
Deb., 10.25%, 04/01/07 400,000 402,000
- -----------------------------------------------------------------------------
TRUCKS & PARTS - 0.13%
Blue Bird Body Co., Series B Sr. Sub. Notes, 10.75%,
11/15/06 110,000 117,700
- -----------------------------------------------------------------------------
WASTE MANAGEMENT - 1.52%
Browning-Ferris, Deb., 9.25%, 05/01/21 350,000 346,343
- -----------------------------------------------------------------------------
WMX Technologies, Inc., Unsec. Putable Notes, 7.10%,
08/01/26 1,000,000 1,013,100
- -----------------------------------------------------------------------------
1,359,443
- -----------------------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes
(Cost $60,805,603) 58,297,161
- -----------------------------------------------------------------------------
U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES -
1.76%
RETAIL (SPECIALTY) - 0.54%
Amazon.com Inc., Conv. Deb., 4.75%,
02/01/09, (Acquired 01/29/99; Cost $501,875)(b) 500,000 485,312
- -----------------------------------------------------------------------------
SHIPPING - 0.65%
Hutchison Delta Finance (Cayman Islands), Conv.
Unsec. Notes, 7.00%, 11/08/02 500,000 580,000
- -----------------------------------------------------------------------------
TELEPHONE - 0.57%
Bell Atlantic Financial Services, Inc., Conv. Bonds,
4.25%, 09/15/05 500,000 511,099
- -----------------------------------------------------------------------------
Total U.S. Dollar Denominated Convertible Bonds &
Notes (Cost $1,584,375) 1,576,411
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(g) VALUE
<S> <C> <C> <C>
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS &
NOTES - 17.99%
CANADA - 8.40%
Bank of Montreal (Banks-Money Center), Sub. Deb.,
7.92%, 07/31/12 CAD 850,000 $ 639,793
- -------------------------------------------------------------------------------
Bell Mobility Cellular, Inc. (Telecommunications-
(Cellular/Wireless), Deb., 6.55%, 06/02/08 CAD 750,000 503,597
- -------------------------------------------------------------------------------
Canadian Oil Debco Inc.
(Oil & Gas-Exploration & Production),
Deb., 11.00%, 10/31/00 CAD 450,000, 327,231
- -------------------------------------------------------------------------------
Canadian Pacific Ltd.
(Manufacturing-Diversified),
Unsec. Notes, 5.85%, 03/30/09 CAD 500,000 330,550
- -------------------------------------------------------------------------------
Clearnet Communications Inc. (Telecommunications-
Cellular/Wireless), Sr. Disc. Notes,
11.75%, 08/13/07(d) CAD 1,500,000 687,139
- -------------------------------------------------------------------------------
10.40%, 05/15/08(d) CAD 1,600,000 651,510
- -------------------------------------------------------------------------------
GMAC Canada Ltd. (Financial Diversified), Sr.
Unsec. Gtd. Unsub. Notes,
6.50%, 03/23/04 GBP 400,000 631,749
- -------------------------------------------------------------------------------
Loblaw Co. Ltd. (Retail-Food Chains), Unsec.
Notes, 6.45%, 03/01/39 CAD 650,000 421,646
- -------------------------------------------------------------------------------
Microcell Telecommunications, Sr. Yankee Unsec.
Disc. Notes, 11.125%, 10/15/07(d) CAD 1,000,000 419,070
- -------------------------------------------------------------------------------
NAV Canada (Services-Commercial & Consumer),
Bonds, 7.40%, 06/01/27 CAD 1,000,000 784,554
- -------------------------------------------------------------------------------
Poco Petroleums Ltd.
(Oil & Gas-Exploration & Production),
Unsec. Deb., 6.60%, 09/11/07 CAD 750,000 486,261
- -------------------------------------------------------------------------------
Telegobe Canada, Inc. (Telephone), Unsec. Deb.,
8.35%, 06/20/03 CAD 850,000 625,712
- -------------------------------------------------------------------------------
TransCanada Pipelines (Natural Gas), Series Q
Deb., 10.625%, 10/20/09 CAD 500,000 442,694
- -------------------------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 CAD 280,000 211,510
- -------------------------------------------------------------------------------
Westcoast Energy, Inc. (Natural Gas), Unsec.
Series V Deb., 6.45%, 12/18/06 (Acquired
12/03/96; Cost $369,585)(b) CAD 500,000 345,792
- -------------------------------------------------------------------------------
7,508,808
- -------------------------------------------------------------------------------
GERMANY - 0.67%
International Bank for Reconstruction &
Development (Banks-Money Center), Unsec. Global
Bonds, 7.125%, 04/12/05 DEM 1,000,000 600,713
- -------------------------------------------------------------------------------
NETHERLANDS - 2.50%
Dresdner Finance B.V. (Banks-Major Regional),
Series 11 Gtd. Notes, 3.072%, 07/30/03 EUR 650,000 668,365
- -------------------------------------------------------------------------------
Hypovereins Finance N.V. (Banks-Major Regional),
Gtd. Series E Medium Term Notes, 6.00%, 03/12/07 DEM 210,000 116,420
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
54
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(g) VALUE
<S> <C> <C> <C>
NETHERLANDS - (CONTINUED)
KPNQWest B.V. (Telecommunications-Long
Distance), Sr. Unsec. Notes, 7.125%, 06/01/09
(Acquired 05/25/99; Cost $683,257)(b) EUR 650,000 $ 669,890
- -----------------------------------------------------------------------------------
Mannesmann Finance B.V. (Machinery Diversified),
Gtd. Unsec. Unsub. Notes, 4.75%, 05/27/09 EUR 250,000 246,260
- -----------------------------------------------------------------------------------
Prudential Financial B.V. (Investment
Banking/Brokerage), Sr. Unsec. Gtd. Bonds,
9.375%, 06/04/07 GBP 285,000 531,110
- -----------------------------------------------------------------------------------
2,232,045
- -----------------------------------------------------------------------------------
NEW ZEALAND - 0.89%
Inter-American Development Bank, (Banks-Money
Center), Unsec. Bonds, 5.75%, 04/15/04 NZD 1,000,000 506,404
- -----------------------------------------------------------------------------------
International Bank for Reconstruction &
Development (Banks-Money Center), Sr. Unsec.
Notes, 6.77%, 08/20/07(c) NZD 1,000,000 288,989
- -----------------------------------------------------------------------------------
795,393
- -----------------------------------------------------------------------------------
SWEDEN - 1.34%
AB Spintab (Banks-Regional), Series 161 Unsec.
Deb., 7.50%, 06/15/04 SEK 3,400,000 439,437
- -----------------------------------------------------------------------------------
Stadshypotek A.B. (Banks-Regional), Series 1562
Notes, 3.50%, 09/15/04 SEK 7,000,000 757,500
- -----------------------------------------------------------------------------------
1,196,937
- -----------------------------------------------------------------------------------
UNITED KINGDOM - 3.48%
European Investment Bank (Banks-Money Center),
Unsec. Unsub. Notes, 7.625%, 12/07/07 GBP 375,000 656,404
- -----------------------------------------------------------------------------------
Lloyds Bank PLC (Banks-Major Regional), Sub.
Notes, 5.25%, 07/14/08 DEM 850,000 447,391
- -----------------------------------------------------------------------------------
Merrill Lynch & Co. (Investment
Banking/Brokerage), Sr. Unsec. Unsub. Notes,
7.375%, 12/17/07 GBP 270,000 445,795
- -----------------------------------------------------------------------------------
National Power PLC (Electric Companies), Sr.
Unsec. Unsub. Notes, 8.00%, 02/21/07 AUD 500,000 338,771
- -----------------------------------------------------------------------------------
Sutton Bridge Financial Ltd. (Financial-
Diversified), Gtd. Eurobonds, 8.625%, 06/30/22
(Acquired 05/29/97; Cost $733,585)(b) GBP 450,000 812,449
- -----------------------------------------------------------------------------------
Union Bank Switzerland London,
(Banks-Major Regional),
Unsec. Sub. Notes, 7.375%, 11/26/04 GBP 250,000 411,393
- -----------------------------------------------------------------------------------
3,112,203
- -----------------------------------------------------------------------------------
UNITED STATES - 0.71%
General Electric Capital Corp. (Financial-
Diversified), Sr. Unsec. Unsub. Notes, 6.00%, 02/05/03 GBP 400,000 630,472
- -----------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Non-
Convertible Bonds & Notes (Cost $16,923,716) 16,076,571
- -----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(g) VALUE
<S> <C> <C> <C>
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS &
NOTES - 1.25%
LUXEMBOURG - 0.61%
Daimler-Benz A.G. (Automobiles), Series WW Conv.
Gtd. Unsub. Eurobonds,
4.125%, 07/05/03 DEM 570,000 $ 549,651
- -----------------------------------------------------------------------------
UNITED KINGDOM - 0.64%
Telewest Communications PLC (Leisure Time-
Products), Sr. Unsec. Conv. Notes, 5.25%,
02/19/07 GBP 350,000 571,159
- -----------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Convertible
Bonds & Notes (Cost $1,052,352) 1,120,810
- -----------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED GOVERNMENT BONDS &
NOTES - 6.36%
AUSTRALIAN DOLLAR - 1.07%
New South Wales Treasury Corp., Gtd., Notes,
7.00%, 04/01/04 AUD 1,400,000 957,938
- -----------------------------------------------------------------------------
BRITISH POUND STERLING - 0.81%
Federal National Mortgage Association, 6.875%,
06/07/02 GBP 450,000 727,085
- -----------------------------------------------------------------------------
CANADIAN DOLLAR - 1.67%
British Columbia Municipal Finance Authority,
Bonds, 7.75%, 12/01/05 CAD 500,000 373,292
- -----------------------------------------------------------------------------
Ontario Province, Unsec. Sr. Unsub. Notes, 8.00%,
03/11/03 CAD 750,000 545,405
- -----------------------------------------------------------------------------
Province of Ontario, Sr. Unsub. Notes, 6.25%,
12/03/08 NZD 1,000,000 481,050
- -----------------------------------------------------------------------------
Quebec (Province of), Deb., 9.375%, 01/16/23 CAD 100,000 93,285
- -----------------------------------------------------------------------------
1,493,032
- -----------------------------------------------------------------------------
DANISH KRONE - 0.68%
Kingdom of Denmark, Bonds, 7.00%, 12/15/04 DKK 3,900,000 608,202
- -----------------------------------------------------------------------------
EURO - 1.94%
Bundesrepublik Deutschland, Series 92 Bonds,
7.25%, 10/21/02 EUR 520,000 595,069
- -----------------------------------------------------------------------------
Treuhandanstalt, Gtd. Notes, 6.00%, 11/12/03 EUR 1,020,000 1,137,014
- -----------------------------------------------------------------------------
1,732,083
- -----------------------------------------------------------------------------
NEW ZEALAND DOLLAR - 0.19%
New Zealand Government, Bonds,
10.00%, 03/15/02 NZD 145,000 84,942
- -----------------------------------------------------------------------------
8.00%, 04/15/04 NZD 145,000 82,309
- -----------------------------------------------------------------------------
167,251
- -----------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Government
Bonds & Notes
(Cost $5,914,805) 5,685,591
- -----------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
55
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY INTERESTS - 1.88%
BANKS (REGIONAL) - 1.84%
First Republic Capital Corp., Series A-$105 Pfd. (Acquired
05/26/99; Cost $750,000)(b) 750 $ 750,469
- ------------------------------------------------------------------------------
Societe Generale (France) 2,150 378,679
- ------------------------------------------------------------------------------
Westpac Banking Corp., STRYPES Trust-$3.135
Conv. Pfd. 16,000 518,000
- ------------------------------------------------------------------------------
1,647,148
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.04%
Nextel Communications, Inc.-Class A(h) 742 37,239
- ------------------------------------------------------------------------------
Total Common Stocks & Other Equity Interests
(Cost $1,535,880) 1,684,387
- ------------------------------------------------------------------------------
WARRANTS - 0.08%
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.00%
Knology Holdings, Inc., expiring 10/15/07 (Acquired
03/12/98; Cost $0)(b)(i) 1,000 2,250
- ------------------------------------------------------------------------------
Wireless One, Inc., expiring 10/19/00(i) 420 4
- ------------------------------------------------------------------------------
2,254
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.00%
Electronic Retailing Systems International, Inc., expiring
02/01/04(i) 590 2,950
- ------------------------------------------------------------------------------
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc., expiring 04/15/03(i) 230 2
- ------------------------------------------------------------------------------
PERSONAL CARE - 0.00%
IHF Capital, Inc., Series I, expiring 11/14/99(i) 150 75
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.02%
Clearnet Communications Inc. (Canada), expiring
09/15/05(i) 891 7,573
- ------------------------------------------------------------------------------
Loral Space & Communications, Ltd.,
expiring 01/15/07(i) 580 6,090
- ------------------------------------------------------------------------------
13,663
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.02%
Versatel Telecom International N.V. (Netherlands),
expiring 05/15/08(i) 250 12,563
- ------------------------------------------------------------------------------
TELEPHONE - 0.04%
Esat Telecom Group PLC, expiring 02/01/07(i) 470 37,835
- ------------------------------------------------------------------------------
Total Warrants (Cost $7,590) 69,342
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 1.18%
U.S. TREASURY NOTES - 1.18%
6.875%, 02/15/08 (Cost $1,045,625) $1,000,000 $ 1,053,450
- -----------------------------------------------------------------
REPURCHASE AGREEMENT - 1.53%(j)
Dean Witter Reynolds, Inc., 4.85%,
07/01/99 (Cost $1,369,762)(k) 1,369,762 1,369,762
- -----------------------------------------------------------------
TOTAL INVESTMENTS - 97.26% 86,933,485
- -----------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 2.74% 2,444,967
- -----------------------------------------------------------------
NET ASSETS - 100.00% $89,378,452
=================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Principal amount is in U.S. Dollars, except as indicated by note (g).
(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 06/30/99 was $2,327,856
which represents 2.60% of the Fund's net assets.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(d) Discounted bond at purchase. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(e) Defaulted security. Currently, the issuer is partially in default with
respect to interest payments.
(f) Consist of more than one class of Securities traded together as a unit. In
addition to the debt obligations listed, each unit contains warrants that
enable the holder to purchase common stock in the issuer at a
predetermined price per share of common stock.
(g) Foreign denominated security. Par value and coupon rate are denominated in
currency of country indicated.
(h) Non-income producing security.
(i) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(j) 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.
(k) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$100,013,472. Collateralized by U.S. Government obligations.
Investment Abbreviations:
ADR - American Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollars
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DEM - German Deutsche Mark
DKK - German Deutsche Mark
Disc. - Discounted
EUR - Euro Currency
GBP - British Pound Sterling
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
56
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $90,239,708) $86,933,485
- ---------------------------------------------------------------------
Receivables for:
Investments sold 1,620,809
- ---------------------------------------------------------------------
Forward currency contracts 161,031
- ---------------------------------------------------------------------
Forward currency contracts closed 91,609
- ---------------------------------------------------------------------
Capital stock sold 979,208
- ---------------------------------------------------------------------
Dividends and interest 1,568,379
- ---------------------------------------------------------------------
Investment for deferred compensation plan 22,399
- ---------------------------------------------------------------------
Other assets 509
- ---------------------------------------------------------------------
Total assets 91,377,429
- ---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,896,723
- ---------------------------------------------------------------------
Forward currency contracts closed 7,668
- ---------------------------------------------------------------------
Capital stock reacquired 5,018
- ---------------------------------------------------------------------
Deferred compensation plan 22,399
- ---------------------------------------------------------------------
Accrued advisory fees 43,428
- ---------------------------------------------------------------------
Accrued directors' fees 1,940
- ---------------------------------------------------------------------
Accrued operating expenses 21,801
- ---------------------------------------------------------------------
Total liabilities 1,998,977
- ---------------------------------------------------------------------
Net assets applicable to shares outstanding $89,378,452
- ---------------------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 8,335,306
- ---------------------------------------------------------------------
Net asset value, offering and redemption price per share $ 10.72
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 3,609,242
- -------------------------------------------------------------------------------
Dividends (net of $1,894 foreign withholding tax) 50,934
- -------------------------------------------------------------------------------
Total investment income 3,660,176
- -------------------------------------------------------------------------------
EXPENSES:
Advisory fees 275,191
- -------------------------------------------------------------------------------
Administrative services fees 25,752
- -------------------------------------------------------------------------------
Custodian fees 21,199
- -------------------------------------------------------------------------------
Directors' fees and expenses 4,228
- -------------------------------------------------------------------------------
Other 28,887
- -------------------------------------------------------------------------------
Total expenses 355,257
- -------------------------------------------------------------------------------
Less: Expenses paid directly (598)
- -------------------------------------------------------------------------------
Net expenses 354,659
- -------------------------------------------------------------------------------
Net investment income 3,305,517
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (2,114,642)
- -------------------------------------------------------------------------------
Foreign currencies (32,829)
- -------------------------------------------------------------------------------
Forward currency contracts 474,201
- -------------------------------------------------------------------------------
(1,673,270)
- -------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (3,392,196)
- -------------------------------------------------------------------------------
Foreign currencies (13,695)
- -------------------------------------------------------------------------------
Forward currency contracts 24,953
- -------------------------------------------------------------------------------
(3,380,938)
- -------------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign currencies and
forward currency contracts (5,054,208)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(1,748,691)
===============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
57
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,305,517 $ 6,761,255
- -----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and forward
currency contracts (1,673,270) (884,777)
- -----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities, foreign
currencies and forward currency contracts (3,380,938) (2,586,149)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (1,748,691) 3,290,329
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment
income - (4,724,444)
- -----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains - (1,507,363)
- -----------------------------------------------------------------------------
Net increase (decrease) from capital stock
transactions (5,318,210) 10,068,179
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets (7,066,901) 7,126,701
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of year 96,445,353 89,318,652
- -----------------------------------------------------------------------------
End of year $89,378,452 $96,445,353
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $85,405,215 $90,723,425
- -----------------------------------------------------------------------------
Undistributed net investment income 9,110,667 5,805,150
- -----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
forward currency contracts (1,984,869) (311,599)
- -----------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities, foreign currencies and
forward currency contracts (3,152,561) 228,377
- -----------------------------------------------------------------------------
$89,378,452 $96,445,353
=============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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. Equity securities which are listed
or traded on an exchange or the NASDAQ National Market System 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 closing bid price
on that day. 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 prices obtained from an
electronic quotation reporting system, if such prices are available, or
from established market makers. Securities for which market quotations are
either not readily
AIM V.I. DIVERSIFIED INCOME FUND
58
<PAGE>
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. 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. 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. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Such
distributions are declared and paid annually.
C. Federal Income Taxes - For federal income tax purposes, each portfolio in
the Company is taxed as a separate entity. It is the Fund's policy to
continue to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income and capital gains to its shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
The Fund had capital loss carryforwards (which may be carried forward to
offset future taxable capital gains, if any) of $299,947 as of December 31,
1998, which expires, if not previously utilized, through the year 2006. The
Fund cannot distribute capital gains to shareholders until the tax loss
carryforwards have been utilized.
D. 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. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. Foreign Currency Contracts - A foreign 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 foreign 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.
Outstanding forward currency contracts at June 30, 1999 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO UNREALIZED
SETTLEMENT ---------------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- ---------- ---------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
08/10/99 AUD 350,000 $ 234,626 $ 231,470 $ 3,156
08/04/99 CAD 8,000,000 5,482,945 5,432,000 50,945
08/04/99 CAD 1,000,000 686,518 679,000 7,518
10/08/99 EUR 1,300,000 1,359,384 1,350,216 9,168
08/31/99 GBP 2,000,000 3,194,000 3,153,906 40,094
10/06/99 GBP 1,400,000 2,218,664 2,208,755 9,909
08/26/99 NZD 800,000 438,080 424,027 14,053
08/26/99 NZD 300,000 160,305 159,010 1,295
07/22/99 SEK 10,000,000 1,204,602 1,179,709 24,893
----------- ----------- --------
$14,979,124 $14,818,093 $161,031
=========== =========== ========
</TABLE>
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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $25,752 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$1,946 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
The Fund received reductions in custodian fees of $598 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $598 during the six months ended
June 30, 1999.
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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did
AIM V.I. DIVERSIFIED INCOME FUND
59
<PAGE>
not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.09% on the unused balance
of the committed line. The commitment fee is allocated among the funds based
on their respective average net assets for the period.
NOTE 6 - 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, 1999 was $35,860,638 and $36,892,301, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 1,228,417
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (4,534,640)
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(3,306,223)
==========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1999 and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold 1,370,512 $14,814,183 2,291,048 $ 26,553,679
- -----------------------------------------------------------------------------
Issued as reinvestment of
distributions - - 569,635 6,231,807
- -----------------------------------------------------------------------------
Reacquired (1,854,175) (20,132,393) (1,956,150) (22,717,307)
- -----------------------------------------------------------------------------
(483,663) $(5,318,210) 904,533 $ 10,068,179
=============================================================================
</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, 1999, each of the years in the three-year
period ended December 31, 1998, the eleven months ended December 31, 1995 and
the year ended January 31, 1995.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------------- JANUARY 31,
1999 1998 1997 1996 1995 1995
-------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.94 $ 11.29 $ 10.33 $ 10.00 $ 9.12 $ 10.46
- -------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.43 0.75 0.73 0.73 0.69 0.76
- -------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.65) (0.35) 0.24 0.28 0.94 (1.42)
- -------------------------------------------------------------------------------------------
Total from investment
operations (0.22) 0.40 0.97 1.01 1.63 (0.66)
- -------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income - (0.57) (0.01) (0.68) (0.75) (0.68)
- -------------------------------------------------------------------------------------------
Distributions from net
realized capital
gains - (0.18) -- -- -- --
- -------------------------------------------------------------------------------------------
Total distributions - (0.75) (0.01) (0.68) (0.75) (0.68)
- -------------------------------------------------------------------------------------------
Net asset value, end of
period $ 10.72 $ 10.94 $ 11.29 $ 10.33 $ 10.00 $ 9.12
===========================================================================================
Total return(a) (2.01)% 3.58% 9.39% 10.19% 18.11% (6.35)%
===========================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $89,378 $96,445 $89,319 $63,624 $44,630 $25,271
===========================================================================================
Ratio of expenses to
average net assets 0.77%(b) 0.77% 0.80% 0.86% 0.88%(c) 0.91%(d)
===========================================================================================
Ratio of net investment
income to average net
assets 7.21%(b) 6.99% 6.90% 7.09% 7.65%(c) 8.07%(d)
===========================================================================================
Portfolio turnover rate 40% 50% 52% 76% 72% 100%
===========================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $92,490,410.
(c) Annualized.
(d) After fee waivers and/or expense reimbursement. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or
expense reimbursements were 1.03% and 7.95%, respectively.
AIM V.I. DIVERSIFIED INCOME FUND
60
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Managers' Overview
TELECOMMUNICATIONS HOLDINGS
BOOST FUND PERFORMANCE
Q. MARKET PERFORMANCE IMPROVED that it would return to a neutral rate 66.96% of the fund's total net assets
SIGNIFICANTLY IN THE FIRST HALF OF policy, signaling that as of June 30 invested in the United States as
1999. HOW DID AIM V.I. GLOBAL UTILITIES interest-rate increases were unlikely domestic utility markets remained
FUND PERFORM? in the near future. strong. Europe continued to be the
A. For the six-month reporting period fund's largest overseas region,
ended June 30, 1999, cumulative total Q. GIVEN CURRENT MARKET CONDITIONS, representing approximately 14.20% of
return for AIM V.I. Global Utilities HOW DID YOU MANAGE THE FUND? the portfolio.
Fund was a strong 7.03%. Fund A. We continued to emphasize electric
performance outpaced the 6.78% return utilities and the telecommunications Q. ELECTRIC COMPANIES REPRESENTED THE
of the Lipper Utility Funds Index and industry. Telecommunications stocks, FUND'S LARGEST INDUSTRY ON JUNE 30.
the 3.17% return of the Dow Jones which represented approximately 7.24% WHAT ARE THE MAJOR TRENDS IN THIS
average of 15 utilities. of total net assets on June 30, fared INDUSTRY?
well during the reporting period, A. Deregulation is changing the U.S.
Q. WHAT WERE THE MAJOR TRENDS IN THE reflecting the sector's dynamic growth. electric-utility market in several
FINANCIAL MARKETS DURING THE REPORTING For the past several years, the ways. First, fewer electric companies
PERIOD? telecom market has grown at more are paying high dividends. This trend
A. U.S. equity markets regained their than twice the rate of the overall continues as corporations reinvest
momentum in the first half of 1999 as economy. In 1998, the S&P 500 returned their earnings to promote growth rather
major market indexes-the Dow, the S&P 28%, while the two leading components than to pay dividends. Secondly,
500 and the Nasdaq-reached record of that index--technology and deregulation has prompted a number of
highs. During the first quarter of communications--were up 72% and up 49%, electric utilities to look beyond their
1999, the broadening of earnings respectively. original markets. Some electric
sparked investor interest in mid- and At the reporting period's end, the companies are exiting the power-
small-cap companies. The recovery fund remained fully invested and well generation part of the business, which
extended to a wide range of industries diversified with more than 140 holdings, is turning very competitive, and are
that had suffered during the market up from approximately 110 six months focusing on distribution, which remains
narrowness of the last few years. As a ago. We ended the reporting period with regulated. An example of this type of
result of this dramatic shift in market company is Sierra Pacific Resources,
sentiment, traditional large-cap growth which buys
stocks were no longer the dominant
market drivers at the reporting PORTFOLIO COMPOSITION
period's end.
In Europe, stock market indexes As of 6/30/99, based on total net assets
have risen back to the historic highs
reached in mid-1998, but in U.S.-dollar TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
terms were still lower. The euro has
had a weak start since its inception in 1. MCI WorldCom Inc. 2.73% 1. Electric Companies 22.39%
January, caused by a weakening of 2. Ameritech Corp. 2.66 2. Telephone 21.76
sentiment toward the region when 3. Williams Companies, Inc. (The) 2.64 3. Finance (Asset Management) 10.52
economic growth disappointed. 4. SBC Communications Inc. 2.57 4. Telecommunications (Long Distance) 10.03
Meanwhile, economic growth around the 5. Lucent Technologies Inc. 2.07 5. Natural Gas 8.15
rest of the world showed signs of 6. Qwest Communications 1.51 6. Communications Equipment 5.87
improvement or continued strong, as International Inc. 7. Broadcasting (Television & Radio) 3.26
in the United States. 7. Century Tel, Inc. 1.44 8. Power Producers (Independent) 2.45
On June 30, the Federal Reserve 8. Redback Networks, Inc. 1.39 9. Computers (Networking) 2.45
Board (the Fed) raised the federal 9. Nokia Oyj A.B.-Class A-ADR 1.28 10. Services (Commercial & Consumer) 2.26
funds rate from 4.75% to 5% to slow 10. Univision Communications, Inc. 1.28
economic growth and combat inflation.
At the same time, the Fed announced The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND 61
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
power and then sells it to some [GRAPH APPEARS HERE]
287,000 clients in Nevada and
California's Lake Tahoe region. On the RESULTS OF A $10,000 INVESTMENT
other hand, another group of electric 5/2/94 - 6/30/99
companies is focusing on the
competitive power-generation and AVERAGE ANNUAL TOTAL RETURNS
related businesses. The focus of these As of 6/30/99
companies is clearly to boost growth Inception (5/2/94) 15.36%
rates. 5 Year 16.70
1 Year 14.06
Q. WHAT HOLDINGS CONTRIBUTED TO THE
FUND'S STRONG PERFORMANCE SO FAR (In thousands) AIM V.I. GLOBAL UTILITIES FUND S&P 500 LIPPER UTILITY FUND INDEX
IN 1999? --------------------------------------------------------------------------
A. The best-performing stocks during 5/2/94 10,000 10,000 10,000
the reporting period were in the 6/94 9,660 9,903 9,516
domestic telecommunications area. MCI 12/94 9,708 10,384 9,593
WorldCom boosted fund performance 6/95 10,829 12,481 10,677
because the company was well positioned 12/95 12,303 14,283 12,194
to take advantage of the fastest- 6/96 12,737 15,724 12,588
growing segment of the 12/96 13,789 17,561 13,331
telecommunications industry--data 6/97 14,909 21,179 14,374
communications. Qwest Communications 12/97 16,772 23,418 16,759
also contributed positively to the 6/98 18,332 27,564 18,137
fund's strong performance. The company 12/98 19,537 30,109 19,842
is building a national network designed 6/99 21,186 33,879 20,910
to accommodate state-of-the-art data
communication. MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
The fund participated successfully INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
in the initial public offering (IPO) SHOWN.
of Redback Networks, which provides
subscriber-management products to the The performance figures shown represent AIM V.I. Global Utilities Fund and
growing market for high-speed data and are not intended to reflect actual annuity values, and do not reflect charges
voice communications. According to at the separate account level which, if applied, would lower the performance
Hoover's Inc., a leading provider of results. The fund's performance figures are historical and reflect
business information on the Web, reinvestment of all distributions and changes in the net asset value. The
Redback Networks was the best-returning fund's investment return and principal value will fluctuate, so fund shares,
IPO launched during the second quarter when redeemed, may be worth more or less than their original cost. Had fees
of 1999, up more than 446% for the and expenses not been waived in the past, returns would have been lower.
quarter. The Dow Jones Average of 15 Utilities is a weighted average of the
performance of 15 large publicly traded utility stocks. The Dow Jones
Q. WHAT IS YOUR OUTLOOK FOR THE Industrial Average (the Dow) is a price-weighted average of 30 actively
REMAINDER OF 1999? traded primarily industrial stocks.
A. We continue to see many The Lipper Utility Funds Index is an average of the 30 largest utility
opportunities in the utilities sector. funds tracked by Lipper, Inc., an independent mutual-fund performance
Deregulation in the United States and monitor.
privatization abroad are two powerful The Nasdaq (National Association of Securities Dealers Automated
forces that are opening up markets Quotation system) Composite Index is a market-value-weighted index comprising
worldwide, allowing well-managed all Nasdaq domestic and non-U.S. based common stocks listed on the Nasdaq
companies to reap the benefits. There Stock Market. It includes more than 5,000 companies and is often considered
are plenty of opportunities in representative of the small and medium-size company stock universe. While it
domestic stocks, especially in the includes many small and mid-sized company stocks, large-capitalization
telecom industry. Many telecom firms technology companies tend to dominate the Nasdaq Index.
have transformed themselves into The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a
high-growth businesses by taking group of unmanaged securities widely regarded by investors to be
advantage of growing markets representative of the stock market in general.
for Internet, data and cellular An investment cannot be made in any index listed. Unless otherwise
service. Consumer demand for indicated, index results include reinvested dividends and do not
high-speed Internet access is on reflect sales charges.
the rise,
and analysts believe the next two years firms and regional Bells to continue,
will be a boom for broadband technology-with as exemplified by the recently propose
which a single channel can carry joining of SBC Communications and
several channels simultaneously. The Ameritech. Given the fund's sizable
strong demand for broadband access is stake in telecommunications and
leading to increased expenditures by telephone stocks, we believe that
competitive local-exchange carriers as AIM V.I. Global Utilities Fund is pois
they prepare for competition. In the to benefit from these trends.
domestic market, we expect the merger
Internet activity between telecommunications
</TABLE>
62 AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 51.31%
BROADCASTING (TELEVISION, RADIO & CABLE) - 1.32%
United GlobalCom, Inc. - Class A(a) 2,900 $ 196,112
- -------------------------------------------------------------------
Univision Communications, Inc.(a) 6,100 402,600
- -------------------------------------------------------------------
598,712
- -------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 4.61%
ANTEC Corp.(a) 4,000 128,250
- -------------------------------------------------------------------
Copper Mountain Networks, Inc.(a) 1,100 84,975
- -------------------------------------------------------------------
Juniper Networks, Inc.(a) 800 119,200
- -------------------------------------------------------------------
Lucent Technologies, Inc. 9,700 654,144
- -------------------------------------------------------------------
NorthPoint Communications Group, Inc.(a) 4,900 178,850
- -------------------------------------------------------------------
Tellabs, Inc.(a) 4,200 283,762
- -------------------------------------------------------------------
1,449,181
- -------------------------------------------------------------------
COMPUTERS (NETWORKING) - 2.18%
Cisco Systems, Inc.(a) 2,000 129,000
- -------------------------------------------------------------------
Redback Networks, Inc.(a) 3,500 439,469
- -------------------------------------------------------------------
Rhythms NetConnections, Inc.(a) 2,000 116,750
- -------------------------------------------------------------------
685,219
- -------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 0.41%
Clarent Corp. 3,700 55,500
- -------------------------------------------------------------------
Covad Communications Group, Inc.(a) 1,350 71,972
- -------------------------------------------------------------------
127,472
- -------------------------------------------------------------------
ELECTRIC COMPANIES - 12.41%
Allegheny Energy, Inc. 7,300 234,056
- -------------------------------------------------------------------
BEC Energy 3,400 140,250
- -------------------------------------------------------------------
Carolina Power & Light Co. 4,400 188,375
- -------------------------------------------------------------------
DQE, Inc. 7,000 280,875
- -------------------------------------------------------------------
Edison International 13,000 347,750
- -------------------------------------------------------------------
Energy East Corp. 10,400 270,400
- -------------------------------------------------------------------
FirstEnergy Corp. 4,500 139,500
- -------------------------------------------------------------------
FPL Group, Inc. 5,600 305,900
- -------------------------------------------------------------------
IPALCO Enterprises, Inc. 4,000 84,750
- -------------------------------------------------------------------
New Century Energies, Inc. 4,500 174,656
- -------------------------------------------------------------------
NiSource, Inc. 9,200 237,475
- -------------------------------------------------------------------
Pinnacle West Capital Corp. 7,400 297,850
- -------------------------------------------------------------------
Public Service Co. of New Mexico 6,800 135,150
- -------------------------------------------------------------------
Sierra Pacific Resources 3,700 134,587
- -------------------------------------------------------------------
Southern Co. 11,600 307,400
- -------------------------------------------------------------------
Teco Energy, Inc. 12,300 279,825
- -------------------------------------------------------------------
Texas Utilities Co. 5,240 216,150
- -------------------------------------------------------------------
Unicom Corp. 3,400 131,112
- -------------------------------------------------------------------
3,906,061
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (INSTRUMENTATION) - 0.91%
Quanta Services, Inc.(a) 6,500 $ 286,000
- -------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.60%
Superior TeleCom, Inc. 7,556 188,900
- -------------------------------------------------------------------------
NATURAL GAS - 3.68%
Enron Corp. 2,800 228,900
- -------------------------------------------------------------------------
Public Service Co. of
North Carolina, Inc. 3,200 93,600
- -------------------------------------------------------------------------
Williams Companies, Inc. (The) 19,600 834,225
- -------------------------------------------------------------------------
1,156,725
- -------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.29%
AES Corp.(a) 3,300 191,812
- -------------------------------------------------------------------------
MidAmerican Energy Holdings Co.(a) 6,200 214,675
- -------------------------------------------------------------------------
406,487
- -------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 1.25%
Alexandria Real Estate Equities, Inc. 4,700 146,875
- -------------------------------------------------------------------------
Boston Properties, Inc. 4,300 154,263
- -------------------------------------------------------------------------
Crescent Real Estate Equities, Co. 2,300 54,625
- -------------------------------------------------------------------------
Golf Trust of America, Inc. 1,600 39,100
- -------------------------------------------------------------------------
394,863
- -------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 1.20%
Convergys Corp.(a) 14,800 284,900
- -------------------------------------------------------------------------
Metzler Group, Inc.(a) 3,400 93,925
- -------------------------------------------------------------------------
378,825
- -------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.44%
Phone.com, Inc.(a) 2,500 140,000
- -------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 6.06%
AT&T Corp. 5,400 301,388
- -------------------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 1,800 145,800
- -------------------------------------------------------------------------
IXC Communications, Inc.(a) 6,000 235,875
- -------------------------------------------------------------------------
MCI WorldCom, Inc.(a) 9,987 861,379
- -------------------------------------------------------------------------
WinStar Communications, Inc.(a) 7,436 362,505
- -------------------------------------------------------------------------
1,906,947
- -------------------------------------------------------------------------
TELEPHONE - 13.93%
Ameritech Corp. 11,400 837,900
- -------------------------------------------------------------------------
Bell Atlantic Corp. 4,600 300,725
- -------------------------------------------------------------------------
BellSouth Corp. 6,800 318,750
- -------------------------------------------------------------------------
CenturyTel, Inc. 11,400 453,150
- -------------------------------------------------------------------------
Cincinnati Bell, Inc. 15,000 374,063
- -------------------------------------------------------------------------
GTE Corp. 3,200 242,400
- -------------------------------------------------------------------------
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
63
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE - (continued)
McLeodUSA, Inc. - Class A(a) 3,600 $ 198,000
- -------------------------------------------------------------------------------
Nextlink Communications, Inc. - Class A(a) 1,900 141,313
- -------------------------------------------------------------------------------
Qwest Communications International, Inc.(a) 14,400 476,100
- -------------------------------------------------------------------------------
SBC Communications, Inc. 14,000 812,000
- -------------------------------------------------------------------------------
Time Warner Telecom, Inc.(a) 7,900 229,100
- -------------------------------------------------------------------------------
4,383,501
- -------------------------------------------------------------------------------
WATER UTILITIES - 0.44%
Azurix Corp.(a) 6,900 138,000
- -------------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $9,126,533) 16,146,893
- -------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 18.18%
AUSTRALIA - 0.26%
Telstra Corp. Ltd. (Telephone) 14,380 82,293
- -------------------------------------------------------------------------------
AUSTRIA - 0.45%
Oesterreichische Elektrizitaetswirtschafts A.G. -
Class A (Electric Companies) 970 141,155
- -------------------------------------------------------------------------------
BELGIUM - 0.41%
Electrabel S.A. (Electric Companies) 400 129,031
- -------------------------------------------------------------------------------
BERMUDA - 0.66%
Global Crossing Ltd. (Telecommunications - Long
Distance)(a) 4,885 208,224
- -------------------------------------------------------------------------------
CANADA - 1.40%
AT&T Canada, Inc. (Telephone)(a) 2,700 172,969
- -------------------------------------------------------------------------------
BCT.Telus Communications, Inc. (Telephone) 4,955 119,048
- -------------------------------------------------------------------------------
BCT.Telus Communications, Inc. - Class A (Telephone) 1,652 39,066
- -------------------------------------------------------------------------------
Westcoast Energy, Inc. (Natural Gas) 5,500 108,625
- -------------------------------------------------------------------------------
439,708
- -------------------------------------------------------------------------------
DENMARK - 0.49%
Tele Danmark A.S. - ADR (Telephone) 6,000 154,500
- -------------------------------------------------------------------------------
ESTONIA - 0.11%
AS Eesti Telekom - GDR (Telecommunications-
Cellular/Wireless) (Acquired 02/11/99;
Cost $30,811)(b) 1,670 33,150
- -------------------------------------------------------------------------------
FINLAND - 1.54%
Fortum Corp. (Electric Companies) 6,300 30,451
- -------------------------------------------------------------------------------
Nokia Oyj A.B. - Class A - ADR
(Communications Equipment) 4,400 402,875
- -------------------------------------------------------------------------------
Sonera Group Oyj (Telecommunications -
Cellular/Wireless) 2,300 50,252
- -------------------------------------------------------------------------------
483,578
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE - 1.30%
France Telecom S.A. - ADR (Communications Equipment) 3,500 $ 269,500
- -------------------------------------------------------------------------------
Suez Lyonnaise des Eaux (Manufacturing -
Diversified) 500 90,126
- -------------------------------------------------------------------------------
Vivendi (Consumer Services) 600 48,572
- -------------------------------------------------------------------------------
408,198
- -------------------------------------------------------------------------------
GERMANY - 0.73%
RWE A.G. (Electric Companies) 2,425 112,189
- -------------------------------------------------------------------------------
Viag A.G. (Manufacturing - Diversified) 250 118,004
- -------------------------------------------------------------------------------
230,193
- -------------------------------------------------------------------------------
GREECE - 0.09%
Panafon Hellenic Telecom S.A. - GDR
(Telecommunications - Cellular/Wireless)
(Acquired 11/20/98; Cost $21,696)(a)(b) 1,200 29,100
- -------------------------------------------------------------------------------
HUNGARY - 0.27%
Magyar Tavkozlesi Rt - ADR
(Telecommunications - Long Distance) 3,100 85,250
- -------------------------------------------------------------------------------
ITALY - 0.77%
AEM S.p.A. (Electric Companies) (Acquired 07/17/98;
Cost $52,035)(b) 55,000 98,062
- -------------------------------------------------------------------------------
Societa Nordelettrica S.p.A. (Electric Companies) 49,000 143,923
- -------------------------------------------------------------------------------
241,985
- -------------------------------------------------------------------------------
JAPAN - 0.59%
Nippon Telegraph & Telephone Corp.
(Telecommunications - Long Distance) 90 104,919
- -------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. - ADR (Telecommu-
nications - Long Distance) 1,300 81,413
- -------------------------------------------------------------------------------
186,332
- -------------------------------------------------------------------------------
NETHERLANDS - 1.71%
Equant N.V. (Computers - Networking)(a) 300 27,641
- -------------------------------------------------------------------------------
Equant N.V. - ADR (Computers - Networking)(a) 1,000 94,124
- -------------------------------------------------------------------------------
Koninklijke KPN N.V. (Telecommunications - Long Dis-
tance) 6 281
- -------------------------------------------------------------------------------
Libertel N.V. (Telecommunications -
Cellular/Wireless)(a) 7,800 152,734
- -------------------------------------------------------------------------------
TNT Post Group N.V. (Air Freight) 287 6,847
- -------------------------------------------------------------------------------
TNT Post Group N.V. - ADR (Air Freight) 3,045 73,080
- -------------------------------------------------------------------------------
United Pan-Europe Communications N.V. (Broadcasting-
Television, Radio & Cable)(a) 3,400 184,313
- -------------------------------------------------------------------------------
539,020
- -------------------------------------------------------------------------------
NEW ZEALAND - 0.19%
Contact Energy Ltd. (Electric Companies)(a) 37,000 59,944
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
64
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PORTUGAL - 0.62%
Electricidade de Portugal, S.A. (Electric Companies) 2,900 $ 52,183
- -------------------------------------------------------------------------------
Electricidade de Portugal, S.A. - ADR (Electric Com-
panies) 4,000 143,500
- --------------------------------------------------------------------------------
195,683
- --------------------------------------------------------------------------------
SOUTH KOREA - 0.55%
Korea Telecom Corp. - ADR (Telephone)(a) 4,312 172,480
- --------------------------------------------------------------------------------
SPAIN - 1.53%
Autopistas Concesionaria Espanola S.A.
(Services - Commercial & Consumer) 3,900 45,620
- --------------------------------------------------------------------------------
Autopistas, Concesionaria Espanola S.A.
Bonus Rts, expiring 07/12/99 3,900 2,252
- --------------------------------------------------------------------------------
Endesa S.A. (Electric Companies) 3,100 66,070
- --------------------------------------------------------------------------------
Telefonica S.A. - ADR (Telephone)(a) 2,497 367,365
- --------------------------------------------------------------------------------
481,307
- --------------------------------------------------------------------------------
SWITZERLAND - 0.60%
Swisscom A.G. (Telephone) 500 188,042
- --------------------------------------------------------------------------------
UNITED KINGDOM - 3.91%
Hyder PLC (Water Utilities) 4,519 53,779
- --------------------------------------------------------------------------------
National Grid Group PLC (Electric Companies) 10,313 71,770
- --------------------------------------------------------------------------------
Orange PLC (Telephone)(a) 6,500 95,284
- --------------------------------------------------------------------------------
PowerGen PLC (Electric Companies) 31,485 339,457
- --------------------------------------------------------------------------------
PowerGen PLC - ADR (Electric Companies) 3,800 162,925
- --------------------------------------------------------------------------------
Scottish Power PLC (Electric Companies) 15,950 137,774
- --------------------------------------------------------------------------------
United Utilities PLC (Water Utilities) 15,459 187,871
- --------------------------------------------------------------------------------
Yorkshire Water PLC (Water Utilities) 26,174 181,942
- --------------------------------------------------------------------------------
1,230,802
- --------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $4,143,158) 5,719,975
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 2.31%
COMPUTERS (SOFTWARE & SERVICES) - 0.92%
PSINet, Inc., $3.375 Conv. Pfd. 6,000 289,500
- --------------------------------------------------------------------------------
NATURAL GAS - 1.06%
El Paso Energy Cap Trust, Inc. - $2.375
Conv. Pfd. 6,700 331,650
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.16%
WinStar Communications, Inc. - $3.50 Conv. Pfd. 900 50,400
- --------------------------------------------------------------------------------
TELEPHONE - 0.17%
NEXTLINK Communications - $3.25 Conv. Pfd. (Acquired
03/26/98; Cost $30,000)(b) 600 54,675
- --------------------------------------------------------------------------------
Total Convertible Preferred Stocks
(Cost $727,923) 726,225
- --------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES - 2.06%
COMPUTERS (HARDWARE) - 1.02%
Candescent Technology Corp., Sr. Conv. Sub. Deb.,
7.00%, 05/01/03(b) (Acquired 04/17/98; Cost
$396,154) $ 412,000 321,360
- --------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE) - 1.04%
Global Telesystems Group, Conv. Notes, 8.75%, 06/30/00 $ 80,000 $ 325,600
- --------------------------------------------------------------------------------
Total U.S. Dollar Denominated Convertible Bonds &
Notes (Cost $541,078) 646,960
- --------------------------------------------------------------------------------
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS &
NOTES - 10.50%
BROADCASTING (TELEVISION, RADIO
& CABLE) - 0.78%
Comcast Cable Communications, Unsec. Unsub. Notes,
6.20%, 11/15/08 150,000 139,960
- --------------------------------------------------------------------------------
Comcast Corp., Sr. Sub. Deb., 9.50%, 01/15/08 100,000 104,750
- --------------------------------------------------------------------------------
244,710
- --------------------------------------------------------------------------------
CONSUMER FINANCE - 0.26%
GMAC, Notes, 9.00%, 10/15/02 75,000 80,677
- --------------------------------------------------------------------------------
ELECTRIC COMPANIES - 2.79%
Cleveland Electric Illuminating Co. (The),
Sr. Sec. Series D Notes, 7.43%, 11/01/09 150,000 151,130
- --------------------------------------------------------------------------------
Commonwealth Edison Co., First Mortgage Notes, 7.50%,
07/01/13 130,000 136,670
- --------------------------------------------------------------------------------
El Paso Electric Co.,
Series D Sec. First Mortgage Bonds, 8.90%, 02/01/06 75,000 80,888
- --------------------------------------------------------------------------------
Series E. Sec. First Mortgage Bonds, 9.40%, 05/01/11 100,000 112,431
- --------------------------------------------------------------------------------
Texas - New Mexico Power, Sec.
Sr. Notes, 6.25%, 01/15/09 250,000 223,168
- --------------------------------------------------------------------------------
Western Resources, Inc.,
Sr. Unsec. Notes, 6.25%, 08/15/03 75,000 73,667
- --------------------------------------------------------------------------------
Sr. Unsec. Notes, 7.125%, 08/01/09 100,000 99,484
- --------------------------------------------------------------------------------
877,438
- --------------------------------------------------------------------------------
NATURAL GAS - 2.58%
Dynegy, Inc., Sr. Unsec. Deb., 7.125%, 05/15/18 100,000 93,492
- --------------------------------------------------------------------------------
Enron Corp., Sr. Sub. Deb., 8.25%, 09/15/12 400,000 424,140
- --------------------------------------------------------------------------------
K N Energy, Inc., Unsec. Deb., 7.35%, 08/01/26 250,000 246,983
- --------------------------------------------------------------------------------
PanEnergy Corp., Notes, 7.875%, 08/15/04 45,000 47,103
- --------------------------------------------------------------------------------
811,718
- --------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.32%
Tennessee Gas Pipeline Co., Unsec. Bonds, 7.00%,
03/15/27 100,000 99,996
- --------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.16%
AES Corp.
Sr. Notes, 8.00%, 12/31/08 100,000 94,500
- --------------------------------------------------------------------------------
Sr. Sub. Notes, 10.25%, 07/15/06 75,000 77,250
- --------------------------------------------------------------------------------
Arizona Public Service Co., Deb., 8.00%, 12/30/15 75,000 78,686
- --------------------------------------------------------------------------------
Indiana Michigan Power, Sec. Lease Obligation Bonds,
9.82%, 12/07/22 93,396 115,105
- --------------------------------------------------------------------------------
365,541
- --------------------------------------------------------------------------------
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND
65
<PAGE>
<TABLE>
<S> <C> <C>
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 1.23%
AT&T Corp., Sr. Notes, 7.75%, 03/01/07 $ 150,000 $ 158,997
- --------------------------------------------------------------------------------
Sprint Capital Corp., Sr. Unsec. Gtd. Notes, 6.875%,
11/15/28 250,000 228,970
- --------------------------------------------------------------------------------
387,967
- --------------------------------------------------------------------------------
TELEPHONE - 1.38%
GTE Florida, Inc., Unsec. Deb., 6.86%, 02/01/28 250,000 238,400
- --------------------------------------------------------------------------------
SBC Communications, Inc., Deb., 7.375/%, 07/15/43 200,000 196,212
- --------------------------------------------------------------------------------
434,612
- --------------------------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes
(Cost $3,454,799) 3,302,659
- --------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS &
NOTES - 1.74%(c)
FRANCE - 0.33%
France Telecom (Telephone), Conv. Bonds, 2.00%,
01/01/04 FRF 603,520 105,008
- --------------------------------------------------------------------------------
UNITED KINGDOM - 1.41%
National Grid Co. PLC (Electric Companies), Conv.
Bonds, 4.25%, 02/17/08 GBP 240,000 444,030
- --------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Convertible Bonds
& Notes
(Cost $504,278) 549,038
- --------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS &
NOTES - 2.06%(c)
CANADA - 2.06%
Bell Canada (Telecommunications-Cellular/Wireless),
Series EW Deb., 8.80%, 08/17/05 CAD 50,000 38,815
- --------------------------------------------------------------------------------
Unsec. Deb., 10.875%, 10/11/04 50,000 40,674
- --------------------------------------------------------------------------------
Canadian Oil Debco Inc. (Oil & Gas-Exploration &
Production), Deb., 11.00%, 10/31/00 100,000 72,718
- --------------------------------------------------------------------------------
Clearnet Communications, Inc. (Telephone), Unsec. Sr.
Disc. Notes, 5.303%, 02/15/09(d) 300,000 111,978
- --------------------------------------------------------------------------------
Ontario Hydro (Electric Companies), Sr. Unsec. Gtd.
Notes, 9.00%, 06/24/02 200,000 147,936
- --------------------------------------------------------------------------------
Telegobe Canada, Inc. (Telephone), Unsec. Deb.,
8.35%, 06/20/03 100,000 73,613
- --------------------------------------------------------------------------------
TransCanada Pipelines (Natural Gas),
Series Q Deb., 10.625%, 10/20/09 125,000 110,674
- --------------------------------------------------------------------------------
Unsec. Notes 8.55%, 02/01/06 70,000 52,878
- --------------------------------------------------------------------------------
649,286
- --------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Non-Convertible
Bonds & Notes
(Cost $676,147) 649,286
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 0.97%
U.S. TREASURY BONDS - 0.48%
7.625%, 02/15/25 130,000 152,997
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY NOTES - 0.49%
6.625%, 06/30/01 $ 150,000 $ 153,045
- --------------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $292,052) 306,042
- --------------------------------------------------------------------------------
Total Investments Excluding Repurchase Agreements (Cost
$19,465,968) 28,047,078
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 10.55%(e)
Dean Witter Reynolds, Inc., 4.85%, 07/01/99 (Cost
$3,318,890)(f) 3,318,890 3,318,890
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.68% 31,365,968
================================================================================
OTHER ASSETS LESS LIABILITIES - 0.32% 101,134
================================================================================
NET ASSETS - 100.00% $31,467,102
================================================================================
</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 these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 06/30/99 was $536,347 which
represented 1.70% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(d) Step bond issued at a discount. The interest rate represents the coupon
rate at which the bond will accrue at a specified future date.
(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 06/30/99 with a maturing value of
$100,013,472. Collaterized by U.S. Government agency obligations.
INVESTMENT ABBREVIATIONS:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
FRF - French Franc
GBP - British Pound Sterling
GDR - Global Depositary Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
66
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreement, at market
value (cost $19,465,968) $28,047,078
- ---------------------------------------------------------------------
Repurchase agreement (cost $3,318,890) 3,318,890
- ---------------------------------------------------------------------
Foreign currencies, at value (cost $2,497) 2,468
- ---------------------------------------------------------------------
Receivables for:
Capital stock sold 13,801
- ---------------------------------------------------------------------
Dividends and interest 151,883
- ---------------------------------------------------------------------
Investments sold 77,241
- ---------------------------------------------------------------------
Investment for deferred compensation plan 18,795
- ---------------------------------------------------------------------
Total assets 31,630,156
- ---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 114,946
- ---------------------------------------------------------------------
Capital stock reacquired 736
- ---------------------------------------------------------------------
Deferred compensation plan 18,795
- ---------------------------------------------------------------------
Accrued advisory fees 16,492
- ---------------------------------------------------------------------
Accrued directors' fees 2,300
- ---------------------------------------------------------------------
Accrued operating expenses 9,776
- ---------------------------------------------------------------------
Total liabilities 163,054
- ---------------------------------------------------------------------
Net assets applicable to shares outstanding $31,467,102
=====================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 1,693,285
=====================================================================
Net asset value, offering and redemption price per share $18.58
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $10,360 foreign withholding tax) $ 227,227
- ---------------------------------------------------------------------
Interest 239,546
- ---------------------------------------------------------------------
Total investment income 466,773
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 93,074
- ---------------------------------------------------------------------
Administrative services fees 25,132
- ---------------------------------------------------------------------
Custodian fees 13,139
- ---------------------------------------------------------------------
Directors' fees and expenses 4,392
- ---------------------------------------------------------------------
Professional fees 16,778
- ---------------------------------------------------------------------
Other 5,014
- ---------------------------------------------------------------------
Total expenses 157,529
- ---------------------------------------------------------------------
Less: Expenses paid indirectly (149)
- ---------------------------------------------------------------------
Net expenses 157,380
- ---------------------------------------------------------------------
Net investment income 309,393
- ---------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities 1,031,157
- ---------------------------------------------------------------------
Foreign currencies (15,492)
- ---------------------------------------------------------------------
1,015,665
- ---------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 678,940
- ---------------------------------------------------------------------
Foreign currencies (329)
- ---------------------------------------------------------------------
678,611
- ---------------------------------------------------------------------
Net gain on investment securities and foreign currencies 1,694,276
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $2,003,669
=====================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
67
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 309,393 $ 610,580
- -------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures and option contracts 1,015,665 (59,962)
- -------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option contracts 678,611 3,278,654
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,003,669 3,829,272
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income -- (450,038)
- -------------------------------------------------------------------------------
Distributions from net realized gains -- (187,121)
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 1,329,805 2,862,654
- -------------------------------------------------------------------------------
Net increase in net assets 3,333,474 6,054,767
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 28,133,628 22,078,861
- -------------------------------------------------------------------------------
End of year $31,467,102 $28,133,628
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $21,028,498 $19,698,693
- -------------------------------------------------------------------------------
Undistributed net investment income 917,531 608,138
- -------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies, futures
and option contracts 940,214 (75,451)
- -------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and option contracts 8,580,859 7,902,248
- -------------------------------------------------------------------------------
$31,467,102 $28,133,628
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 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 closing bid price on that day. 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 closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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
AIM V.I. GLOBAL UTILITIES FUND
68
<PAGE>
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. Realized gains or losses from securities transactions are recorded
on the identified cost basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid annually.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $50,716 as of December 31, 1998, which expires,
if not previously utilized, through the year 2006. The Fund cannot
distribute capital gains to shareholders until the tax loss carryforwards
have been utilized.
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. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. Foreign Currency Contracts - A foreign 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 foreign 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 foreign 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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $25,132 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$1,878 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
The Fund received reductions in custodian fees of $149 under an expense offset
arrangement. The effect of this arrangement resulted in a reduction of the
Fund's total expenses of $149 during the six months ended June 30, 1999.
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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
AIM V.I. GLOBAL UTILITIES FUND
69
<PAGE>
NOTE 6 - 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, 1999 was $5,558,483 and $4,925,822, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $9,101,958
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (520,858)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $8,581,100
=========================================================================
</TABLE>
Cost of investments for tax purposes is $22,784,868.
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1999, and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31
1999 1998
--------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- ----------
<S> <C> <C> <C> <C>
Sold 284,859 $ 5,094,149 516,028 $8,375,181
- -----------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 37,858 637,159
- -----------------------------------------------------------------------
Reacquired (211,751) (3,764,344) (380,439) (6,149,686)
- -----------------------------------------------------------------------
73,108 $ 1,329,805 173,447 $2,862,654
=======================================================================
</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, 1999, each of the years in the three-year
period ended December 31, 1998, 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,
1999 1998 1997 1996 1995 1995
-------- ------- ------- ------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 17.36 $ 15.26 $ 12.55 $11.64 $9.69 $10.00
- -------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.17 0.35 0.32 0.40 0.29 0.27
- -------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 1.05 2.15 2.40 0.99 1.98 (0.33)
- -------------------------------------------------------------------------------------------------
Total from investment
operations 1.22 2.50 2.72 1.39 2.27 (0.06)
- -------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.28) -- (0.41) (0.31) (0.25)
- -------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.12) (0.01) (0.07) (0.01) --
- -------------------------------------------------------------------------------------------------
Total distributions -- (0.40) (0.01) (0.48) (0.32) (0.25)
- -------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 18.58 $ 17.36 $ 15.26 $12.55 $11.64 $ 9.69
=================================================================================================
Total return(a) 7.03% 16.49% 21.63% 12.07% 23.73% (0.56)%
=================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $31,467 $28,134 $22,079 $13,576 $8,394 $2,958
=================================================================================================
Ratio of expenses to
average net assets 1.10%(b) 1.11% 1.28% 1.40%(c) 1.47%(c)(d) 1.31%(d)(e)
=================================================================================================
Ratio of net investment
income to average net
assets 2.16%(b) 2.46% 2.81% 3.56%(c) 3.76%(c)(d) 4.39%(d)(e)
=================================================================================================
Portfolio turnover rate 19% 32% 28% 47% 58% 69%
=================================================================================================
</TABLE>
(a) Totals returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $28,875,556.
(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 were 1.55%, 3.42% for 1996 and 2.44% (annualized)
and 2.79% (annualized) for 1995, respectively.
(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 2.80% (annualized) and 2.90% (annualized),
respectively.
AIM V.I. GLOBAL UTILITIES FUND
70
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
FUND CONTINUES TO PROVIDE INCOME, STABILITY IN VOLATILE BOND MARKET
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID THE FUND PERFORM comments by Federal Reserve Board A. Performance was largely defined by a
DURING THE REPORTING PERIOD? (Fed) chairman Alan Greenspan in February rising interest rate environment. For
A. Strong economic growth and resulting and surprisingly high Consumer Price the six-months ending June 30, 1999 yield
inflationary concerns created a difficult Index (CPI) data in April, led investors on the two-year Treasury note rose from
environment for intermediate-term debt to speculate that this strong economic 4.53% to 5.52%. Similarly, yield on
securities. For the six months ended growth would necessitate the tightening the 30-year Treasury bond rose from
June 30, 1999, the fund's total return of the federal funds rate. The 5.09% to 5.97%. As interest rates
was -2.06%. possibility of a rate hike created continued to rise during the reporting
further demand for securities with period, the value of the fund's
Q. WHAT EVENTS HAVE SHAPED THE higher yields and less interest rate holdings declined. This was not
MARKET ENVIRONMENT OVER THE LAST sensitivity than government-issued debt. unexpected, however. In a rising interest
SIX MONTHS? To a degree, investor concern was rate environment, it is normal for the
A. Despite the global economic struggles warranted, as on June 30, the Fed value of existing debt securities to
of the second half of 1998, the bumped the federal funds rate upward decrease, as a security's yield and
United States enjoyed unexpectedly strong by 25 basis points (0.25%) from 4.75% price have an inverse relationship.
growth of 4.1% in the first quarter to 5.00%. The increase was small, To counter a rising interest rate
of 1999. This robust economic expansion but enough to moderate the possibility environment, the fund typically relies
alleviated concerns that problems in of inflation. More important, was the on mortgage-backed securities, which
developing nations would lead to a Fed's declaration of a neutral bias, historically have proven less volatile
global recession. As investor confidence indicating its reluctance to further than Treasury securities. While yields
returned, yield replaced safety as adjust rates in the near future. This of most debt securities will climb
the driving force in the bond market. declaration removed uncertainty and with rising interest rates, the yields
Demand for government debt securities created relative stability in the of mortgage-backed securities generally
weakened in favor of lower-rated fixed-income marketplace. do not increase as much as those of
higher-yielding securities. Treasuries. In the past, mortgage-backed
In addition to weakening demand, a Q. HOW DID THE FUND'S HOLDINGS securities have had less volatile yields,
combination of factors, most notably REACT TO THIS VOLATILE ENVIRONMENT? and thus, have helped the fund's
price stability.
However, as demand for the safety of
government securities dwindled in favor
[CHART APPEARS HERE] of higher-yielding, lower-rated debt
securities during the reporting
PORTFOLIO COMPOSITION period, mortgage-backed securities have
As of 6/30/99, based on total investments been surprisingly more volatile than
Treasuries. As a result, the fund's
Mortgage-Backed U.S Treasury U.S. Agency mortgage-backed securities did not dampen
Obligations Obligations Obligations Cash Equivalent the volatility of the fund's net asset
value, but instead contributed to it.
55.78% 17.68% 11.45% 15.09%
Q. HOW DID THE FUND ADJUST ITS STRATEGY
UNDER THESE MARKET CONDITIONS?
The fund's portfolio composition is subject to change, and there is no A. In a rising interest rate environment,
assurance that the fund will continue to hold any particular security. the securities most susceptible to
price fluctuation are those with the
longest duration. Treasury securities
like 10-year notes and 30-year bonds
are among the securities more prone to
price fluctua-
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND 71
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
tion, while two- and five-year notes are [CHART APPEARS HERE]
historically more stable. In response to
rising interest rates, then, we have RESULTS OF A $10,000 INVESTMENT
shortened the average duration of the From 5/5/93 - 6/30/99
fund's holdings, to reduce price and
interest rate risk. AIM V.I. Lehman Brothers
While we are lowering the duration Government Intermediate
of the fund's securities, we are remaining Securities Government
true our investment discipline. While our (In thousands) Fund Bond Index
mortgage-backed securities suffered some ------------ ------------
setbacks in recent months, fund management
carefully researched these securities 5/5/93 10,000 10,000
before adding them to the portfolio. Our 12/93 10,355 10,346
research still indicates that these 6/94 9,922 10,098
securities offer good value and 12/94 9,969 10,165
opportunity for high yield and 6/95 10,935 11,083
preservation of capital. 12/95 11,520 11,632
Similarly, while the fund experienced 6/96 11,316 11,630
some fluctuation in its net asset 12/96 11,784 12,104
value, it remained in line with its 6/97 12,094 12,438
objective of providing the price 12/97 12,745 13,039
stability of a five-year Treasury 6/98 13,211 13,479
note. Additionally, the fund's yield 12/98 13,730 14,143
continues to be higher than the 6/99 13,448 14,077
benchmark yield of the 30-year
Treasury bond. We believe that AVERAGE ANNUAL TOTAL RETURNS
lowering the fund's duration As of 6/30/99
and maintaining our positions in
mortgage-backed securities will Inception (5/5/93) 4.93%
continue to provide our shareholders 5 Year 6.27
with the price stability and 1 Year 1.79
distribution yield to which
they have grown accustomed. Past performance cannot guarantee comparable future results.
Q. WHAT DOES THE HIKE IN THE MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
FEDERAL FUNDS RATE MEAN FOR INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
THE FIXED-INCOME MARKET? SHOWN.
A. The Fed's decision to raise the
rate to 5.00% was prudent. With such The performance figures shown represent the AIM V.I. Government Securities
strong economic growth, it is crucial Fund and are not intended to reflect actual annuity values, and do not
that the Fed monitor and temper the reflect charges on the separate account level which, if applied, would lower
rate of inflation. And while the the performance results. The fund's performance figures are historical and
alarmingly high upturn in retail reflect investment of all distributions and changes in the net asset value.
inflation reflected in April's CPI The fund's investment return and principal value will fluctuate, so that
data appears to have been a one time fund shares, when redeemed, may be worth more or less than their
aberration, the Fed's action should original cost.
provide a good cushion for the economy The Lehman Brothers Intermediate Government Bond Index is an unmanaged
should the lower inflation reflected in composite generally considered representative of intermediate term U.S.
May and June's data prove short lived. Treasury and U.S. government agency securities. Results shown here
Additionally, one should never are for the period 4/30/93-6/30/99. Source: Tower Data Systems
discount the role investor uncertainty HYPO--Registered Trademark--; Lipper. An investment cannot be made
plays in the markets. With the Fed's in the index listed. Index results include reinvested dividends.
declaration of a neutral bias, they have
effectively communicated to the market calm the fixed-income markets going environment for fixed-income securities
that as of June 30th inflation is forward and create a positive environment appears favorable. We believe the fund is
under control and for the moment further for fixed-income investors. well positioned to capitalize on this
tightening of rates is unnecessary. environment, and to provide shareholders
Hopefully, this should Q. WHAT IS YOUR OUTLOOK FOR THE NEAR with the stability and income they have
TERM? come to expect from AIM V.I. Government
A. At the close of the reporting period, Securities Fund.
the benchmark 30-year Treasury bond
was yielding 5.97% versus 5.09% at the ----------------------------------------
period's outset. While it has been a
bumpy ride, the bottom line is that higher Overall,
yields can offer a greater degree
of income for investors. the market environment
In addition, the country's economic
growth, while healthy, seems to be for fixed-income securities
moderating somewhat. Inflation appears
contained, and bonds have been trading appears favorable.
at relatively consistent levels since the
Fed rate hike on June 30. Overall ----------------------------------------
the market
72 AIM V.I. GOVERNMENT SECURITIES FUND
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 66.71%
FEDERAL FARM CREDIT BANK - 3.42%
Medium term notes
5.96%, 07/14/03 $ 200,000 $ 198,264
- ---------------------------------------------------------------------------
5.80%, 06/17/05 1,000,000 976,500
- ---------------------------------------------------------------------------
6.22%, 06/17/08 1,000,000 967,270
- ---------------------------------------------------------------------------
2,142,034
- ---------------------------------------------------------------------------
FEDERAL HOME LOAN BANK - 3.76%
Debentures
8.375%, 10/25/99 150,000 151,402
- ---------------------------------------------------------------------------
6.00%, 06/27/00 250,000 251,322
- ---------------------------------------------------------------------------
5.97%, 12/11/00 1,000,000 1,005,390
- ---------------------------------------------------------------------------
7.31%, 07/06/01 500,000 514,630
- ---------------------------------------------------------------------------
8.17%, 12/16/04 400,000 434,696
- ---------------------------------------------------------------------------
2,357,440
- ---------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC") - 15.53%
Debentures
6.13%, 08/19/99 150,000 150,230
- ---------------------------------------------------------------------------
6.45%, 04/29/09 1,000,000 968,140
- ---------------------------------------------------------------------------
Pass through certificates
6.00%, 11/01/08 to 08/01/10 634,467 616,023
- ---------------------------------------------------------------------------
6.50%, 12/01/08 to 08/01/28 4,281,855 4,168,791
- ---------------------------------------------------------------------------
7.00%, 11/01/10 to 01/01/26 1,077,769 1,083,565
- ---------------------------------------------------------------------------
10.50%, 08/01/19 133,744 146,449
- ---------------------------------------------------------------------------
8.50%, 09/01/20 to 12/01/26 2,478,522 2,607,400
- ---------------------------------------------------------------------------
9,740,598
- ---------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") -
24.45%
Debentures
8.25%, 12/18/00 500,000 518,540
- ---------------------------------------------------------------------------
7.50%, 02/11/02 1,350,000 1,398,695
- ---------------------------------------------------------------------------
7.55%, 04/22/02 400,000 415,920
- ---------------------------------------------------------------------------
8.50%, 02/01/05 500,000 508,495
- ---------------------------------------------------------------------------
5.75%, 06/15/05 500,000 488,240
- ---------------------------------------------------------------------------
Medium term notes
7.375%, 03/28/05 300,000 315,618
- ---------------------------------------------------------------------------
Pass through certificates
7.50%, 11/01/09 to 07/01/27 1,854,019 1,884,348
- ---------------------------------------------------------------------------
6.50%, 10/01/10 to 06/01/23 1,339,149 1,321,331
- ---------------------------------------------------------------------------
7.00%, 07/01/11 to 01/01/28 3,901,856 3,902,272
- ---------------------------------------------------------------------------
6.00%, 10/01/13 to 12/01/13 2,905,216 2,806,235
- ---------------------------------------------------------------------------
8.50%, 09/01/24 to 02/01/25 1,239,484 1,296,508
- ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") -
CONTINUED
STRIPS(a)
7.37%, 10/09/19 $1,800,000 $ 480,888
- ---------------------------------------------------------------------------
15,337,090
- ---------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") -
15.37%
Pass through certificates
9.50%, 08/15/03 to 09/15/16 48,748 52,836
- ---------------------------------------------------------------------------
9.00%, 09/15/08 to 10/15/16 108,246 115,790
- ---------------------------------------------------------------------------
11.00%, 10/15/15 25,893 28,668
- ---------------------------------------------------------------------------
10.50%, 09/15/17 to 11/15/19 22,036 24,177
- ---------------------------------------------------------------------------
10.00%, 06/15/19 758,368 826,621
- ---------------------------------------------------------------------------
6.50%, 12/15/23 389,627 378,059
- ---------------------------------------------------------------------------
8.00%, 07/15/24 to 07/15/26 2,674,834 2,759,791
- ---------------------------------------------------------------------------
7.50%, 05/15/27 to 08/15/28 2,129,593 2,155,684
- ---------------------------------------------------------------------------
7.00%, 04/15/28 to 06/15/28 3,332,751 3,296,754
- ---------------------------------------------------------------------------
9,638,380
- ---------------------------------------------------------------------------
PRIVATE EXPORT FUNDING COMPANY - 0.49%
Debentures
7.30%, 01/31/02 300,000 309,078
- ---------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION - 0.48%
Debentures
5.55%, 12/15/99 150,000 150,146
6.50%, 08/01/02 150,000 151,926
- ---------------------------------------------------------------------------
302,072
- ---------------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY - 3.21%
Debentures
6.375%, 06/15/05 2,000,000 2,014,400
- ---------------------------------------------------------------------------
Total U.S. Government Agency Securities (Cost
$42,220,968) 41,841,092
- ---------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 17.54%
U.S. TREASURY BONDS & NOTES - 16.16%
6.125%, 12/31/01 500,000 506,010
- ---------------------------------------------------------------------------
6.00%, 07/31/02 300,000 303,138
- ---------------------------------------------------------------------------
5.25%, 08/15/03 3,500,000 3,439,100
- ---------------------------------------------------------------------------
4.75%, 02/15/04 3,000,000 2,883,990
- ---------------------------------------------------------------------------
5.50%, 02/15/08 1,000,000 973,220
- ---------------------------------------------------------------------------
6.875%, 08/15/25 500,000 541,110
- ---------------------------------------------------------------------------
6.125%, 11/15/27 1,500,000 1,488,120
- ---------------------------------------------------------------------------
10,134,688
- ---------------------------------------------------------------------------
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND
73
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY STRIPS(a) - 1.38%
5.378%, 05/15/06 $ 750,000 $ 499,717
- ---------------------------------------------------------------------------------
6.80%, 11/15/18 1,250,000 367,838
- ---------------------------------------------------------------------------------
867,555
- ---------------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $11,373,618) 11,002,243
- ---------------------------------------------------------------------------------
Total Investments Excluding, Repurchase Agreement (Cost
$53,594,586) 52,843,335
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 14.98%(b)
CIBC Oppenheimer, 5.00%, 07/01/99(c)
(Cost $9,393,793) 9,393,793 9,393,793
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.23% 62,237,128
- ---------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES--0.77% 484,344
- ---------------------------------------------------------------------------------
NET ASSETS - 100.00% $62,721,472
=================================================================================
</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 is at least 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 06/30/99 with a maturing value of
$50,006,945. Collateralized by U.S. Government obligations.
Abbreviation:
STRIPS - Separately Traded Registered Interest and Principal Security
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
74
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreement, at market
value (cost $53,594,586) $ 52,843,335
- ----------------------------------------------------------------------
Repurchase agreement (cost $9,393,793) 9,393,793
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 75,519
- ----------------------------------------------------------------------
Interest 494,448
- ----------------------------------------------------------------------
Paydowns 6,232
- ----------------------------------------------------------------------
Investment for deferred compensation plan 21,978
- ----------------------------------------------------------------------
Other assets 545
- ----------------------------------------------------------------------
Total assets 62,835,850
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 26,992
- ----------------------------------------------------------------------
Deferred compensation plan 21,978
- ----------------------------------------------------------------------
Accrued advisory fees 25,063
- ----------------------------------------------------------------------
Accrued administrative services fees 10,690
- ----------------------------------------------------------------------
Accrued directors' fees and expenses 3,700
- ----------------------------------------------------------------------
Accrued operating expenses 25,955
- ----------------------------------------------------------------------
Total liabilities 114,378
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $ 62,721,472
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 5,730,208
======================================================================
Net asset value, offering and redemption price per share $10.95
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 2,067,019
- -----------------------------------------------------------------------------
EXPENSES:
Advisory fees 148,812
- -----------------------------------------------------------------------------
Administrative services fees 40,450
- -----------------------------------------------------------------------------
Custodian fees 10,579
- -----------------------------------------------------------------------------
Directors' fees and expenses 6,062
- -----------------------------------------------------------------------------
Interest expense 12,190
- -----------------------------------------------------------------------------
Professional fees 17,827
- -----------------------------------------------------------------------------
Other 10,199
- -----------------------------------------------------------------------------
Total expenses 246,119
- -----------------------------------------------------------------------------
Net investment income 1,820,900
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (1,110,342)
- -----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,934,302)
- -----------------------------------------------------------------------------
Net gain (loss) on investment securities (3,044,644)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(1,223,744)
=============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
75
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,820,900 $ 2,530,613
- ------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (1,110,342) 241,993
- ------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (1,934,302) 445,919
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (1,223,744) 3,218,525
- ------------------------------------------------------------------------------
Dividends from net investment income -- (1,611,964)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 5,760,535 22,778,324
- ------------------------------------------------------------------------------
Net increase in net assets 4,536,791 24,384,885
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 58,184,681 33,799,796
- ------------------------------------------------------------------------------
End of year $62,721,472 $58,184,681
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $60,518,530 $54,757,995
- ------------------------------------------------------------------------------
Undistributed net investment income 4,309,645 2,488,745
- ------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (1,355,452) (245,110)
- ------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (751,251) 1,183,051
- ------------------------------------------------------------------------------
$62,721,472 $58,184,681
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 United States 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. The Fund may engage
in dollar roll transactions with respect to mortgage securities issued by
GNMA, FNMA and FHLMC. In a dollar roll transaction, the Fund sells a
mortgage security held in the portfolio to a financial institution such as
a bank or broker-dealer, and simultaneously agrees to repurchase a
substantially similar
AIM V.I. GOVERNMENT SECURITIES FUND
76
<PAGE>
security (same type, coupon and maturity) from the institution at a later
date at an agreed upon price. The mortgage securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. During the period between the sale and repurchase, the Fund will
not be entitled to receive interest and principal payments on the securities
sold. Proceeds of the sale will be reinvested in short-term instruments, and
the income from these investments, together with any additional fee income
received on the sale, could generate income for the Fund exceeding the yield
on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement. In
the event the buyer of securities in a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale
of the securities may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the Fund's obligation
to repurchase the securities.
Interest income is recorded as earned from settlement date and is recorded
on the accrual basis. Realized gains or losses from securities transactions
are recorded on the identified cost basis. Distributions to shareholders are
recorded on the ex-dividend date. Such distributions are declared and paid
annually.
C. Federal Income Taxes - For federal income tax purposes, each portfolio in
the Company is taxed as a separate entity. It is the Fund's policy to
continue to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income and capital gains to its shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
The Fund had capital loss carryforwards (which may be carried forward to
offset future taxable capital gains, if any) of $180,497 as of December 31,
1998, 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.
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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $22,486 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$1,908 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 a director's
fees, if so elected by such director, in mutual fund shares in accordance with
a deferred compensation plan.
NOTE 4 - BORROWINGS
Reverse repurchase agreements involve the sale of securities held by the
Fund, with an agreement that the Fund will repurchase such securities at an
agreed-upon price and date. Proceeds from reverse repurchase agreements are
treated as borrowings. The agreements are collateralized by the underlying
securities and are carried at the amount at which the securities will
subsequently be repurchased as specified in the agreements. The maximum amount
outstanding during the six months ended June 30, 1999 was $3,221,250 while
borrowings averaged $1,010,663 per day with a weighted average interest rate
of 2.40%. No borrowings existed at June 30, 1999.
The Fund will limit its borrowings from banks, reverse repurchase agreements
and dollar roll transactions to an aggregate of 33 1/3% of its total assets at
the time of investment. The Fund will not purchase additional securities when
any borrowings from banks exceed 5% of the Fund's total assets.
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
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, 1999 was $13,351,944 and $13,474,325, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 258,523
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,046,025)
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $ (787,502)
==========================================================================
</TABLE>
Cost of investments for tax purposes is $63,024,630.
AIM V.I. GOVERNMENT SECURITIES FUND
77
<PAGE>
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1999 and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 2,015,202 $ 22,281,052 3,062,093 $ 34,224,621
- ------------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 144,183 1,611,964
- ------------------------------------------------------------------------------
Reacquired (1,490,564) (16,520,517) (1,168,506) (13,058,261)
- ------------------------------------------------------------------------------
524,638 $ 5,760,535 2,037,770 $ 22,778,324
==============================================================================
</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, 1999, each of the years in the three-year
period ended December 31, 1998, the eleven months ended December 31, 1995 and
the year ended January 31, 1995.
<TABLE>
<CAPTION>
JANUARY
JUNE 30, DECEMBER 31, 31,
-------- ---------------------------------- -------
1999(a) 1998(a) 1997 1996 1995 1995
-------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 11.18 $ 10.67 $ 9.87 $ 10.17 $ 9.39 $ 10.24
- ------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.34 0.63 0.59 0.58 0.54 0.53
- ------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.57) 0.20 0.22 (0.35) 0.74 (0.88)
- ------------------------------------------------------------------------------------------
Total from investment
operations (0.23) 0.83 0.81 0.23 1.28 (0.35)
- ------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.32) (0.01) (0.53) (0.50) (0.50)
- ------------------------------------------------------------------------------------------
Net asset value, end of
period $ 10.95 $ 11.18 $ 10.67 $ 9.87 $ 10.17 $ 9.39
==========================================================================================
Total return(b) (2.06)% 7.73% 8.16% 2.29% 13.84% (3.42)%
==========================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $62,721 $58,185 $33,800 $24,527 $19,545 $12,887
==========================================================================================
Ratio of expenses
(exclusive of interest
expense) to average net
assets 0.79%(c) 0.76% 0.87% 0.91% 1.19%(d) 0.95%(e)
==========================================================================================
Ratio of net investment
income to average net
assets 6.12%(c) 5.70% 5.85% 5.80% 5.78%(d) 5.51%(f)
==========================================================================================
Ratio of interest expense
to average net assets 0.04% N/A N/A N/A N/A N/A
==========================================================================================
Portfolio turnover rate 25% 78% 66% 32% 41% 29%
==========================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $60,017,920.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.10% for January 1995.
(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 was 5.35% for January 1995.
AIM V.I. GOVERNMENT SECURITIES FUND
78
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
AIM V.I. GROWTH FUND DELIVERS STRONG PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. THE STOCK MARKET SEEMS TO HAVE where size matters. These big companies This sector has gone through three waves
DONE WELL THE PAST SIX MONTHS. HOW DID have large research and development of development. The first was the
AIM V.I. GROWTH FUND DO? budgets to develop new products, introduction of the microprocessor and
A. For the six-month reporting period economies of scale to reduce costs and computer chip. The second, the development
ended June 30, 1999, total return for access to global markets to sell of computer hardware and software, gave
the fund was a solid 12.58%, slightly products. Large-cap stocks represented rise to the prevalence of the personal
outpacing the 12.38% return of the S&P 500 about 90% of the fund's total net computer. The third is bandwidth
Index of large-company stocks. Net assets at the end of the reporting improvement.
assets under management stood at $478.6 period. We are focusing on stable Bandwidth is a measurement of the volume
million as the reporting period closed. core stocks in traditional growth of information that can be transmitted
sectors such as technology and over a network at a given time, and
Q. WHAT WERE THE MAJOR TRENDS IN THE health care. increasing bandwidth is necessary for the
FINANCIAL MARKETS DURING THE REPORTING evolution of information exchange and
PERIOD? Q. WHAT TYPES OF TECHNOLOGY Internet commerce. If you think of a
A. Overall, equity markets flourished COMPANIES DOES THE FUND OWN? computer network as a water pipe, the
during the period covered by this A. At the reporting period's close, higher the bandwidth (the larger the
report. In late 1998, the Federal Reserve technology holdings accounted for more diameter of the pipe), the more data
Board (the Fed) lowered interest than a third of the Fund's net assets. (water) can pass over the network
rates, spurring a market rally. For The majority of the fund's technology (through the pipe). This growth is not
large-cap stocks, the rally continued in holdings are high-quality, dominant limited only to the Internet but
1999, and the Dow Jones Industrial brand-name firms. Companies such as AOL involves all the companies that support
Average briefly crossed the 11,000 and Cisco Systems continued to do well as and build demand for Internet use. Lucent
threshold during the reporting period. they have large budgets for research and Technologies and Nortel Networks were
In April, concerns about interest development and the ability to provide among companies in the portfolio
rates shook the markets when the Consumer global reach for customers. producing bandwidth-related products.
Price Index revealed an unexpected Expansion of bandwidth is the major
increase in inflation. driver in the technology sector today.
In May, the Fed hinted that it might
raise interest rates, and at its June 30 TOP 10 EQUITY HOLDINGS
meeting, it did raise the federal funds
rate from 4.75% to 5%. At the same time, As of 6/30/99, based on total net assets
the Fed announced that it had shifted
from a tightening to a neutral bias, TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
indicating it planned no further rate
hikes in the near future. That sparked a 1. MCI WorldCom Inc. 4.73% 1. Computers (Software & Services) 10.52%
"relief rally" in the markets that 2. Tyco International Ltd 3.46 2. Communications Equipment 8.95
continued after the close of the 3. Guidant Corp. 3.22 3. Health Care (Diversified) 6.64
reporting period. 4. America Online Inc. 3.12 4. Health Care (Medical Products & 6.29
5. Lucent Technologies Inc. 2.79 Instruments)
Q. WHAT CONTRIBUTED TO THE FUND'S 6. International Business Machines 2.65 5. Broadcasting (Television & Radio) 5.34
STRONG GAINS? Corp. 6. Telecommunications (Long Distance) 4.73
A. The fund invests primarily in large, 7. Unisys Corp. 2.48 7. Manufacturing (Diversified) 4.41
brand-name companies in a market 8. Warner-Lambert Co. 2.46 8. Computers (Hardware) 4.09
9. Outdoor Systems Inc. 2.10 9. Electrical Equipment 3.97
10. Cisco Systems, Inc. 2.07 10. Financial (Diversified) 3.78
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
</TABLE>
AIM V.I. GROWTH FUND 79
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ----------------------------------------- Q. WHAT TYPE OF HEALTH-CARE major firms such as Pharmacia & Upjohn
COMPANIES DO YOU FAVOR? have a clear advantage over their smaller
The majority of the fund's A. The fund's health-care holdings competitors. Long-term demographic trends
accounted for just over 17% of net assets favor this sector. The population is
technology holdings are high-quality, on June 30. Holdings included diversified aging and requires more health care.
health-care companies such as Johnson & Worldwide drug sales are rising
dominant brand-name firms. Johnson and Bristol-Myers Squibb and 8% to 10% a year.
major pharmaceutical houses such as Another major focus within health
- ----------------------------------------- Eli Lilly and Pharmacia & Upjohn. care was on the medical products and
We're seeing a continuation of the supplies industry. Holdings included
"size matters" theme with major drug Guidant, the very successful maker
companies. Bringing a new drug to market of specialized cardiac-care devices
can cost about $1 billion, so such as stents used in angioplasty;
and Medtronic, maker of implantable
[CHART APPEARS HERE] devices such as pacemakers.
RESULTS OF A $10,000 INVESTMENT Q. WHAT'S YOUR OUTLOOK FOR THE
5/5/93 - 6/30/99 NEXT SIX MONTHS?
A. June 1999 was the 99th straight
AVERAGE ANNUAL TOTAL RETURNS month of the current economic expansion,
Inception (5/5/99) 21.35% which began in April 1991. Housing starts
5 Years 26.50 are still strong, consumer confidence
1 Year 27.04 high and consumer spending up.
Manufacturing, hit hard during 1998
(In AIM V.I. S&P when overseas demand collapsed with
thousands) GROWTH FUND 500 the Asian financial crisis, has been
----------- --- coming back. After one spike in April,
5/5/93 10,000 10,000
6/93 10,460 10,285 -----------------------------------------
12/93 11,066 10,794
6/94 10,155 10,429 We're seeing a continuation
12/94 10,792 10,936
6/95 13,208 13,145 of the "size matters" theme
12/95 14,544 15,042
6/96 15,743 16,560 with major drug companies.
12/96 17,175 18,495
6/97 19,839 22,305 -----------------------------------------
12/97 21,790 24,663
6/98 25,899 29,029 inflation was again invisible in May
12/98 29,224 31,711 and June. There is plenty of reason
6/99 32,901 35,678 for optimism, and if these factors remain
so positive, the investing environment
Past performance cannot guarantee comparable future results. for the fund should be very favorable.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF
AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
The performance figures shown represent 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. AIM V.I. Growth Fund performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. The fund's
investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than their original cost.
The Dow Jones Industrial Average (the Dow) is a price-weighted average
of 30 actively traded primarily industrial stocks. The Standard & Poor's
Composite Index of 500 stocks (the S&P 500) is a group of unmanaged
securities widely regarded by investors to be representative of the stock
market in general.
An investment cannot be made in any index listed. Unless otherwise
noted, index results include reinvested dividends.
</TABLE>
80 AIM V.I. GROWTH FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 88.78%
BANKS (REGIONAL) - 0.16%
North Fork Bancorporation, Inc. 35,200 $ 750,200
- -------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 5.34%
AT&T Corp.-Liberty Media Group-Class A(a) 120,200 4,417,350
- -------------------------------------------------------------------
Cablevision Systems Corp.-Class A(a) 9,900 693,000
- -------------------------------------------------------------------
Clear Channel Communications, Inc.(a) 89,925 6,199,205
- -------------------------------------------------------------------
Comcast Corp.-Class A 153,800 5,911,687
- -------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 99,000 3,644,437
- -------------------------------------------------------------------
Infinity Broadcasting Corp.-Class A(a) 157,600 4,688,600
- -------------------------------------------------------------------
25,554,279
- -------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 5.82%
General Instrument Corp.(a) 72,000 3,060,000
- -------------------------------------------------------------------
Lucent Technologies, Inc. 197,804 13,339,390
- -------------------------------------------------------------------
Motorola, Inc. 55,000 5,211,250
- -------------------------------------------------------------------
QUALCOMM, Inc.(a) 22,200 3,185,700
- -------------------------------------------------------------------
Tellabs, Inc.(a) 45,000 3,040,312
- -------------------------------------------------------------------
27,836,652
- -------------------------------------------------------------------
COMPUTERS (HARDWARE) - 4.09%
International Business Machines Corp. 98,000 12,666,500
- -------------------------------------------------------------------
Sun Microsystems, Inc.(a)(b) 100,000 6,887,500
- -------------------------------------------------------------------
19,554,000
- -------------------------------------------------------------------
COMPUTERS (NETWORKING) - 2.07%
Cisco Systems, Inc.(a)(b) 153,300 9,887,850
- -------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 1.28%
EMC Corp.(a)(b) 44,000 2,420,000
- -------------------------------------------------------------------
Lexmark International Group, Inc.(a) 56,000 3,699,500
- -------------------------------------------------------------------
6,119,500
- -------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 10.52%
America Online, Inc.(b) 135,000 14,917,500
- -------------------------------------------------------------------
Citrix Systems, Inc.(a) 64,400 3,638,600
- -------------------------------------------------------------------
Compuware Corp.(a) 102,500 3,260,781
- -------------------------------------------------------------------
Microsoft Corp.(a) 105,800 9,541,837
- -------------------------------------------------------------------
Novell, Inc.(a) 5,500 145,750
- -------------------------------------------------------------------
Unisys Corp.(a) 305,000 11,875,937
- -------------------------------------------------------------------
Veritas Software Corp.(a) 6,100 579,119
- -------------------------------------------------------------------
Yahoo!, Inc.(a) 37,000 6,373,250
- -------------------------------------------------------------------
50,332,774
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE - 0.55%
Capital One Financial Corp. 36,000 $ 2,004,750
- -------------------------------------------------------------------
Providian Financial Corp. 6,700 626,450
- -------------------------------------------------------------------
2,631,200
- -------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.04%
AmeriSource Health Corp.-Class A(a) 7,800 198,900
- -------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.46%
General Electric Co. 50,000 5,650,000
- -------------------------------------------------------------------
Sanmina Corp.(a)(b) 51,600 3,915,150
- -------------------------------------------------------------------
Symbol Technologies, Inc. 60,450 2,229,094
- -------------------------------------------------------------------
11,794,244
- -------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 3.72%
Analog Devices, Inc.(a) 60,000 3,011,250
- -------------------------------------------------------------------
Intel Corp.(b)(c) 36,000 2,142,000
- -------------------------------------------------------------------
LSI Logic Corp.(a) 20,900 964,012
- -------------------------------------------------------------------
Texas Instruments, Inc. 40,000 5,800,000
- -------------------------------------------------------------------
Xilinx, Inc.(a) 103,000 5,896,750
- -------------------------------------------------------------------
17,814,012
- -------------------------------------------------------------------
ENTERTAINMENT - 1.80%
Time Warner, Inc. 117,000 8,599,500
- -------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 3.78%
American Express Co. 15,000 1,951,875
- -------------------------------------------------------------------
Fannie Mae 91,500 6,256,312
- -------------------------------------------------------------------
Freddie Mac 170,000 9,860,000
- -------------------------------------------------------------------
18,068,187
- -------------------------------------------------------------------
FOOTWEAR - 0.46%
Nike, Inc.-Class B 35,000 2,215,937
- -------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 6.64%
Abbott Laboratories 98,600 4,486,300
- -------------------------------------------------------------------
Bristol-Myers Squibb Co. 125,000 8,804,687
- -------------------------------------------------------------------
Johnson & Johnson 68,500 6,713,000
- -------------------------------------------------------------------
Warner-Lambert Co. 170,000 11,793,750
- -------------------------------------------------------------------
31,797,737
- -------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) -
2.99%
Lilly (Eli) & Co. 62,000 4,440,750
- -------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 143,000 8,124,187
- -------------------------------------------------------------------
Schering-Plough Corp. 32,500 1,722,500
- -------------------------------------------------------------------
14,287,437
- -------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH FUND
81
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 6.29%
Bausch & Lomb, Inc. 46,400 $ 3,549,600
- ---------------------------------------------------------------------------
Becton, Dickinson & Co. 79,900 2,397,000
- ---------------------------------------------------------------------------
Boston Scientific Corp.(a) 60,000 2,636,250
- ---------------------------------------------------------------------------
Guidant Corp. 300,000 15,431,250
- ---------------------------------------------------------------------------
Medtronic, Inc. 78,026 6,076,275
- ---------------------------------------------------------------------------
30,090,375
- ---------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 1.40%
American International Group, Inc. 57,360 6,714,705
- ---------------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.63%
Knight/Trimark Group, Inc.-Class A(a) 50,000 3,015,625
- ---------------------------------------------------------------------------
LODGING-HOTELS - 0.88%
Carnival Corp. 87,200 4,229,200
- ---------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 4.41%
Tyco International Ltd. 175,000 16,581,250
- ---------------------------------------------------------------------------
United Technologies Corp. 63,000 4,516,313
- ---------------------------------------------------------------------------
21,097,563
- ---------------------------------------------------------------------------
NATURAL GAS - 0.51%
Enron Corp. 30,000 2,452,500
- ---------------------------------------------------------------------------
RAILROADS - 0.03%
Kansas City Southern Industries, Inc. 2,300 146,769
- ---------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 3.26%
Home Depot, Inc. (The) 97,000 6,250,438
- ---------------------------------------------------------------------------
Lowe's Companies, Inc. 165,000 9,353,438
- ---------------------------------------------------------------------------
15,603,876
- ---------------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 1.67%
Best Buy Co., Inc.(a) 68,000 4,590,000
- ---------------------------------------------------------------------------
Tandy Corp. 70,000 3,421,250
- ---------------------------------------------------------------------------
8,011,250
- ---------------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 0.26%
Dollar Tree Stores, Inc.(a) 28,800 1,267,200
- ---------------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 1.41%
Kroger Co.(a) 200,200 5,593,088
- ---------------------------------------------------------------------------
Safeway, Inc.(a) 23,600 1,168,200
- ---------------------------------------------------------------------------
6,761,288
- ---------------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 2.21%
Dayton Hudson Corp. 70,000 4,550,000
- ---------------------------------------------------------------------------
Wal-Mart Stores, Inc. 125,000 6,031,250
- ---------------------------------------------------------------------------
10,581,250
- ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY) - 2.41%
Office Depot, Inc.(a) 232,750 $ 5,135,047
- ---------------------------------------------------------------------------
Staples, Inc.(a) 161,000 4,980,938
- ---------------------------------------------------------------------------
Tiffany & Co. 14,600 1,408,900
- ---------------------------------------------------------------------------
11,524,885
- ---------------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 1.32%
Gap, Inc. (The) 54,000 2,720,250
- ---------------------------------------------------------------------------
Intimate Brands, Inc. 75,895 3,595,526
- ---------------------------------------------------------------------------
6,315,776
- ---------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 2.10%
Outdoor Systems, Inc.(a) 275,000 10,037,500
- ---------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 2.47%
Affiliated Computer Services, Inc.-Class A(a) 29,100 1,473,188
- ---------------------------------------------------------------------------
Ceridian Corp.(a) 69,400 2,268,513
- ---------------------------------------------------------------------------
CSG Systems International, Inc.(a) 67,900 1,778,131
- ---------------------------------------------------------------------------
First Data Corp. 100,000 4,893,750
- ---------------------------------------------------------------------------
Fiserv, Inc.(a) 45,225 1,416,108
- ---------------------------------------------------------------------------
11,829,690
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 4.73%
MCI WorldCom, Inc.(a)(b) 262,243 22,618,459
- ---------------------------------------------------------------------------
TEXTILES (APPAREL) - 1.07%
Tommy Hilfiger Corp.(a) 70,000 5,145,000
- ---------------------------------------------------------------------------
Total Domestic Common Stocks (Cost $285,708,730) 424,885,320
- ---------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 4.65%
CANADA - 1.45%
Nortel Networks Corp. (Communications Equipment) 80,000 6,945,000
- ---------------------------------------------------------------------------
FINLAND - 1.69%
Nokia Oyj A.B.-Class A (Communications Equipment) 13,600 1,191,374
- ---------------------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR (Communications
Equipment) 75,000 6,867,187
- ---------------------------------------------------------------------------
8,058,561
- ---------------------------------------------------------------------------
NETHERLANDS - 1.51%
Koninklijke (Royal) Philips Electronics N.V.-ADR
(Electrical Equipment) 26,680 2,691,345
- ---------------------------------------------------------------------------
Koninklijke (Royal) Phillips Electronics N.V.-
(Electrical Equipment) 46,000 4,534,537
- ---------------------------------------------------------------------------
7,225,882
- ---------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $15,507,956) 22,229,443
- ---------------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH FUND
82
<PAGE>
<TABLE>
<CAPTION>
OPTIONS PURCHASED - 0.00%
NUMBER OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE MARKET VALUE
<S> <C> <C> <C> <C>
ELECTRONICS (SEMICONDUCTORS) -
0.00%
Intel Corp. (Cost $37,080) 360 $52.50 Jul-99 $ 12,375
- --------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
TIME DEPOSIT - 4.67%
CIBC Oppenheimer Corp., 5.50%,
07/01/99 (Cost $22,363,210) $22,363,210 22,363,210
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.72%(d)
Greenwich Capital Markets, Inc., 5.00%, 07/01/99
(Cost $13,000,037)(e) 13,000,037 13,000,037
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.82% 482,490,385
===========================================================================
LIABILITIES LESS OTHER ASSETS - (0.82%) (3,903,545)
===========================================================================
NET ASSETS - 100.00% $478,586,840
===========================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of this security is subject to call options.
(c) A portion of this security is subject to put options.
(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 agreements entered into 06/30/99 with a maturing value of
$100,013,889. Collaterialized by U.S. Government obligations.
Investment Abbreviation:
ADR - American Depositary Receipt
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
83
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments at market value (cost $336,617,013) $482,490,385
- ----------------------------------------------------------------------
Cash 375,509
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 1,052,941
- ----------------------------------------------------------------------
Investments sold 1,028,734
- ----------------------------------------------------------------------
Dividends and interest 124,730
- ----------------------------------------------------------------------
Investment for deferred compensation plan 23,806
- ----------------------------------------------------------------------
Other assets 2,757
- ----------------------------------------------------------------------
Total assets 485,098,862
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 22,080
- ----------------------------------------------------------------------
Investments purchased 816,068
- ----------------------------------------------------------------------
Deferred compensation plan 23,806
- ----------------------------------------------------------------------
Options written (Premiums received $4,998,568) 5,344,875
- ----------------------------------------------------------------------
Accrued advisory fees 231,912
- ----------------------------------------------------------------------
Accrued administrative services fees 8,675
- ----------------------------------------------------------------------
Accrued directors' fees 2,350
- ----------------------------------------------------------------------
Accrued operating expenses 62,256
- ----------------------------------------------------------------------
Total liabilities 6,512,022
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $478,586,840
======================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 17,139,556
======================================================================
Net asset value, offering and redemption price per share $27.92
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $22,717 foreign withholding tax) $ 923,851
- -------------------------------------------------------------------------
Interest 619,632
- -------------------------------------------------------------------------
Total investment income 1,543,483
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,301,868
- -------------------------------------------------------------------------
Administrative services fees 46,972
- -------------------------------------------------------------------------
Custodian fees 29,321
- -------------------------------------------------------------------------
Directors' fees and expenses 3,039
- -------------------------------------------------------------------------
Other 53,727
- -------------------------------------------------------------------------
Total expenses 1,434,927
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (1,229)
- -------------------------------------------------------------------------
Net expenses 1,433,698
- -------------------------------------------------------------------------
Net investment income 109,785
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTIONS CONTRACTS:
Net realized gain (loss) from:
Investment securities 25,571,787
- -------------------------------------------------------------------------
Foreign currencies (94,199)
- -------------------------------------------------------------------------
Options contracts (687,809)
- -------------------------------------------------------------------------
24,789,779
- -------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 25,471,680
- -------------------------------------------------------------------------
Foreign currencies (6,813)
- -------------------------------------------------------------------------
Options contracts (47,752)
- -------------------------------------------------------------------------
25,417,115
- -------------------------------------------------------------------------
Net gain from investment securities, foreign currencies and
options contracts 50,206,894
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $50,316,679
=========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
84
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 109,785 $ 1,230,060
- -------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and options contracts 24,789,779 22,257,031
- -------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, futures and
options contracts 25,417,115 68,057,550
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 50,316,679 91,544,641
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment
income -- (1,180,373)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (22,129,920)
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 56,355,410 44,828,633
- -------------------------------------------------------------------------------
Net increase in net assets 106,672,089 113,062,981
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 371,914,751 258,851,770
- -------------------------------------------------------------------------------
End of year $478,586,840 $371,914,751
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $285,154,071 $228,798,661
- -------------------------------------------------------------------------------
Undistributed net investment income 1,399,293 1,289,508
- -------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and
options contracts 46,508,913 21,719,134
- -------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and options contracts 145,524,563 120,107,448
- -------------------------------------------------------------------------------
$478,586,840 $371,914,751
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 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 closing bid price on that day. 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
closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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
AIM V.I. GROWTH FUND
85
<PAGE>
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. Such distributions are
declared and paid annually.
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. 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.
F. Put options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, a Fund pays an option premium. The option's underlying instrument
may be a security, or a futures contract. Put options may be used by a Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
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. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
H. Foreign Currency Contracts - A foreign 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 foreign 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 foreign 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.
AIM V.I. GROWTH FUND
86
<PAGE>
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% 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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $23,029 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$2,252 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
The Fund received reductions in custodian fees of $1,229 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $1,229 during the six months ended
June 30, 1999.
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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the six months ended June 30, 1999 was
$279,182,690 and $221,208,463, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $146,386,829
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,143,479)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $145,243,350
===========================================================================
</TABLE>
Cost of investments for tax purposes is $337,247,035.
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1999
and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold 3,733,983 $ 98,563,168 2,345,258 $52,301,342
- -----------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 1,005,621 23,310,293
- -----------------------------------------------------------------------------
Reacquired (1,591,689) (42,207,758) (1,407,943) (30,783,002)
- -----------------------------------------------------------------------------
2,142,294 $ 56,355,410 1,942,936 $44,828,633
=============================================================================
</TABLE>
NOTE 8 - CALL OPTIONS CONTRACTS WRITTEN
Transactions in call options written during the six months ended June 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period 1,197 $ 739,850
- -------------------------------------------
Written 6,900 6,352,045
- -------------------------------------------
Closed (1,730) (1,353,477)
- -------------------------------------------
Exercised (1,040) (605,070)
- -------------------------------------------
Expired (157) (134,780)
- -------------------------------------------
End of period 5,170 $ 4,998,568
===========================================
</TABLE>
Open call options held at June 30, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUM 1999 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
- ---------------------- ---------- ------ --------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
American Online Inc. Oct. 1999 $105 540 $1,128,703 $1,036,125 $ 92,578
- ------------------------------------------------------------------------------------------
American Online Inc. Jan. 2000 120 810 1,346,525 1,549,125 (202,600)
- ------------------------------------------------------------------------------------------
Cisco Systems, Inc. Oct. 1999 60 900 639,878 821,250 (181,372)
- ------------------------------------------------------------------------------------------
EMC Corp. Oct. 1999 60 440 224,177 206,250 17,927
- ------------------------------------------------------------------------------------------
Intel Corp. Oct. 1999 60 360 156,055 204,750 (48,695)
- ------------------------------------------------------------------------------------------
MCI Worldcom, Inc. Sept. 1999 90 1,100 710,576 556,875 153,701
- ------------------------------------------------------------------------------------------
Sanmina Corp. Oct. 1999 80 300 231,292 232,500 (1,208)
- ------------------------------------------------------------------------------------------
Sun Microsystems, Inc. Oct. 1999 65 720 561,362 738,000 (176,638)
- ------------------------------------------------------------------------------------------
5,170 $4,998,568 $5,344,875 $(346,307)
==========================================================================================
</TABLE>
AIM V.I. GROWTH FUND
87
<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, 1999, each of the years in the
three-year period ended December 31, 1998, the eleven months ended
December 31, 1995 and the year ended January 31, 1995.
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 31,
-------------------------------------- -----------
JUNE 30,
1999 1998 1997 1996 1995 1995
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 24.80 $ 19.83 $ 16.25 $ 14.44 $ 10.71 $ 11.59
- ---------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income -- 0.08 0.08 0.07 0.09 0.06
- ---------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 3.12 6.57 4.27 2.52 3.65 (0.88)
- ---------------------------------------------------------------------------------------------
Total from investment
operations 3.12 6.65 4.35 2.59 3.74 (0.82)
- ---------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.09) (0.09) (0.06) (0.01) (0.06)
- ---------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (1.59) (0.68) (0.72) -- --
- ---------------------------------------------------------------------------------------------
Total distributions -- (1.68) (0.77) (0.78) (0.01) (0.06)
- ---------------------------------------------------------------------------------------------
Net asset value, end of
period $ 27.92 $ 24.80 $ 19.83 $ 16.25 $ 14.44 $ 10.71
=============================================================================================
Total return(a) 12.58% 34.12% 26.87% 18.09% 34.89% (7.11)%
=============================================================================================
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000s omitted) $478,587 $371,915 $258,852 $178,638 $102,600 $45,497
=============================================================================================
Ratio of expenses to
average net assets 0.69%(b) 0.72% 0.73% 0.78% 0.84%(c) 0.95%
=============================================================================================
Ratio of net investment
income to average net
assets 0.05%(b) 0.41% 0.54% 0.79% 0.95%(c) 0.71%
=============================================================================================
Portfolio turnover rate 56% 133% 132% 143% 125% 179%
=============================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $416,718,726.
(c) Annualized.
AIM V.I. GROWTH FUND
88
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
FUND HANDILY OUTPACES BENCHMARKS
DURING REPORTING PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. THE STOCK MARKET SEEMS TO HAVE DONE Q. WHAT CONTRIBUTED TO THE STRONG
WELL THE PAST SIX MONTHS. HOW DID PERFORMANCE OF THE FUND?
AIM V.I. GROWTH AND INCOME FUND DO? A. The fund invests in large, brand-name
A. The fund continued to produce [CHART APPEARS HERE] companies in a market where size matters.
outstanding performance. Total return for These big companies have large research
the six months ended June 30 was AIM V.I. Growth & Income 14.57% and development budgets to develop new
14.57%, well ahead of the 12.38% return of S&P 500 12.39% products, economies of scale to reduce
the S&P 500 and the 11.59% return of the Lipper Growth & Income Funds Index 11.68% costs and access to global markets
Lipper Growth and Income Funds Index to sell products.
for the same period. In response to the narrowness of the
market during much of the past six
Q. WHAT WERE MARKET CONDITIONS In May, the Fed hinted that it might months, with a handful of stocks producing
LIKE DURING THE REPORTING PERIOD? raise interest rates, and at its most of the rise in the standard market
A. In late 1998, the Federal Reserve Board June 30 meeting, it did raise the federal indexes, we reduced the number of holdings
(the Fed) lowered interest rates, funds rate from 4.75% to 5%. At the in the portfolio from 139 to 87. Our main
spurring a market rally. That rally same time, the Fed announced that it had sectors are technology, financial and
continued in 1999, and the Dow briefly shifted from a tightening to a neutral health-care stocks, where companies
crossed the 11,000 threshold during the bias, indicating that it planned no continue to show strong earnings growth.
reporting period. In April, concerns further rate hikes in the near future.
about interest rates shook the markets That sparked a "relief rally" in the Q. DID THE FUND OWN ANY INTERNET STOCKS?
when the Consumer Price Index revealed markets. Overall, it was a good A. One of our core holdings, Microsoft,
an unexpected increase in inflation. period in equity markets. is a key Internet player. The company
is investing $5 billion for a small
PORTFOLIO COMPOSITION stake in AT&T. AT&T's set-top boxes will
offer digital cable services using
As of 6/30/99, based on total net assets Microsoft's Windows operating system.
Microsoft has cut other deals to steer
TOP 10 HOLDINGS TOP 10 INDUSTRIES telecommunications business its way.
As cable and phone companies build
1. Tyco International Ltd. 5.37% 1. Computers (Software & Services) 8.78% networks to provide voice, video
2. Microsoft Corp. 4.44 2. Manufacturing (Diversified) 6.10 and data over one pipeline, Microsoft
3. Chase Manhattan Corp. (The) 3.26 3. Computers (Hardware) 5.65 hopes to attract more users for its
4. Schwab (Charles) Corp. 3.11 4. Telecommunications multimedia communications software.
5. MCI WorldCom, Inc. 2.95 (Long Distance) 5.55 With these and other holdings, including
6. International Business 5. Communications Equipment 5.51 Lucent Technologies and MCI WorldCom, the
Machines Corp. 2.93 6. Health Care (Diversified) 5.46 fund is investing in the companies
7. American International 7. Financial (Diversified) 5.39 building the Internet's infrastructure.
Group, Inc. 2.92 8. Investment Banking/Brokerage 5.12 The fund has not participated in the
8. General Electric Co. 2.43 9. Retail (General Merchandise) 4.45 much-noted mania for Internet stocks.
9. Cisco Systems Inc. 2.26 10. Health Care (Drugs-Major Few of these companies meet our
10. Wal-Mart Stores, Inc. 2.05 Pharmaceuticals) 4.13 earnings-based investment criteria
for the simple reason that they had
The fund's portfolio composition is subject to change, and there is no assurance no earnings.
that the fund will continue to hold any particular security.
</TABLE>
AIM V.I. GROWTH AND INCOME FUND 89
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Q. WHAT DID YOU LIKE IN THE stability: health-care products, fire and Q. WHAT'S YOUR OUTLOOK FOR THE
FINANCIAL SECTOR? security systems, flow-control technology NEXT SIX MONTHS?
A. The brokerage house Charles Schwab, (pipes, pipe fittings and tubing) and A. June 1999, the last month of the
which has such a sizable Internet electrical components. Its products reporting period, was the 99th straight
presence, was new to the portfolio since include Curity bandages, fire month of the current economic expansion,
our report six months ago; it was extinguishers, and undersea which began in April 1991. Housing starts
also one of our 10 largest holdings. fiber-optic cable. are still strong, consumer confidence high
Shortly after the close of the reporting The Bermuda-based company has grown and consumer spending up. Manufacturing,
period, Schwab reported record quarterly through acquisitions, buying nearly 100 hit hard during 1998 when overseas demand
results, with revenue up 54% and companies and growing its earnings rapidly collapsed with the Asian financial crisis,
income up 98%. The rising value of Schwab over the past six years. Tyco embodies has been coming back. After a spike in
stock made an important contribution to much of what we look for in a growth April, inflation was again invisible in
the Fund's solid performance during the stock: leading market-share positions May. There is plenty of reason for
period covered by this report. in leading growth industries both in optimism, and if these factors remain so
Other financial holdings include the United States and in international positive, the investing environment for
Merrill Lynch, which reported record markets, which recently have begun to the fund should be very favorable.
second-quarter earnings just after the show signs of improving growth prospects.
reporting period closed, and the newly
public Goldman Sachs Group. The robust [CHART APPEARS HERE]
health of both the economy and the
financial markets bodes well for the RESULTS OF A $10,000 INVESTMENT
financial sector. 5/2/94 - 6/30/99 ==== AIM V.I. Growth Fund
---- S&P 500
Q. WHAT TYPE OF HEALTH-CARE ---- Lipper Growth & Income Fund Index
COMPANIES DO YOU FAVOR?
A. The fund's health-care holdings made AIM V.I. Growth & Income S&P 500 Lipper Growth & Income Fund Index
up about 13% of the portfolio and were 5/2/94 10,000 10,000 10,000
split between diversified health-care 6/94 9,770 9,903 9,918
companies such as Johnson & Johnson 6/95 12,012 12,481 11,850
and Bristol-Myers Squibb and major 6/96 14,641 15,724 14,443
pharmaceutical houses such as Pfizer 6/97 18,735 21,179 18,632
and Schering-Plough. Long-term 6/98 23,093 27,564 22,756
demographic trends favor this sector. 6/99 29,526 33,879 25,841
The population is aging and requires more
health care. Worldwide drug sales AVERAGE ANNUAL TOTAL RETURN
are rising 8% to 10% a year. As of 6/30/99
We're seeing a continuation of the Inception (5/2/94) 23.34% $35,678
"size matters" theme with major drug 5 Years 24.76 $32,901
companies. Bringing a new drug to market 1 Year 27.86
can cost about $1 billion, so major firms
such as Pfizer have a clear advantage over Past performance cannot guarantee comparable future results.
their smaller competitors.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF
Q. WHY IS TYCO YOUR LARGEST AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
HOLDING? PERFORMANCE SHOWN.
A. We like this diversified manufacturer
with leading positions in a wide array of The performance figures shown represent AIM V.I. Growth and Income Fund and
businesses. The company has four divisions, are not intended to reflect actual annuity values, and do not reflect charges
each exhibiting strength and at the separate account level, which, if applied, would lower the performance
results. AIM V.I. Growth & Income Fund performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value. The
Fund's investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than their original cost.
The Standard & Poor's Composite Index of 500 Stocks (the 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 Growth & Income Fund Index represents an average
of the performance of the 30 largest growth-and-income funds. It is compiled
by Lipper Inc., an independent mutual-fund performance monitor. Data for the
indexes is for the period 4/30/99-6/30/99.
An investment cannot be made in any index listed. Unless otherwise
noted, index results include reinvested dividends.
</TABLE>
90 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS - 89.49%
AUTOMOBILES - 0.96%
Ford Motor Co. 300,000 $ 16,931,250
- -----------------------------------------------------------------------
BANKS (MONEY CENTER) - 3.26%
Chase Manhattan Corp. (The) 665,000 57,605,625
- -----------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 1.98%
AT&T Corp. - Liberty Media Group-Class A(a) 250,000 9,187,500
- -----------------------------------------------------------------------
Broadcast.com, Inc.(a) 49,500 6,611,344
- -----------------------------------------------------------------------
Comcast Corp. - Class A 500,000 19,218,750
- -----------------------------------------------------------------------
35,017,594
- -----------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 1.17%
Monsanto Co. 525,000 20,704,687
- -----------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 5.51%
Corning, Inc. 175,000 12,271,875
- -----------------------------------------------------------------------
Lucent Technologies, Inc. 440,000 29,672,500
- -----------------------------------------------------------------------
Motorola, Inc. 200,000 18,950,000
- -----------------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR (Finland) 210,000 19,228,125
- -----------------------------------------------------------------------
QUALCOMM, Inc.(a) 120,000 17,220,000
- -----------------------------------------------------------------------
97,342,500
- -----------------------------------------------------------------------
COMPUTERS (HARDWARE) - 5.39%
Dell Computer Corp.(a) 375,000 13,875,000
- -----------------------------------------------------------------------
International Business Machines Corp. 400,000 51,700,000
- -----------------------------------------------------------------------
Sun Microsystems, Inc.(a) 430,000 29,616,250
- -----------------------------------------------------------------------
95,191,250
- -----------------------------------------------------------------------
COMPUTERS (NETWORKING) - 2.26%
Cisco Systems, Inc.(a) 620,000 39,990,000
- -----------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 1.54%
EMC Corp.(a) 350,000 19,250,016
- -----------------------------------------------------------------------
Lexmark International Group, Inc.(a) 120,000 7,927,500
- -----------------------------------------------------------------------
27,177,516
- -----------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 8.18%
America Online, Inc. 200,000 22,100,000
- -----------------------------------------------------------------------
Microsoft Corp.(a) 870,000 78,463,125
- -----------------------------------------------------------------------
Novell, Inc.(a) 1,290,000 34,185,000
- -----------------------------------------------------------------------
Unisys Corp.(a) 250,000 9,734,375
- -----------------------------------------------------------------------
144,482,500
- -----------------------------------------------------------------------
CONSUMER FINANCE - 1.06%
Providian Financial Corp. 200,000 18,700,000
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD & HEALTH) - 0.55%
Cardinal Health, Inc. 150,000 $ 9,618,750
- -----------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.43%
General Electric Co. 380,000 42,940,000
- -----------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 1.27%
Linear Technology Corp. 140,000 9,415,000
- -----------------------------------------------------------------------------
Texas Instruments, Inc. 90,000 13,050,000
- -----------------------------------------------------------------------------
22,465,000
- -----------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 1.25%
Applied Materials, Inc.(a) 125,000 9,234,375
- -----------------------------------------------------------------------------
Teradyne, Inc.(a) 180,000 12,915,000
- -----------------------------------------------------------------------------
22,149,375
- -----------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 5.39%
American Express Co. 240,000 31,230,000
- -----------------------------------------------------------------------------
Citigroup, Inc. 352,500 16,743,750
- -----------------------------------------------------------------------------
Fannie Mae 325,000 22,221,875
- -----------------------------------------------------------------------------
Freddie Mac 430,000 24,940,000
- -----------------------------------------------------------------------------
95,135,625
- -----------------------------------------------------------------------------
FOOTWEAR - 0.54%
Nike, Inc. - Class B 150,000 9,496,875
- -----------------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 5.46%
American Home Products Corp. 240,000 13,800,000
- -----------------------------------------------------------------------------
Bristol-Myers Squibb Co. 500,000 35,218,750
- -----------------------------------------------------------------------------
Johnson & Johnson 130,000 12,740,000
- -----------------------------------------------------------------------------
Warner-Lambert Co. 500,000 34,687,500
- -----------------------------------------------------------------------------
96,446,250
- -----------------------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 4.13%
Lilly (Eli) & Co. 155,000 11,101,875
- -----------------------------------------------------------------------------
Pfizer, Inc. 300,000 32,925,000
- -----------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 230,000 13,066,875
- -----------------------------------------------------------------------------
Schering-Plough Corp. 300,000 15,900,000
- -----------------------------------------------------------------------------
72,993,750
- -----------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.39%
Columbia/HCA Healthcare Corp. 300,000 6,843,750
- -----------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 2.56%
Guidant Corp. 500,000 25,718,750
- -----------------------------------------------------------------------------
Medtronic, Inc. 250,000 19,468,750
- -----------------------------------------------------------------------------
45,187,500
- -----------------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH AND INCOME FUND 91
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES) - 0.32%
Omnicare, Inc. 451,700 $ 5,702,712
- -----------------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES - 0.40%
Maytag Corp. 100,000 6,968,750
- -----------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.45%
Colgate-Palmolive Co. 80,000 7,900,000
- -----------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 2.92%
American International Group, Inc. 440,000 51,507,500
- -----------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 5.12%
Goldman Sachs Group, Inc. (The) 120,000 8,670,000
- -----------------------------------------------------------------------
Merrill Lynch & Co., Inc. 130,000 10,391,875
- -----------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 160,000 16,400,000
- -----------------------------------------------------------------------
Schwab (Charles) Corp. 500,000 54,937,500
- -----------------------------------------------------------------------
90,399,375
- -----------------------------------------------------------------------
LODGING-HOTELS - 0.82%
Carnival Corp. 300,000 14,550,000
- -----------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 6.10%
Tyco International Ltd. 1,000,000 94,750,000
- -----------------------------------------------------------------------
United Technologies Corp. 180,000 12,903,750
- -----------------------------------------------------------------------
107,653,750
- -----------------------------------------------------------------------
NATURAL GAS - 0.60%
Enron Corp. 130,000 10,627,500
- -----------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.96%
Halliburton Co. 200,000 9,050,000
- -----------------------------------------------------------------------
Schlumberger Ltd. 125,000 7,960,938
- -----------------------------------------------------------------------
17,010,938
- -----------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 1.21%
Mobil Corp. 215,000 21,285,000
- -----------------------------------------------------------------------
RAILROADS - 0.54%
Kansas City Southern Industries, Inc. 150,000 9,571,875
- -----------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.68%
Home Depot, Inc. (The) 50,000 3,221,875
- -----------------------------------------------------------------------
Lowe's Companies, Inc. 155,000 8,786,563
- -----------------------------------------------------------------------
12,008,438
- -----------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 1.21%
Kroger Co.(a) 500,000 13,968,750
- -----------------------------------------------------------------------
Safeway, Inc.(a) 150,000 7,425,000
- -----------------------------------------------------------------------
21,393,750
- -----------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 4.45%
Costco Companies, Inc.(a) 100,000 8,006,250
- -----------------------------------------------------------------------
Dayton Hudson Corp. 530,000 34,450,000
- -----------------------------------------------------------------------
Wal-Mart Stores, Inc. 750,000 36,187,500
- -----------------------------------------------------------------------
78,643,750
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY) - 0.57%
Amazon.com, Inc.(a) 80,000 $ 10,010,000
- -----------------------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 0.82%
Abercrombie & Fitch Co.-Class A(a) 300,000 14,400,000
- -----------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.29%
Concord EFS, Inc.(a) 193,300 8,179,006
- -----------------------------------------------------------------------------
First Data Corp. 300,000 14,681,250
- -----------------------------------------------------------------------------
22,860,256
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 3.89%
AT&T Corp. 150,000 8,371,875
- -----------------------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 100,000 8,100,000
- -----------------------------------------------------------------------------
MCI WorldCom, Inc.(a) 605,000 52,181,250
- -----------------------------------------------------------------------------
68,653,125
- -----------------------------------------------------------------------------
TELEPHONE - 0.49%
SBC Communications, Inc. 150,000 8,700,000
- -----------------------------------------------------------------------------
TOBACCO - 1.37%
Philip Morris Companies, Inc. 600,000 24,112,500
- -----------------------------------------------------------------------------
Total Common Stocks (Cost $1,159,408,793) 1,580,379,016
- -----------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS - 2.62%
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.85%
MediaOne Group, Inc.-$2.25 Conv. Pfd. 100,000 14,981,250
- -----------------------------------------------------------------------------
ENTERTAINMENT - 1.56%
Houston Industries, Inc.-$3.22 Conv. Pfd. 230,600 27,499,050
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.21%
Global Telesystems Group, Inc., -$3.625 Conv.
Pfd. (Acquired 06/11/99; Cost $3,742,815)(b) 58,000 3,828,000
- -----------------------------------------------------------------------------
Total Convertible Preferred Stocks (Cost
$33,793,293) 46,308,300
- -----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE BONDS & NOTES - 2.78%
COMPUTERS (HARDWARE) - 0.26%
Candescent Technology Corp., Conv. Sr. Sub. Deb.,
7.00%, 05/01/03 (Acquired 04/17/98; Cost
$5,875,401)(b) $ 6,000,000 4,680,000
- -----------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 0.60%
Veritas Software Corp., Conv. Unsec. Notes,
5.25%, 11/01/04 4,500,000 10,549,688
- -----------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.48%
Home Depot, Inc., Conv. Sub. Notes, 3.25%,
10/01/01 3,000,000 8,392,500
- -----------------------------------------------------------------------------
</TABLE>
92 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE) - 1.44%
Global Telesystems Group,
Conv. Sr. Sub. Deb., 8.75%, 06/30/00 $ 500,000 $ 2,035,000
- --------------------------------------------------------------------------
Sr. Sec. Sub. Conv. Notes, 8.75%, 06/30/00
(Acquired 02/05/98; Cost $1,950,812)(b) 1,500,000 6,105,000
- --------------------------------------------------------------------------
Conv. Sr. Sub. Deb., 5.75%, 07/01/10 11,000,000 17,325,000
- --------------------------------------------------------------------------
25,465,000
- --------------------------------------------------------------------------
Total Convertible Bonds & Notes
(Cost $31,116,876) 49,087,188
- --------------------------------------------------------------------------
TIME DEPOSIT - 4.53%
CIBC Oppenheimer Corp., 5.50%, 07/01/99 (Cost
$80,000,000) 80,000,000 80,000,000
- --------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.40%(c)
Chase Securities Inc., 5.00%, 07/01/99
(Cost $24,718,696)(d) 24,718,696 24,718,696
- --------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.82% 1,780,493,200
- --------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (0.82%) (14,532,689)
- --------------------------------------------------------------------------
NET ASSETS - 100.00% $1,765,960,511
==========================================================================
</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 these securities has been determined in
accordance with the procedures established by the Board of Directors. The
aggregate market value of these securities at 06/30/99 was $14,613,000
which represented 0.83% of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% 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.
(d) Joint repurchase agreements entered into 06/30/99 with a maturing value of
$200,027,778. Collateralized by U.S. Government obligations.
Investment Abbreviations:
ADR- American Depositary Receipt
Conv.- Convertible
Deb.- Debentures
Pfd.- Preferred
Sec.- Secured
Sr.- Senior
Sub.- Subordinated
Unsec.- Unsecured
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND 93
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,329,037,658) $1,780,493,200
- ------------------------------------------------------------------------
Receivables for:
Capital stock sold 1,149,282
- ------------------------------------------------------------------------
Dividends and interest 1,381,249
- ------------------------------------------------------------------------
Investment for deferred compensation plan 22,564
- ------------------------------------------------------------------------
Other assets 13,616
========================================================================
Total assets 1,783,059,911
========================================================================
LIABILITIES:
Payables for:
Investments purchased 15,382,671
- ------------------------------------------------------------------------
Capital stock reacquired 544,962
- ------------------------------------------------------------------------
Deferred compensation plan 22,564
- ------------------------------------------------------------------------
Accrued advisory fees 820,149
- ------------------------------------------------------------------------
Accrued director's fees 13,181
- ------------------------------------------------------------------------
Accrued administrative services fees 222,713
- ------------------------------------------------------------------------
Accrued operating expenses 93,160
- ------------------------------------------------------------------------
Total liabilities 17,099,400
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,765,960,511
========================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ------------------------------------------------------------------------
Outstanding 64,889,801
========================================================================
Net asset value, offering and redemption price per share $27.21
========================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $16,291 foreign withholding tax) $ 5,928,208
- ------------------------------------------------------------------------------
Interest 2,546,431
==============================================================================
Total investment income 8,474,639
==============================================================================
EXPENSES:
Advisory fees 4,462,314
- ------------------------------------------------------------------------------
Administrative services fees 588,532
- ------------------------------------------------------------------------------
Custodian fees 76,249
- ------------------------------------------------------------------------------
Directors' fees and expenses 7,866
- ------------------------------------------------------------------------------
Other 363,148
==============================================================================
Total expenses 5,498,109
==============================================================================
Less: Expenses paid indirectly (2,450)
- ------------------------------------------------------------------------------
Net expenses 5,495,659
==============================================================================
Net investment income 2,978,980
==============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 62,660,690
- ------------------------------------------------------------------------------
Foreign currencies 915
- ------------------------------------------------------------------------------
Option contracts (368,390)
- ------------------------------------------------------------------------------
62,293,215
- ------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 138,812,320
- ------------------------------------------------------------------------------
Foreign currencies (7,963)
- ------------------------------------------------------------------------------
Option contracts 1,110,542
==============================================================================
139,914,899
==============================================================================
Net gain from investment securities, foreign currencies, and
option contracts 202,208,114
==============================================================================
Net increase in net assets resulting from operations $205,187,094
==============================================================================
</TABLE>
See Notes to Financial Statements.
94 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,978,980 $ 12,149,523
- -------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and option
contracts 62,293,215 5,086,770
- -------------------------------------------------------------------------------
Change in net unrealized appreciation of
investment securities, foreign currencies,
futures and option contracts 139,914,899 224,324,487
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 205,187,094 241,560,780
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment
income -- (4,873,870)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (12,029,125)
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 298,714,648 398,288,439
- -------------------------------------------------------------------------------
Net increase in net assets 503,901,742 622,946,224
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 1,262,058,769 639,112,545
- -------------------------------------------------------------------------------
End of year $1,765,960,511 $1,262,058,769
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,234,705,540 $ 935,990,892
- -------------------------------------------------------------------------------
Undistributed net investment income 14,976,348 11,997,368
- -------------------------------------------------------------------------------
Undistributed net realized gain on sales from
investment securities, foreign currencies,
futures and option contracts 64,825,596 2,532,381
- -------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 451,453,027 311,538,128
- -------------------------------------------------------------------------------
$1,765,960,511 $1,262,058,769
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 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 closing bid price on that day. 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
closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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 AND INCOME FUND 95
<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. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Realized gains or losses from securities transactions are recorded
on the identified cost basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid annually.
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. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts -- A foreign 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 foreign 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 foreign 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.
H. Put options -- The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
options' underlying instrument at a fixed strike price. In return for this
right, a Fund pays an option premium. The options' underlying instrument
may be a security, or a futures contract. Put options may be used by a Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six
96 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
months ended June 30, 1999, AIM was paid $31,750 for accounting and
administrative services rendered by AIM.
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, 1999, the Fund incurred legal fees of
$3,238 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
The Fund received reductions in custodian fees of $2,450 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $2,450 during the six months ended
June 30, 1999.
NOTE 4 - BANK BORROWINGS
Reverse repurchase agreements involve the sale of securities held by the Fund,
with an agreement that the Fund will repurchase such securities at an agreed-
upon price and date. Proceeds from reverse repurchase agreements are treated
as borrowings. The agreements are collateralized by the underlying securities
and are carried at the amount at which the securities will subsequently be
repurchased as specified in the agreements.
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 5 - 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 6 - 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, 1999 was $1,106,698,112 and $874,927,098, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $456,638,797
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (9,303,482)
===========================================================================
Net unrealized appreciation of investment securities $447,335,315
===========================================================================
</TABLE>
Cost of investments for tax purposes is $1,333,157,885.
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during six months ended June 30, 1999 and
the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold 12,959,806 $329,487,675 19,890,074 $409,625,526
- -----------------------------------------------------------------------------
Issued as reinvestment
of distributions -- -- 751,578 16,902,995
- -----------------------------------------------------------------------------
Reacquired (1,201,029) (30,773,027) (1,379,171) (28,240,082)
=============================================================================
11,758,777 $298,714,648 19,262,481 $398,288,439
=============================================================================
</TABLE>
NOTE 8 - CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended June 30, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION
CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of year 2,667 $617,471
- --------------------------------------
Written 850 465,834
- --------------------------------------
Closed (2,417) (921,610)
- --------------------------------------
Exercised (1,100) (161,695)
======================================
End of year -- $ --
======================================
</TABLE>
AIM V.I. GROWTH AND INCOME FUND 97
<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, 1999, each of the years in the three-year
period ended December 31, 1998, 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,
1999(a) 1998 1997 1996 1995 1995
---------- ---------- -------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 23.75 $ 18.87 $ 15.03 $ 12.68 $ 9.98 $10.00
- ------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.05 0.26(a) 0.13 0.16 0.14 0.11
- ------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 3.41 4.95 3.74 2.36 3.11 (0.02)
======================================================================================================
Total from investment
operations 3.46 5.21 3.87 2.52 3.25 0.09
======================================================================================================
Less distributions:
Dividends from net
investment income -- (0.09) (0.01) (0.14) (0.14) (0.11)
- ------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.24) (0.02) (0.03) (0.41) --
======================================================================================================
Total distributions -- (0.33) (0.03) (0.17) (0.55) (0.11)
======================================================================================================
Net asset value, end of
period $ 27.21 $ 23.75 $ 18.87 $ 15.03 $ 12.68 $ 9.98
======================================================================================================
Total return(b) 14.57% 27.68% 25.72% 19.95% 32.65% 0.90%
======================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $1,765,961 $1,262,059 $639,113 $209,332 $38,567 $7,380
======================================================================================================
Ratio of expenses to
average net assets 0.75%(c) 0.65% 0.69% 0.78% 0.78%(d) 1.07%(d)(e)
======================================================================================================
Ratio of net investment
income to average net
assets 0.41%(c) 1.34% 1.15% 2.05% 1.92%(d) 1.95%(d)(e)
======================================================================================================
Portfolio turnover rate 61% 140% 135% 148% 145% 96%
======================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $1,478,931,561.
(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% (annualized) and 1.30% (annualized),
respectively.
98 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
HIGH-YIELD MARKET RECOVERS SLOWLY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID AIM V.I. HIGH YIELD FUND the Lipper High Current Yield Funds 24, its highest level since 1997. On
PERFORM DURING THE REPORTING PERIOD? Index, which returned 3.85%, as well June 30, the Fed raised the federal funds
A. By the end of the first quarter of as the Lehman High Yield Bond Index, rate from 4.75% to 5% and returned to a
1999, yield spreads in the high-yield which returned 2.20%. neutral-rate policy. The latter decision
market had narrowed substantially on signaled that rate hikes were unlikely
their way back to more favorable levels Q. WHAT WERE THE MAJOR TRENDS IN in the near future and sparked a "relief
established before last fall's market THE BOND MARKETS DURING THE rally" in the bond market.
downturn. Even the high-yield market's FIRST HALF OF 1999?
lackluster performance during the second A. Bond performance was generally Q. HOW DID HIGH-YIELD BONDS FARE
quarter of 1999 could not erase the disappointing for the reporting period. IN THIS MARKET ENVIRONMENT?
gains made by AIM V.I. High Yield Fund. This poor performance stemmed from A. During the reporting period,
Cumulative total return for the heightened concerns that the Federal emerging-markets debt and high-yield
six-month reporting period ended Reserve Board (the Fed) would raise securities were among the better-performing
June 30, 1999, was a solid 6.11%. interest rates to slow economic growth segments of the bond market. Poorer
Boosted by favorable sector positioning, and combat inflation. These concerns performers included Treasuries and
fund performance outpaced the gains of surfaced early in the reporting period foreign-government bonds. High-yield
after economic data showed that the U.S. bonds generally outperform other
[CHART APPEARS HERE] gross domestic product continued to fixed-income assets when interest
expand at a blistering pace. But the rates rise because these bonds usually
FUND OUTPERFORMS BENCHMARKS primary catalyst for concerns about a have higher coupons and shorter durations,
Fed rate hike was the dramatic and which make them less sensitive to
Six-month returns as of 6/30/99 unexpected rise in the inflation rate in interest-rate moves.
April. Despite these positive changes in 1999,
AIM V.I. High Yield Uncertainty regarding the extent to the high-yield market continued to suffer
Fund 6.11% which the Fed might raise interest from lack of investor confidence. Although
Lehman High Yield rates eroded bond prices in May and June, high-yield bonds performed better than most
Bond Index 2.20% sending their yields higher. The yield other types of fixed-income instruments in
Lipper High Current of the benchmark 30-year U.S. Treasury the first half of the year, investors
Yield Funds Index 3.85% bond soared from 5.09% at the beginning remained wary of the bonds' riskier nature.
of the reporting period to 6.16% on June This general
PORTFOLIO COMPOSITION
As of 6/30/99, based on total net assets
TOP 10 HOLDINGS TOP 10 INDUSTRIES COUNTRY ALLOCATIONS
1. Tele1 Europe A.B. (Netherlands) 4.00% 1. Telecommunications (Cellular/Wireless) 14.33% 1. United States 80.87%
2. Ono Finance PLC (United Kingdom) 3.33 2. Telecommunications (Long Distance) 9.50 2. United Kingdom 8.06
3. Vista Eyecare, Inc. 3.06 3. Telephone 8.57 3. Netherlands 5.92
4. KMC Telecom Holdings, Inc. 2.94 4. Textiles (Apparel) 7.22 4. Canada 1.84
5. Logix Communications 2.94 5. Lodging-Hotels 5.63 5. Sweden 0.89
6. Majestic Star Casino LLC 2.91 6. Financial (Diversified) 3.32 6. Bermuda 0.33
7. Schuff Steel Co. 2.90 7. Computers (Networking) 3.20
8. US Xchange LLC 2.81 8. Gaming, Lottery & Parimutuel Companies 3.08
9. Precision Partners, Inc. 2.80 9. Retail (Specialty) 3.06
10. Supreme International Corp. 2.67 10. Construction (Cement & Aggregates) 2.90
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any particular
security.
</TABLE>
AIM V.I. HIGH YIELD FUND 99
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
decline in investor confidence was also By the end of the reporting period, market may depend on the time it takes
fueled by an increase in default rates high-yield bonds boasted some for investors to become comfortable
during the reporting period. Through excellent values relative to other again with the risk-reward relationship of
the first six months of 1999, the default fixed-income securities. Indeed, even if this asset class. Although we cannot
rate for high-yield bonds was 4.23% prices of high-yield bonds remain low, predict if and when this shift in market
compared to 3.25% last year and 2.84% their yields of about 10%, on average, sentiment will occur, we believe that
in 1997. provide a valuable safety cushion. If high-yield bonds remain an attractive
fundamentals continue to improve in the option for investors looking for high
Q. GIVEN CURRENT MARKET CONDITIONS, next few months, a full recovery in the income with some potential of
HOW HAVE YOU MANAGED THE FUND'S high-yield appreciation.
PORTFOLIO?
A. As yield spreads returned to more [CHART APPEARS HERE]
normal levels in early 1999, riskier
assets once again outperformed RESULTS OF A $10,000 INVESTMENT
higher-quality issues because bond issuers 5/1/98 - 6/30/99
compensated investors for taking on more AVERAGE ANNUAL TOTAL RETURN
risk. As a result, the middle-and As of 6/30/99
lower-rated tiers of the high-yield Inception (5/1/98) -1.69%
market--B, CCC and non-rated bonds--have 1 Year -2.45%
been the best-performing this year.
Overall, we maintained about 60% of the Lehman Lipper
fund's total net assets in the single-B (In AIM V.I. High Yield Bond High Current Yield
sector, as rated by Standard & Poor's thousands) High Yield Fund Index Funds Index
Corporation, a well-known credit-rating
agency. 5/1/98 $10,000 $10,000 $10,000
Fund performance was also helped by 6/98 10,050 10,070 9,989
a significant rebound in the steel, 9/98 9,130 9,613 9,251
energy, paper and chemical industries. 12/98 9,239 9,817 9,542
In a dramatic reversal of trends, 3/99 9,584 9,998 9,847
sectors that had been the hardest hit 6/99 9,804 10,033 9,910
during the market downturn in 1998 have
benefited the most so far in 1999. Past performance cannot guarantee comparable future results.
At the reporting period's close, the
fund's largest holdings were in the MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
telecommunications and telephone INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
industries, which continued to benefit SHOWN.
from consolidation and from growing
investor interest in the new generation The performance figures shown represent AIM V.I. High Yield Fund and are not
of communications spawned by the computer intended to reflect actual annuity values, and do not reflect charges at the
age. Domestic high-yield securities were separate account level, which, if applied, would lower the performance
76.82% of net assets. The introduction results. AIM V.I. High Yield Fund performance figures are historical and
of the euro in January sparked a surge reflect reinvestment of all distributions and changes in net asset value. The
of new bond issues from European fund's investment return and principal value will fluctuate, so an investor's
companies. We took this opportunity shares, when redeemed, may be worth more or less than their original cost.
to add to the fund's dollar-denominated Had fees and expenses not been waived during the reporting period, the fund's
international holdings, which represented yields and returns would have been lower.
17% of total net assets on June 30. The fund invests primarily in higher-yielding, lower-rated corporate
bonds, commonly known as "junk bonds." These bonds have a greater risk of
Q. WHAT IS YOUR OUTLOOK FOR price fluctuation and loss of principal and income than U.S. government
HIGH-YIELD BONDS FOR THE REMAINDER securities, such as U.S. Treasury bonds and bills, which offer a government
OF 1999? guarantee as to the repayment of principal and interest if held to maturity.
A. Several economic forces for favorable Fund shares are not insured, and their value will vary with market
bond performance are now in place: conditions.
modest inflationary pressures, full The Lehman High Yield Bond Index is an unmanaged composite generally
employment, income growth, relatively low considered representative of high-yield depth securities. It is compiled by
interest rates and capital formation. Lehman Brothers, a well-known global investment bank.
The unmanaged Lipper High Current Yield Funds Index represents an
average of the performance of the 30 largest high-yield funds charted by
Lipper Inc., an independent mutual-fund performance monitor. Results shown
reflect reinvestment of dividends.
An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not
reflect sales charges.
</TABLE>
100 AIM V.I. HIGH YIELD FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS & NOTES - 92.51%
AEROSPACE/DEFENSE - 2.80%
Precision Partners, Inc., Sr. Sub. Mortgage Notes,
12.00%, 03/15/09(a) (Acquired 05/13/99;
Cost $498,125) $500,000 $ 477,500
- -------------------------------------------------------------------------------
BUILDING MATERIALS - 0.42%
Imperial Home Decor Group, Series B Sr. Unsec. Gtd. Sub.
Notes, 11.00%, 03/15/08 100,000 72,500
- -------------------------------------------------------------------------------
CHEMICAL (SPECIALTY) - 2.07%
ZSC Specialty Chemicals PLC (United Kingdom), Sr. Notes,
11.00%, 07/01/09(a) (Acquired 06/24/99; Cost $350,000) 350,000 353,500
- -------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.69%
GST Telecom, Sr. Disc. Notes, 10.50%, 05/01/08(a)(b)
(Acquired 04/28/99; Cost $309,068) 500,000 288,750
- -------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 3.20%
Convergent Communications, Series B Sr. Unsec. Notes,
13.00%, 04/01/08(c) 250,000 228,750
- -------------------------------------------------------------------------------
Exodus Communications, Sr. Unsec. Notes, 11.25%,
07/01/08 300,000 317,250
- -------------------------------------------------------------------------------
546,000
- -------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.01%
Metal Management, Inc., Sr. Unsec. Gtd. Sub. Notes,
10.00%, 05/15/08 425,000 344,250
- -------------------------------------------------------------------------------
CONSTRUCTION (CEMENT & AGGREGATES) - 2.90%
Schuff Steel Co., Sr. Unsec. Gtd. Sub. Notes, 10.50%,
06/01/08 550,000 495,000
- -------------------------------------------------------------------------------
CONTAINERS & PACKAGING (PAPER) - 0.46%
BPC Holding Corp., Series B Sr. Sec. Notes, 12.50%,
06/15/06 80,000 78,400
- -------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 3.32%
Ono Finance PLC (United Kingdom), Notes, 13.00%,
05/01/09(c) 550,000 567,875
- -------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 3.08%
Resort at Summerlin/RAS Co., Sr. Unsec. Sub. PIK Notes,
13.00%, 12/15/07 118,000 107,970
- -------------------------------------------------------------------------------
Venetian Casino Resort LLC, Gtd. Mortgage Notes, 12.25%,
11/15/04 425,000 418,625
- -------------------------------------------------------------------------------
526,595
- -------------------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 2.45%
Biovail Corp., Sr. Notes, 10.875%, 11/15/05 400,000 418,000
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.64%
Alaris Medical, Inc., Sr. Disc. Notes, 11.125%,
08/01/08(b) $200,000 $ 109,500
- -------------------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 2.39%
Team Health, Inc., Sr. Sub. Notes, 12.00%, 03/15/09(a)
(Acquired 03/05/99-03/16/99; Cost $400,000) 400,000 408,000
- -------------------------------------------------------------------------------
HOUSEHOLD FURN. & APPLIANCES - 2.06%
Falcon Products, Inc., Sr. Sub. Notes, 11.375%,
06/15/09(a) (Acquired 06/14/99; Cost $350,000) 350,000 351,750
- -------------------------------------------------------------------------------
HOUSEWARES - 2.49%
Decora Industries, Inc., Series B Sr. Sec. Gtd. Notes,
11.00%, 05/01/05 440,000 424,600
- -------------------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 2.41%
Marvel Enterprises, Inc., Sr. Notes, 12.00%, 06/15/09(a)
(Acquired 02/17/99; Cost $395,000) 395,000 411,788
- -------------------------------------------------------------------------------
LODGING-HOTELS - 5.63%
American Skiing Co., Series B Sr. Sub. Notes, 12.00%,
07/15/06 300,000 232,500
- -------------------------------------------------------------------------------
Booth Creek Ski Holdings, Sr. Unsec. Gtd. Notes, 12.50%,
03/15/07 90,000 79,650
- -------------------------------------------------------------------------------
Majestic Star Casino LLC, Sec. Bonds, 10.875%,
07/01/06(a) (Acquired 06/15/99; Cost $491,300) 500,000 497,500
- -------------------------------------------------------------------------------
Stena Line A.B. (Sweden), Sr. Unsec. Yankee Notes,
10.625%, 06/01/08 200,000 151,500
- -------------------------------------------------------------------------------
961,150
- -------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 2.09%
Comstock Resources, Inc., Sr. Notes, 11.25%, 05/01/07(a)
(Acquired 04/26/99; Cost $348,184) 350,000 357,000
- -------------------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 2.62%
Polariod Corp., Sr. Unsec. Notes, 11.50%, 02/15/06 420,000 447,300
- -------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 3.06%
Vista Eyecare, Inc., Series B Sr. Unsec. Gtd. Notes,
12.75%, 10/15/05 525,000 522,375
- -------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 2.09%
Avis Rent A Car, Inc., Sr. Sub. Notes, 11.00%,
05/01/09(a) (Acquired 06/25/99; Cost $350,000) 350,000 357,000
- -------------------------------------------------------------------------------
SHIPPING - 0.63%
Millenium Seacarriers, First Priority Ship Mortgage
Notes, 12.00%, 07/15/05(c) 100,000 52,500
- -------------------------------------------------------------------------------
Pegasus Shipping Hellas Co. (Bermuda), Series A Sr. Sec.
Gtd. Mortgage Notes, 11.875%, 11/15/04 100,000 55,500
- -------------------------------------------------------------------------------
108,000
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. HIGH YIELD FUND
101
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 14.33%
Clearnet Communications, Inc. (Canada), Sr. Disc. Yankee
Notes, 10.125%, 05/01/09(b) $550,000 $ 314,875
- --------------------------------------------------------------------------------
Dobson Communications Corp., Sr. Notes, 11.75%, 04/15/07 200,000 210,500
- --------------------------------------------------------------------------------
GST Equipment Funding, Sr. Sec. Notes, 13.25%, 05/01/07 400,000 425,000
- --------------------------------------------------------------------------------
Jazztel PLC (United Kingdom), Sr. Notes, 14.00%,
04/01/09(a)(c) (Acquired 03/31/99; Cost $450,000) 450,000 443,250
- --------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr. Notes, 13.50%,
05/15/09(a) (Acquired 05/19/99; Cost $500,000) 500,000 502,500
- --------------------------------------------------------------------------------
Nextel Communications, Inc., Sr. Unsec. Notes, 12.00%,
11/01/08 225,000 256,500
- --------------------------------------------------------------------------------
Spectrasite Holdings, Inc., Sr. Disc. Notes,
11.25%, 04/15/09(a)(b) (Acquired 04/13/99; Cost $40,559) 70,000 40,250
- --------------------------------------------------------------------------------
12.00%, 07/15/08(a)(b) (Acquired 06/23/98-02/24/99; Cost
$253,665) 400,000 254,000
- --------------------------------------------------------------------------------
2,446,875
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 9.50%
DTI Holdings, Inc., Unsec. Sr. Disc. Notes, 12.50%,
03/01/08(b)(c) 500,000 187,500
- --------------------------------------------------------------------------------
Econophone, Inc.,
Sr. Unsec. Notes, 13.50%, 07/15/07 300,000 320,250
- --------------------------------------------------------------------------------
Sr. Unsec. Disc. Notes, 11.00%, 02/15/08(b) 50,000 27,000
- --------------------------------------------------------------------------------
Long Distance Direct, Inc., Sr. Notes, 12.25%,
04/15/08(c) 140,000 91,350
- --------------------------------------------------------------------------------
Tele1 Europe A.B. (Netherlands), Sr. Notes, 13.00%,
05/15/09 650,000 682,500
- --------------------------------------------------------------------------------
Versatel Telecom B.V. (Netherlands), Sr. Notes, 13.25%,
05/01/08(c) 300,000 313,500
- --------------------------------------------------------------------------------
1,622,100
- --------------------------------------------------------------------------------
TELEPHONE - 8.57%
Firstworld Communications, Sr. Unsec. Disc. Notes,
13.00%, 04/15/08(b)(c) 350,000 187,250
- --------------------------------------------------------------------------------
Logix Communications, Sr. Unsec. Notes, 12.25%, 06/15/08 550,000 501,875
- --------------------------------------------------------------------------------
Nextlink Communications, Inc., Sr. Disc. Unsec. Notes,
12.25%, 06/01/09(b) 500,000 295,000
- --------------------------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec. Notes, 15.00%, 07/01/08 460,000 479,550
- --------------------------------------------------------------------------------
1,463,675
- --------------------------------------------------------------------------------
TEXTILES (APPAREL) - 7.22%
Panolam Industry International, Sr. Sub. Notes, 11.50%,
02/15/09(a) (Acquired 02/15/99; Cost $420,000) 420,000 430,500
- --------------------------------------------------------------------------------
St. John Knits International, Inc., Sr. Unsec. Sub.
Notes, 12.50%, 07/01/09(a) (Acquired 06/30/99; Cost
$345,156) 350,000 345,156
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
Supreme International Corp., Sr. Sub. Unsec. Gtd.
Notes, 12.25%, 04/01/06(a) (Acquired 03/31/99; Cost
$444,834) $450,000 $ 456,750
- ---------------------------------------------------------------------------
1,232,406
- ---------------------------------------------------------------------------
TRUCKS & PARTS - 2.38%
HDA Parts System, Inc., Sr. Sub. Notes, 12.00%,
08/01/05(a) (Acquired 07/28/98-03/17/99; Cost
$391,274) 400,000 406,000
- ---------------------------------------------------------------------------
Total Corporate Bonds & Notes
(Cost $15,838,107) 15,797,889
- ---------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
WARRANTS--0.26%
COMPUTERS (NETWORKING) - 0.00%
Convergent Communications, expiring 04/01/08(d) 1,000 10
- ---------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.00%
Resort At Summerlin/RAS Co., expiring 12/15/07(d) 100 1
- ---------------------------------------------------------------------------
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc., expiring 04/15/03(d) 60 1
- ---------------------------------------------------------------------------
SHIPPING - 0.00%
Millenium Seacarriers, expiring 07/15/03(d) 100 125
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.07%
Jazztel PLC (United Kingdom), expiring 04/01/09(d) 2,250 11,812
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.09%
DTI Holdings, Inc., expiring 03/01/08(d) 2,500 300
- ---------------------------------------------------------------------------
Long Distance Direct, Inc., expiring 04/13/08(d) 140 350
- ---------------------------------------------------------------------------
Versatel Telecom B.V. (Netherlands), expiring
05/15/08(d) 300 15,075
- ---------------------------------------------------------------------------
15,725
- ---------------------------------------------------------------------------
TELEPHONE - 0.10%
Firstworld Communications, expiring 04/15/08(d) 350 17,500
- ---------------------------------------------------------------------------
Total Warrants (Cost $3,701) 45,174
- ---------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT - 5.14%(e)
Dean Witter Reynolds, Inc., 4.85%, 07/01/99(f)
(Cost $877,929) $877,929 877,929
===========================================================================
TOTAL INVESTMENTS - 97.91% 16,720,992
===========================================================================
OTHER ASSETS LESS LIABILITIES - 2.09% 356,072
===========================================================================
NET ASSETS - 100.00% $17,077,064
===========================================================================
</TABLE>
AIM V.I. HIGH YIELD FUND
102
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) 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
market value of these securities at 06/30/99 was $6,381,194 which
represented 37.37% of the Fund's net assets.
(b) Step bond issued at a discount. Interest rate shown represents the coupon
rate at which the bond will accrue at a specified future date.
(c) Consists of more than one class of securities traded together as a unit. In
addition to the debt obligations listed, each unit contains warrants that
enable the holder to purchase common stock in the issuer at a predetermined
price per share of common stock.
(d) Non-income producing security.
(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 is at least 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 6/30/99 with a maturing value of
$100,013,472. Collateralized by U.S. Government obligations.
Investment Abbreviations:
Deb.- Debentures
Disc.- Discounted
Gtd.- Guaranteed
PIK- Payment in Kind
Sec.- Secured
Sr.- Senior
Sub.- Subordinated
Unsec.- Unsecured
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
103
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30 , 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $16,719,737) $ 16,720,992
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 74,172
- ----------------------------------------------------------------------
Interest 376,233
- ----------------------------------------------------------------------
Investments sold 267,287
- ----------------------------------------------------------------------
Investment for deferred compensation plan 4,116
- ----------------------------------------------------------------------
Other assets 3,403
- ----------------------------------------------------------------------
Total assets 17,446,203
- ----------------------------------------------------------------------
LIABILITIES:
Payables For:
Investments purchased 345,156
- ----------------------------------------------------------------------
Deferred compensation plan 4,116
- ----------------------------------------------------------------------
Accrued advisory fees 7,935
- ----------------------------------------------------------------------
Accrued operating expenses 11,932
- ----------------------------------------------------------------------
Total liabilities 369,139
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $ 17,077,064
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 1,819,998
======================================================================
Net asset value, offering and redemption price per share $ 9.38
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $700,543
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 37,529
- --------------------------------------------------------------------------
Administrative services fees 22,784
- --------------------------------------------------------------------------
Custodian fees 11,055
- --------------------------------------------------------------------------
Directors' fees and expenses 2,222
- --------------------------------------------------------------------------
Professional fees 12,033
- --------------------------------------------------------------------------
Other 4,305
- --------------------------------------------------------------------------
Total expenses 89,928
- --------------------------------------------------------------------------
Less: Expenses paid indirectly (1,036)
- --------------------------------------------------------------------------
Fees waived by advisor (22,557)
- --------------------------------------------------------------------------
Net expenses 66,335
- --------------------------------------------------------------------------
Net investment income 634,208
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (328,379)
- --------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities 327,005
- --------------------------------------------------------------------------
Net gain (loss) from investment securities (1,374)
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $632,834
==========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
104
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the period May 1, 1998 (date
operations commenced) through December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $634,208 $ 323,361
- ----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities (328,379) (367,230)
- ----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities 327,005 (325,750)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 632,834 (369,619)
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment
income -- (330,305)
- ----------------------------------------------------------------------------
Net increase from capital stock transactions 8,477,929 8,666,225
- ----------------------------------------------------------------------------
Net increase in net assets 9,110,763 7,966,301
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 7,966,301 --
- ----------------------------------------------------------------------------
End of period $17,077,064 $7,966,301
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $17,139,995 $8,662,066
- ----------------------------------------------------------------------------
Undistributed net investment income 631,423 (2,785)
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (695,609) (367,230)
- ----------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities 1,255 (325,750)
- ----------------------------------------------------------------------------
$17,077,064 $7,966,301
============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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. High Yield Fund (the "Fund"). The Fund's investment objective
is to achieve a high level of current income by investing primarily in
publicly traded non-investment grade debt securities. The Fund will also
consider the possibility of capital growth when it purchases and sells
securities. Debt securities of less than investment grade are considered "high
risk" securities (commonly referred to as junk bonds). These 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. The Fund commenced
operations on May 1, 1998. 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 securities (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
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. Equity
securities which are listed or traded on an exchange or the NASDAQ National
Market System are valued at the last sales price on the exchange where
principally traded or, lacking any sales on a particular day, at the
closing bid price on that day. 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 prices otained from an electronic quotation reporting system, if such
prices are available, or from established market makers. 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.
AIM V.I. HIGH YIELD FUND
105
<PAGE>
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. Such distributions are
declared and paid annually.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $247,108 as of December 31, 1998, which expires,
if not previously utilized, through the year 2006. The Fund cannot
distribute capital gains to shareholders until the tax loss carryforwards
have been utilized.
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 0.625% of
the first $200 million of the Fund's average daily net assets, plus 0.55% of
the Fund's average daily net assets of the next $300 million, plus 0.50% of
the Fund's average daily net assets of the next $500 million, plus 0.45% of
the Fund's average daily net assets in excess of $1 billion. During the six
months ended June 30, 1999, AIM waived fees of $22,557.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $18,730 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$1,860 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
The Fund received reductions in custodian fees of $1,036 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $1,036 during the six months ended
June 30, 1999.
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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the six months ended June 30, 1999 was
$15,809,115 and $7,391,443, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $458,871
- -----------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (457,616)
- -----------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,255
=======================================================================
Investments have the same cost for tax and financial statements.
</TABLE>
AIM V.I. HIGH YIELD FUND
106
<PAGE>
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1999
and the period May 1, 1998 (date operations commenced) through December 31,
1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 1999 DECEMBER 31, 1998
---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Sold 1,140,490 $10,500,348 910,186 $8,767,632
- -----------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 37,577 330,305
- -----------------------------------------------------------------------
Reacquired (222,167) (2,022,419) (46,088) (431,712)
=======================================================================
918,323 $ 8,477,929 901,675 $8,666,225
=======================================================================
</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, 1999 and period May 1, 1998 (date
operations commenced) through December 31, 1998.
<TABLE>
<CAPTION>
JUNE 30,
1999 1998
-------- ------
<S> <C> <C>
Net asset value, beginning of period $ 8.84 $10.00
- -----------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.35 0.39
- -----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.19 (1.15)
- -----------------------------------------------------------------------------
Total from investment operations 0.54 (0.76)
- -----------------------------------------------------------------------------
Less dividends from net investment income -- (0.40)
- -----------------------------------------------------------------------------
Net asset value, end of period $ 9.38 $ 8.84
=============================================================================
Total return(a) 6.11% (7.61)%
=============================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $17,077 $7,966
=============================================================================
Ratio of expenses to average net assets(b) 1.12%(c) 1.13%(d)
=============================================================================
Ratio of net investment income to average net
assets(e) 10.56%(c) 9.75%(d)
=============================================================================
Portfolio turnover rate 65% 39%
=============================================================================
</TABLE>
(a) Does not deduct contingent deferred sales charges and is not annualized
for periods less than one year.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.50% (annualized) and 2.50% (annualized) for 1999-1998.
(c) Ratios are annualized and based on average net assets of $12,108,624.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 10.19% (annualized) and 8.36% (annualized) for 1999-
1998.
AIM V.I. HIGH YIELD FUND
107
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
EUROPEAN STOCKS STRUGGLE AS
EMERGING MARKETS SURGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID AIM V.I. INTERNATIONAL Macroeconomic factors and quickening Q. GIVEN THAT, WILL YOU CONTINUE TO
EQUITY FUND PERFORM THE PAST SIX MONTHS? corporate restructuring have buoyed FOCUS THE FUND'S ASSETS IN EUROPE?
A. The period covered by this report saw Japan. Other Asian markets have rallied on A. The fund has already reallocated
a reversal of a years-long trend in good economic news and signs that interest assets out of Europe as we have seen
international markets: Asia, Japan and in buying Asian stocks could be spreading stronger earnings in other regions
Latin America outperformed Europe. from blue chips to lesser-known stocks. around the world. But we still believe the
This shift affected the performance of Latin American markets were on their way long-term outlook for Europe is very
AIM V.I. International Equity Fund, up as investors began to regain confidence favorable. We also see some positive
which remained heavily invested in in the region. In Latin America, market short-term trends:
Europe. The fund's six-month total return sentiment turned for the better with the . The new European Central Bank
was 4.43%. By comparison, the overall arrival in Brazil of a new central-bank dropped interest rates in April to
index for international markets, the governor and a clearer monetary policy. stimulate the economy and boost confidence
EAFE, gained 3.97% during the reporting At the same time, European economic in Europe. Lower interest rates bode well
period. The Fund's net assets were growth has become sluggish, particularly for stocks.
$254.8 million at the end of six-month in Germany, and we have seen earnings . There's a positive side to the decline
reporting period. disappointments from some companies. The of the euro: European exporters are now
introduction of the euro in January created much more competitive, and their earnings
Q. WHY DID JAPAN AND EMERGING MARKETS a new common currency for 11 countries. should accelerate once sales rise.
PERFORM BETTER THAN EUROPEAN MARKETS? The euro started strong against the . European companies are more focused on
A. Japan, Asia and Latin America suffered dollar but weakened as it became clear that shareholder value. The introduction of
major problems last year, including the U.S. economy was growing much faster the euro triggered a massive wave of
currency devaluation and recession. than the European economy. mergers and acquisitions as companies
Signs of recovery appeared in early 1999. strive to improve their strategic position
in the "new Europe."
PORTFOLIO COMPOSITION . While recent earnings have declined,
European companies have long-term
As of 6/30/99, based on total net assets growth expectations superior to those in
the United States. And European stocks are
TOP 10 EQUITY HOLDINGS TOP 10 COUNTRIES selling at a cheaper price compared
to U.S. stocks.
1. Nokia Oyj A.B.-Class A (Finland) 2.49% 1. Japan 15.26%
2. Mannesmann A.G. (Germany) 1.96 2. United Kingdom 14.00 Q. WHAT EUROPEAN STOCKS DID
3. Nortel Networks Corp. (Canada) 1.62 3. France 12.01 YOU LIKE?
4. Barclays PLC (United Kingdom) 1.43 4. Canada 6.21 A. Telecommunications companies have
5. Banca Popolare di Brescia 5. Netherlands 5.17 performed well. Our top holding is
(Italy) 1.33 6. Switzerland 4.16 Finland-based Nokia, the world's largest
6. Carrefour S.A. (France) 1.31 7. Mexico 3.99 wireless phone company. We think the
7. Banque Nationale de Paris 8. Germany 3.84 company is poised for future growth as
(France) 1.28 9. Hong Kong 3.56 deregulation continues in the European
8. DaimlerChrysler A.G. (Germany) 1.24 10. Sweden 3.44 telecommunications industry. Many analysts
9. Hennes & Mauritz A.B. (Sweden) 1.22 expect Nokia to continue widening
10. Pinault-Printemps-Redoute S.A. its lead over its competitors.
(France) 1.20
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
</TABLE>
108 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Our second-largest holding was RESULTS OF A $10,000 INVESTMENT
Mannesmann, a German engineering and 5/5/93 - 6/30/99
telecommunications conglomerate that
retains its roots in industrial areas AVERAGE ANNUAL TOTAL RETURN
such as seamless tubes and automotive As of 6/30/99
products while rapidly increasing its Inception (5/5/93) 13.02%
telecommunications operations. The company 5 Year 12.82
built the first private telephone network 1 Year 1.52
in Germany. EUROPE,
AIM V.I. AUSTRALASIA, LIPPER
Q. IS THE OUTLOOK FOR JAPAN IMPROVING? INTERNATIONAL AND FAR EAST INTERNATIONAL
A. The investment environment in Japan (In thousands) EQUITY FUND INDEX FUND INDEX
has steadily improved over the past ------------- ---- -------------
six months, driven both by macroeconomic 5/93 10,000 10,000 10,000
factors and by an increased pace of 6/93 9,880 10,057 10,030
corporate restructuring. In June, a 6/94 11,620 11,797 12,163
better-than-expected GDP number (1.9% for 6/95 12,670 12,027 12,398
the first quarter of 1999) also boosted 6/96 15,501 13,665 14,465
the markets. This was very welcome news, 6/97 18,387 15,464 17,355
coming after six consecutive quarters 6/98 20,916 16,451 18,198
of contraction. Telecommunications, 6/99 21,235 17,448 19,674
health care, and financial services have
been good sectors; banks and utilities Past performance cannot guarantee comparable future results.
have been weak. Consumers are holding on
to their yen, so retail hasn't been very MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF
strong, although there are a few exceptions. AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
But as people start to perceive that the PERFORMANCE SHOWN.
economy is improving, they may spend
a little more, which itself could The performance figures shown represent AIM V.I. International Equity Fund
help recovery. and are not intended to reflect actual annuity values, and do not reflect
We had 15.26% of assets invested in charges at the separate account level, which, if applied, would lower the
Japan at the close of the reporting performance results. AIM V.I. International Equity Fund performance figures
period, up from 7.68% six months ago, are historical and reflect reinvestment of all distributions and changes in
because we found companies in Japan net asset value. The fund's investment return and principal value will
with strong earnings potential. Our fluctuate so that an investor's shares, when redeemed, may be worth more or
Japanese holdings include less than their original cost.
telecommunications giant NTT, and AIM V.I. International Equity Fund's performance figures are historical
Takeda, that nation's largest and reflect reinvestment of all distributions and changes in net asset value.
pharmaceutical firm. Nevertheless, The fund's investment return and principal value will fluctuate, so an
we remain cautious about a Japanese investor's shares, when redeemed, may be worth more or less than their
recovery as consumer spending is down, original cost.
unemployment is rising, and the International investing presents certain risks not associated with
government has yet to implement meaningful investing solely in the United States. These include risks relating to
economic reform. fluctuations in the value of the U.S. dollar relative to the values of other
currencies, the custody arrangements made for the fund's foreign
Q. HAS LATIN AMERICA RECOVERED? holdings, differences in accounting, political risks, and the lesser degree
A. Latin American markets have turned of public information required to be provided by non-U.S. companies.
around considerably. Markets calmed, The EAFE--Registered Trademark--(Europe, Australasia, and the Far East)
for example, as Brazil established a Index is a group of unmanaged foreign securities tracked by Morgan Stanley
clearer monetary policy. Even with this Capital International.
positive news, we feel it is too early to The unmanaged Lipper International Fund Index represents an average of
expect a sustained recovery in the performance of the 30 largest international mutual funds. It is
Brazil. At least in the short term, we'll compiled by Lipper Inc., an independent mutual funds performance monitor.
continue to focus our Latin American An investment cannot be made in any index listed. Unless otherwise
investments in Mexico. The recent recovery indicated, index results include reinvested dividends.
in oil prices
has boosted the Mexican economy, and earnings picture to improve as
Mexico continues to benefit from the privatization, deregulation and
strength of its largest trading partner, restructuring take hold.
the United States. We look for continued improvement
in Latin America and Asia, with the
Q. WHAT IS YOUR OUTLOOK? exception of Japan. While we have
A. Further interest-rate cuts could occur increased our Japanese holdings, we
across Europe, a move that would benefit believe it's too early to say the
large-company stocks in which the fund economic crisis there has ended.
invests. Over the long run, we expect the
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND 109
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 88.75%
ARGENTINA - 0.36%
Telefonica de Argentina S.A.-ADR (Telephone) 29,300 $ 919,286
- -------------------------------------------------------------------------------
AUSTRALIA - 1.11%
AMP Ltd. (Insurance-Life/Health) 120,800 1,318,883
- -------------------------------------------------------------------------------
Brambles Industries Ltd. (Air Freight) 34,000 894,533
- -------------------------------------------------------------------------------
Cable & Wireless Optus, Ltd. (Telephone)(a) 268,000 609,435
- -------------------------------------------------------------------------------
2,822,851
- -------------------------------------------------------------------------------
BELGIUM - 0.54%
UCB S.A. (Manufacturing-Diversified) 32,000 1,368,637
- -------------------------------------------------------------------------------
BRAZIL - 0.69%
Embratel Participacoes S.A. - ADR (Telephone) 14,100 195,637
- -------------------------------------------------------------------------------
Petroleo Brasileiro S.A.-Petrobras, Pfd. (Oil & Gas-
Exploration & Production) 7,013 1,085,337
- -------------------------------------------------------------------------------
Tele Centro Sul Participacoes S.A. - ADR (Telephone) 2,821 156,514
- -------------------------------------------------------------------------------
Telecomunicacoes Brasileiras S.A.-ADR (Telephone)(a) 14,100 881
- -------------------------------------------------------------------------------
Telesp Participacoes S.A.-ADR (Telephone) 14,100 322,537
- -------------------------------------------------------------------------------
1,760,906
- -------------------------------------------------------------------------------
CANADA - 6.21%
ATI Technologies, Inc. (Computers-Hardware) 78,100 1,264,123
- -------------------------------------------------------------------------------
BCE, Inc. (Telephone) 57,300 2,790,143
- -------------------------------------------------------------------------------
Bombardier Inc. (Aerospace/Defense) 42,600 650,492
- -------------------------------------------------------------------------------
CGI Group, Inc. (Services-Computer Systems)(a) 31,000 652,189
- -------------------------------------------------------------------------------
Imasco Ltd. (Manufacturing-Diversified) 28,600 770,560
- -------------------------------------------------------------------------------
JDS Fitel, Inc. (Manufacturing-Specialized)(a) 16,400 1,374,550
- -------------------------------------------------------------------------------
Loblaw Co. Ltd. (Retail-Specialty) 24,000 608,347
- -------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 47,617 4,133,751
- -------------------------------------------------------------------------------
Rogers Communications, Inc. (Telecommunications-
Cellular/Wireless)(a) 61,000 979,063
- -------------------------------------------------------------------------------
Shaw Communications, Inc. (Broadcasting-Television,
Radio & Cable) 33,600 1,329,406
- -------------------------------------------------------------------------------
Toronto-Dominion Bank (Banks-Regional) 28,100 1,272,939
- -------------------------------------------------------------------------------
15,825,563
- -------------------------------------------------------------------------------
FINLAND - 3.05%
Nokia Oyj A.B.-Class A (Communications Equipment) 72,400 6,342,312
- -------------------------------------------------------------------------------
Sonera Group Oyj (Telecommunications-
Cellular/Wireless) 65,250 1,425,629
- -------------------------------------------------------------------------------
7,767,941
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE - 12.01%
Accor S.A. (Lodging-Hotels) 8,500 $ 2,133,084
- -------------------------------------------------------------------------------
Alstom (Engineering & Construction)(a) 40,000 1,257,332
- -------------------------------------------------------------------------------
Altran Technologies, S.A. (Services-Commercial &
Consumer) 5,300 1,398,318
- -------------------------------------------------------------------------------
Axa (Insurance-Multi-Line) 20,300 2,474,976
- -------------------------------------------------------------------------------
Banque Nationale de Paris (Banks-Major Regional) 39,300 3,272,608
- -------------------------------------------------------------------------------
Cap Gemini Sogeti S.A. (Computers-Software &
Services) 13,000 2,041,825
- -------------------------------------------------------------------------------
Carrefour S.A. (Retail-Food Chains) 22,800 3,348,419
- -------------------------------------------------------------------------------
Danone (Foods) 4,600 1,185,190
- -------------------------------------------------------------------------------
Elf Aquitaine S.A. (Oil & Gas-Refining & Marketing) 10,400 1,525,206
- -------------------------------------------------------------------------------
Pinault-Printemps-Redoute S.A. (Retail-General
Merchandise) 17,800 3,052,555
- -------------------------------------------------------------------------------
Promodes (Retail-Food Chains) 3,650 2,394,316
- -------------------------------------------------------------------------------
Societe Television Francaise 1 (Broadcasting-
Television, Radio & Cable) 6,600 1,537,243
- -------------------------------------------------------------------------------
Total Fina S.A.-Class B (Oil & Gas-Refining &
Marketing) 19,000 2,449,633
- -------------------------------------------------------------------------------
Vivendi (Consumer Services) 31,200 2,525,753
- -------------------------------------------------------------------------------
30,596,458
- -------------------------------------------------------------------------------
GERMANY - 3.84%
DaimlerChrsyler A.G. (Automobiles) 36,564 3,165,317
- -------------------------------------------------------------------------------
EM.TV & Merchandising A.G. (Broadcasting-Television,
Radio & Cable) 650 914,400
- -------------------------------------------------------------------------------
Mannesmann A.G. (Machinery-Diversified) 33,500 4,995,782
- -------------------------------------------------------------------------------
Porsche A.G., Pfd. (Automobiles) 300 704,930
- -------------------------------------------------------------------------------
9,780,429
- -------------------------------------------------------------------------------
HONG KONG - 3.47%
China Telecom Ltd. (Telecommunications-
Cellular/Wireless)(a) 840,000 2,333,153
- -------------------------------------------------------------------------------
Cosco Pacific Ltd. (Financial-Diversified) 2,788,000 2,299,797
- -------------------------------------------------------------------------------
Dao Heng Bank Group Ltd. (Banks-Regional)(a) 338,000 1,516,047
- -------------------------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail-Food Chains) 254,000 2,299,835
- -------------------------------------------------------------------------------
Ng Fung Hong Ltd. (Foods) 460,000 382,414
- -------------------------------------------------------------------------------
8,831,246
- -------------------------------------------------------------------------------
INDONESIA - 0.69%
Gulf Indonesia Resources Ltd. (Oil-International
Integrated) 152,300 1,751,450
- -------------------------------------------------------------------------------
</TABLE>
110 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
IRELAND - 2.06%
Allied Irish Banks PLC (Banks-Regional) 176,500 $ 2,336,948
- ----------------------------------------------------------------------------
Bank of Ireland (Banks-Major Regional) 104,100 1,756,523
- ----------------------------------------------------------------------------
CRH PLC (Construction-Cement & Aggregates) 65,000 1,151,433
- ----------------------------------------------------------------------------
5,244,904
- ----------------------------------------------------------------------------
ITALY - 2.15%
Banca Popolare di Brescia (Banks-Regional) 79,000 3,382,893
- ----------------------------------------------------------------------------
Credito Italiano S.p.A. (Banks-Major Regional) 229,400 1,007,148
- ----------------------------------------------------------------------------
San Paolo-IMI S.p.A. (Banks-Major Regional) 79,460 1,080,967
- ----------------------------------------------------------------------------
5,471,008
- ----------------------------------------------------------------------------
JAPAN - 15.26%
Advantest Corp. (Electronics-Instrumentation) 21,400 2,353,204
- ----------------------------------------------------------------------------
Aiwa Co., Ltd. (Electronics Component
Distributors)(a) 37,000 1,223,646
- ----------------------------------------------------------------------------
Alps Electric Co., Ltd. (Electronics-Component
Distributors)(a) 103,000 2,414,262
- ----------------------------------------------------------------------------
Hirose Electric Co. Ltd. (Electronics-Component
Distributors) 19,000 1,973,047
- ----------------------------------------------------------------------------
Hoya Corp.(Manufacturing-Specialized) 23,000 1,298,801
- ----------------------------------------------------------------------------
Ibiden Co., Ltd. (Electronics-Component
Distributors)(a) 72,000 1,190,575
- ----------------------------------------------------------------------------
Kirin Brewery Co., Ltd. (Beverages-Alcoholic) 189,000 2,265,812
- ----------------------------------------------------------------------------
Matsushita Communication Industrial Co., Ltd.
(Telephone) 32,000 2,288,549
- ----------------------------------------------------------------------------
Murata Manufacturing Co., Ltd. (Electronics-
Component Distributors) 33,000 2,171,807
- ----------------------------------------------------------------------------
NEC Corp. (Computers-Hardware) 181,000 2,252,212
- ----------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications-Long Distance) 1,970 2,296,569
- ----------------------------------------------------------------------------
NTT Data Corp. (Computers-Software & Services) 1,780 1,415,759
- ----------------------------------------------------------------------------
NTT Mobile Communications Network, Inc.
(Telecommunications-Cellular/Wireless) 1,600 2,169,492
- ----------------------------------------------------------------------------
Okuma Corp. (Hardware & Tools) 286,000 1,328,913
- ----------------------------------------------------------------------------
Ricoh Corp. Ltd. (Office Equipment & Supplies)(a) 158,000 2,176,337
- ----------------------------------------------------------------------------
Rohm Co. (Electronics-Component Distributors) 7,000 1,096,734
- ----------------------------------------------------------------------------
Sharp Corp. (Electrical Equipment)(a) 84,000 993,138
- ----------------------------------------------------------------------------
Sony Corp. (Electronics-Component Distributors) 25,300 2,729,764
- ----------------------------------------------------------------------------
Takeda Chemical Industries (Health Care-Drugs-
Generic & Other) 53,000 2,458,289
- ----------------------------------------------------------------------------
Tokyo Electron Ltd. (Electronics-Semiconductors) 20,000 1,357,586
- ----------------------------------------------------------------------------
Ushio, Inc. (Electronics-Component Distributors) 111,000 1,422,489
- ----------------------------------------------------------------------------
38,876,985
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO - 3.99%
Cifra S.A. de C.V. (Retail-General Merchandise)(a) 772,000 $ 1,412,265
- -------------------------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 70,000 1,356,250
- -------------------------------------------------------------------------------
Fomento Economico Mexicano, S.A. de C.V.-ADR
(Beverages-Non-Alcoholic) 59,020 2,353,422
- -------------------------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series C (Beverages-
Alcoholic) 387,000 1,103,370
- -------------------------------------------------------------------------------
Grupo Televisa S.A.-GDR (Entertainment)(a) 47,500 2,128,594
- -------------------------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A
(Paper & Forest Products) 171,000 703,211
- -------------------------------------------------------------------------------
Telefonos de Mexico S.A.-ADR (Telephone) 13,700 1,107,131
- -------------------------------------------------------------------------------
10,164,243
- -------------------------------------------------------------------------------
NETHERLANDS - 5.17%
AEGON N.V. (Insurance Brokers) 6,800 493,018
- -------------------------------------------------------------------------------
Equant N.V. (Computers-Networking)(a) 16,000 1,474,170
- -------------------------------------------------------------------------------
Getronics N.V. (Computers-Software & Services) 42,500 1,633,759
- -------------------------------------------------------------------------------
Koninklijke Ahold N.V. (Retail-Food Chains) 85,000 2,925,873
- -------------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics N.V.
(Household Furniture & Appliances) 14,260 1,405,706
- -------------------------------------------------------------------------------
Libertel N.V.(Telecommunications-
Cellular/Wireless)(a) 52,000 1,018,233
- -------------------------------------------------------------------------------
Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit (Publishing) 56,800 2,268,351
- -------------------------------------------------------------------------------
Wolters Kluwer N.V. (Specialty Printing) 49,400 1,965,189
- -------------------------------------------------------------------------------
13,184,299
- -------------------------------------------------------------------------------
NORWAY - 0.17%
Merkantildata A.S.A (Services-Commercial & Consumer) 44,000 424,325
- -------------------------------------------------------------------------------
PHILIPPINES - 0.53%
Philippine Long Distance Telephone Co. (Telephone) 24,260 739,595
- -------------------------------------------------------------------------------
Philippine Long Distance Telephone Co.-ADR
(Telephone) 20,600 620,575
- -------------------------------------------------------------------------------
1,360,170
- -------------------------------------------------------------------------------
PORTUGAL - 0.29%
Jeronimo Martins & Filho, S.A. (Retail-General
Merchandise) 22,500 742,728
- -------------------------------------------------------------------------------
SINGAPORE - 1.39%
Development Bank of Singapore Ltd. (Banks-Major
Regional) 106,000 1,295,417
- -------------------------------------------------------------------------------
Keppel Corp. Ltd. (Engineering & Construction) 331,000 1,127,967
- -------------------------------------------------------------------------------
Singapore Press Holdings Ltd. (Publishing-
Newspapers) 66,000 1,124,559
- -------------------------------------------------------------------------------
3,547,943
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
111
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SOUTH KOREA - 1.73%
Korea Electric Power Corp.-ADR (Electric Companies) 58,900 $ 1,207,450
- -------------------------------------------------------------------------------
Korea Telecom Corp.-ADR (Telephone)(a) 42,000 1,680,000
- -------------------------------------------------------------------------------
Pohang Iron & Steel Co. Ltd. -ADR (Iron & Steel) 45,500 1,529,937
- -------------------------------------------------------------------------------
4,417,387
- -------------------------------------------------------------------------------
SPAIN - 2.12%
Banco Popular Espanol S.A. (Banks-Major Regional) 17,500 1,257,976
- -------------------------------------------------------------------------------
Corp. Financiera Reunida, S.A. (Investment
Management)(a) 49,400 632,323
- -------------------------------------------------------------------------------
Endesa S.A. (Electric Companies) 49,200 1,048,590
- -------------------------------------------------------------------------------
Telefonica S.A. (Telephone) 51,200 2,464,733
- -------------------------------------------------------------------------------
5,403,622
- -------------------------------------------------------------------------------
SWEDEN - 3.44%
Electrolux A.B. (Household Furniture & Appliances) 113,000 2,369,629
- -------------------------------------------------------------------------------
Hennes & Mauritz A.B. (Retail-Specialty-Apparel) 125,976 3,116,657
- -------------------------------------------------------------------------------
NetCom A.B. (Telecommunications-
Cellular/Wireless)(a) 36,000 1,212,971
- -------------------------------------------------------------------------------
Svenska Handelsbanken A.B. (Banks-Major Regional) 119,500 1,435,985
- -------------------------------------------------------------------------------
WM-Data A.B.-Class B (Computers-Software & Services) 16,500 629,812
- -------------------------------------------------------------------------------
8,765,054
- -------------------------------------------------------------------------------
SWITZERLAND - 4.16%
ABB A.G. (Electrical Equipment) 1,600 2,365,799
- -------------------------------------------------------------------------------
Adecco S.A. (Services-Commercial & Consumer) 2,600 1,392,350
- -------------------------------------------------------------------------------
Compagnie Financiere Richemont A.G. (Tobacco)(a) 685 1,316,715
- -------------------------------------------------------------------------------
Julius Baer Holding A.G. (Banks-Major Regional) 230 655,031
- -------------------------------------------------------------------------------
UBS A.G. (Bank-Major Regional) 7,107 2,119,992
- -------------------------------------------------------------------------------
Zurich Allied A.G. (Insurance-Multi-Line) 4,850 2,756,284
- -------------------------------------------------------------------------------
10,606,171
- -------------------------------------------------------------------------------
THAILAND - 0.69%
Siam Commercial Bank (Banks-Regional), Conv. Pfd. 846,000 1,204,475
- -------------------------------------------------------------------------------
Siam Commercial Bank (Banks-Regional), Wts. expiring
05/10/12(a) 846,000 544,881
- -------------------------------------------------------------------------------
1,749,356
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM - 13.63%
Airtours PLC (Services-Commercial & Consumer) 82,450 $ 655,008
- -------------------------------------------------------------------------------
Barclays PLC (Banks-Major Regional) 125,000 3,637,197
- -------------------------------------------------------------------------------
British Sky Broadcasting Group PLC (Broadcasting-
Television, Radio & Cable) 250,000 2,319,058
- -------------------------------------------------------------------------------
British Telecommunications PLC (Communications
Equipment) 144,730 2,425,029
- -------------------------------------------------------------------------------
Compass Group PLC (Services-Commercial & Consumer) 156,000 1,546,680
- -------------------------------------------------------------------------------
Dixons Group PLC (Retail-Specialty) 94,000 1,755,785
- -------------------------------------------------------------------------------
General Electric Co. PLC (Manufacturing-Diversified) 262,600 2,678,083
- -------------------------------------------------------------------------------
Granada Group PLC (Leisure Time-Products) 83,500 1,549,131
- -------------------------------------------------------------------------------
Hays PLC (Services-Commercial & Consumer) 278,800 2,937,780
- -------------------------------------------------------------------------------
Invensys PLC (Electronics-Component-Distributors)(a) 200,000 946,538
- -------------------------------------------------------------------------------
Logica PLC (Computer Software & Services) 92,500 972,507
- -------------------------------------------------------------------------------
Misys PLC (Services-Commercial & Consumer) 189,500 1,621,938
- -------------------------------------------------------------------------------
Orange PLC (Telephone)(a) 172,000 2,521,369
- -------------------------------------------------------------------------------
Provident Financial PLC (Consumer Finance) 89,543 1,244,168
- -------------------------------------------------------------------------------
Railtrack Group PLC (Shipping) 78,644 1,607,795
- -------------------------------------------------------------------------------
Shell Transport & Trading Co. (Oil-International
Integrated)(a) 159,000 1,192,342
- -------------------------------------------------------------------------------
Stagecoach Holdings PLC (Shipping) 145,000 519,394
- -------------------------------------------------------------------------------
Vodafone Airtouch PLC (Telecommunications-
Cellular/Wireless) 130,000 2,561,406
- -------------------------------------------------------------------------------
WPP Group PLC (Services-Advertising/Marketing) 240,000 2,029,580
- -------------------------------------------------------------------------------
34,720,788
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$176,596,674) 226,103,750
- -------------------------------------------------------------------------------
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
112
<PAGE>
<TABLE>
<S> <C> <C>
PRINCIPAL MARKET
AMOUNT VALUE
FOREIGN CONVERTIBLE BONDS
& NOTES - 0.46%(b)
HONG KONG - 0.09%
Cosco Treasury Co. Ltd. (Shipping), Conv. Gtd. Bonds,
1.00%, 03/13/03 $ 246,000 $ 223,764
- --------------------------------------------------------------------------------
UNITED KINGDOM - 0.37%
Airtours PLC (Services-Commercial & Consumer), Conv.
Sub. Notes
5.75%, 01/05/04(b) GBP 71,000 136,115
- --------------------------------------------------------------------------------
5.75%, 01/05/04 (Acquired 12/09/98;
Cost $706,386)(b)(c) GBP 427,000 818,608
- --------------------------------------------------------------------------------
954,723
- --------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Convertible Bonds
& Notes
(Cost $1,004,923) 1,178,487
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 6.00%(d)
Greenwich Capital Markets, Inc., 5.00%, 07/01/99
(Cost $15,279,556) 15,279,556 15,279,556
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 95.21% 242,561,793
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 4.79% 12,200,329
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $ 254,762,122
================================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(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
market value at 06/30/99 represented 0.32% of the Fund's net assets.
(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 06/30/99 with a maturing value of
$100,013,889. Collaterized by U.S. Government agency obligations.
Investment Abbreviations:
Conv. - Convertible
GBP - British Pound Sterling
Gtd. - Guaranteed
Pfd. - Preferred
Sub. - Subordinated
Wts. - Warrants
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
113
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $192,881,153) $242,561,793
- ----------------------------------------------------------------------
Foreign currencies, at value (cost $3,683,106) 3,662,179
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 552,339
- ----------------------------------------------------------------------
Investments sold 9,617,179
- ----------------------------------------------------------------------
Dividends and interest 687,449
- ----------------------------------------------------------------------
Investment for deferred compensation plan 23,434
- ----------------------------------------------------------------------
Other assets 1,891
- ----------------------------------------------------------------------
Total assets 257,106,264
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 108,321
- ----------------------------------------------------------------------
Investments purchased 2,012,321
- ----------------------------------------------------------------------
Deferred compensation plan 23,434
- ----------------------------------------------------------------------
Accrued advisory fees 153,586
- ----------------------------------------------------------------------
Accrued directors' fees 2,071
- ----------------------------------------------------------------------
Accrued operating expenses 44,409
- ----------------------------------------------------------------------
Total liabilities 2,344,142
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $254,762,122
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 12,430,719
======================================================================
Net asset value, offering and redemption price per share $ 20.49
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $224,168 foreign withholding tax) $ 1,686,138
- ----------------------------------------------------------------------------
Interest 352,033
- ----------------------------------------------------------------------------
Total investment income 2,038,171
- ----------------------------------------------------------------------------
EXPENSES:
Advisory fees 895,775
- ----------------------------------------------------------------------------
Administrative services fees 37,240
- ----------------------------------------------------------------------------
Custodian fees 119,929
- ----------------------------------------------------------------------------
Directors' fees and expenses 4,732
- ----------------------------------------------------------------------------
Other 42,157
- ----------------------------------------------------------------------------
Total expenses 1,099,833
- ----------------------------------------------------------------------------
Net investment income 938,338
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 16,439,375
- ----------------------------------------------------------------------------
Foreign currencies (37,086)
- ----------------------------------------------------------------------------
16,402,289
- ----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (6,437,619)
- ----------------------------------------------------------------------------
Foreign currencies (130,169)
- ----------------------------------------------------------------------------
(6,567,788)
- ----------------------------------------------------------------------------
Net gain from investment securities and foreign currencies 9,834,501
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $10,772,839
============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
114
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 938,338 $ 1,852,329
- -----------------------------------------------------------------------------
Net realized gain from investment securities and
foreign currencies 16,402,289 13,261,554
- -----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (6,567,788) 15,969,669
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 10,772,839 31,083,552
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment
income -- (1,910,166)
- -----------------------------------------------------------------------------
Net increase from capital stock transactions 3,674,971 118,341
- -----------------------------------------------------------------------------
Net increase in net assets 14,447,810 29,291,727
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of year 240,314,312 211,022,585
- -----------------------------------------------------------------------------
End of year $254,762,122 $240,314,312
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $174,074,005 $170,399,034
- -----------------------------------------------------------------------------
Undistributed net investment income 2,872,698 1,934,360
- -----------------------------------------------------------------------------
Undistributed net realized gain from investment
securities and foreign currencies 28,228,091 11,825,802
- -----------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 49,587,328 56,155,116
- -----------------------------------------------------------------------------
$254,762,122 $240,314,312
=============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 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 closing bid price on that day. 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
closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. 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
AIM V.I. INTERNATIONAL EQUITY FUND
115
<PAGE>
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. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
C. Foreign Currency Contracts - A foreign 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 foreign 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 foreign 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. Such distributions are
declared and paid annually.
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.
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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $33,156 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$1,642 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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
AIM V.I. INTERNATIONAL EQUITY FUND
116
<PAGE>
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, 1999 was $123,451,148 and $127,292,161, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $53,414,192
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,989,832)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $49,424,360
==========================================================================
</TABLE>
Cost of investments for tax purposes is $193,137,434.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 1999
and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 2,154,168 $ 42,787,625 2,410,075 $ 46,643,002
- ------------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 101,067 1,910,166
- ------------------------------------------------------------------------------
Reacquired (1,973,022) (39,112,654) (2,581,125) (48,434,827)
- ------------------------------------------------------------------------------
181,146 $ 3,674,971 (69,983) $ 118,341
- ------------------------------------------------------------------------------
</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, 1999 and each of the years in the three-
year period ended December 31, 1998, the eleven months ended December 31,
1995, and the year ended January 31, 1995.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ------------------------------------- JANUARY 31,
1999 1998 1997 1996 1995 1995
-------- -------- -------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 19.62 $ 17.13 $ 16.36 $ 13.66 $ 11.03 $ 12.49
- ----------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.07 0.15 0.10 0.07 0.07 0.06
- ----------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 0.80 2.50 1.03 2.67 2.58 (1.49)
- ----------------------------------------------------------------------------------------------
Total from investment
operations 0.87 2.65 1.13 2.74 2.65 (1.43)
- ----------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.16) (0.08) (0.04) (0.02) (0.03)
- ----------------------------------------------------------------------------------------------
Distributions from net
realized gains -- -- (0.28) -- -- --
- ----------------------------------------------------------------------------------------------
Total distributions -- (0.16) (0.36) (0.04) (0.02) (0.03)
- ----------------------------------------------------------------------------------------------
Net asset value, end of
period $ 20.49 $ 19.62 $ 17.13 $ 16.36 $ 13.66 $ 11.03
==============================================================================================
Total return(a) 4.43% 15.49% 6.94% 20.05% 24.04% (11.48)%
==============================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $254,762 $240,314 $211,023 $165,738 $82,257 $55,019
==============================================================================================
Ratio of expenses to
average net assets 0.92%(b) 0.91% 0.93% 0.96% 1.15%(c) 1.27%(d)
==============================================================================================
Ratio of net investment
income (loss) to
average net assets 0.79%(b) 0.80% 0.68% 0.78% 0.75%(c) 0.60%(e)
==============================================================================================
Portfolio turnover rate 65% 76% 57% 59% 67% 64%
==============================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $240,852,908.
(c) Annualized.
(d) 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 1.28% and 0.59%.
AIM V.I. INTERNATIONAL EQUITY FUND
117
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
FUND PRODUCES ATTRACTIVE YIELD IN
CHANGING MARKET ENVIRONMENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID AIM V.I. MONEY MARKET FUND rate hikes in the near future. That -----------------------------------------
PERFORM DURING THE REPORTING PERIOD? sparked a "relief rally" in the bond
A. For the six months ended June 30, 1999, market, dropping the yield on the 30-year For much of the reporting period,
the fund's management team maintained a Treasury to 5.97% at the close of the
weighted average maturity (WAM) in the reporting period. investors and economists
18- to 32-day range. As of June 30, the
WAM stood at 21 days and the seven-day Q. WHAT HAPPENED IN U.S. worried that the strong U.S. economy
yield for the fund was 4.44%. MARKETS?
A. The Dow Jones Industrial Average would touch off inflation.
Q. WHAT WAS THE INTEREST-RATE STORY? reached two milestones during the first
A. For much of the reporting period, six months of 1999, closing above 10,000 -----------------------------------------
investors and economists worried that in March and beyond 11,000 in May.
the strong U.S. economy would touch However, these record-setting performances economists are concerned about Europe's
off inflation. U.S. Treasury securities masked a very narrow market during the economic outlook because of widely varying
performed poorly because of heightened first part of the reporting period. As growth rates among the euro-zone countries.
concerns that the Federal Reserve Board time went on, though, we began to see a And unlike other foreign markets, the
(the Fed) would raise interest rates to dramatic reversal of this trend. Markets performance of European markets during the
slow economic growth and combat inflation. that had been out of favor for the past past six months has been largely flat.
The primary impetus for these concerns was couple of years--small- and mid-sized
the dramatic and unexpected rise of consumer company stocks, cyclical and value Q. HOW WILL THE FUND RESPOND IF
prices in April--the 0.7% increase was the stocks--were reporting positive earnings INTEREST RATES RISE?
largest in more than eight years. that coaxed investors back. As a result, A. The fund's short WAM makes it
Uncertainty concerning the extent that the overall market in the United States capable of responding quickly to any
the Fed might raise interest rates eroded broadened. change in rates. It can take advantage of
Treasury prices in May and June, sending any reversal in interest rates to provide
their yields higher. The yield of the Q. HOW ABOUT FOREIGN MARKETS? competitive yield while maintaining a
benchmark 30-year U.S. Treasury bond A. The Fed's rate cuts in 1998 helped conservative position with respect to
soared from 5.09% at the beginning of halt the downward spiral that started interest-rate risk.
reporting period to 6.16% on June 24, in Asia and gave emerging markets--and
its highest level since 1997. the global financial system--a big scare An investment in the fund is neither
Speculation surrounding the Fed's last summer. Asian markets have rallied insured nor guaranteed by the U.S.
possible action did not end until during recent months, and investor government. There is no assurance that the
June 30, when the central bank raised the confidence in Latin America is returning. fund will be able to maintain a stable net
federal funds rate from 4.75% to 5%. Some economists also believe that asset value of $1.00 per share.
At the same time, the Fed announced that Japan's financial woes may have bottomed
it had shifted from a tightening to a out with markets there on the way
neutral bias, indicating it planned no back up.
further Elsewhere, the debut of Europe's new
common currency, the euro, at the
beginning of 1999 went smoothly. But
</TABLE>
118 AIM V.I. MONEY MARKET FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
PAR
(000) VALUE
<S> <C> <C>
COMMERCIAL PAPER - 40.56%(a)
ASSET-BACKED SECURITIES - COMMERCIAL LOANS/LEASES -
1.31%
Centric Capital Corp.
4.81%, 10/04/99 $ 1,000 $ 987,307
- ----------------------------------------------------------------------------
ASSET-BACKED SECURITIES - MULTI-PURPOSE - 22.14%
Bavaria TRR Corp.
5.12%, 07/27/99 2,000 1,992,604
- ----------------------------------------------------------------------------
Clipper Receivables Corp.
4.96%, 08/09/99 3,000 2,983,880
- ----------------------------------------------------------------------------
Edison Asset Securitization, LLC
4.85%, 07/30/99 2,000 1,992,186
- ----------------------------------------------------------------------------
4.81%, 09/09/99 1,155 1,144,198
- ----------------------------------------------------------------------------
Enterprise Funding Corp.
5.08%, 07/28/99 1,246 1,241,253
- ----------------------------------------------------------------------------
Falcon Asset Securitization Corp.
4.81%, 09/20/99 1,500 1,483,766
- ----------------------------------------------------------------------------
Park Avenue Receivables Corp.
5.05%, 08/12/99 2,916 2,898,820
- ----------------------------------------------------------------------------
Quincy Capital Corp.
4.93%, 08/03/99 3,000 2,986,443
- ----------------------------------------------------------------------------
16,723,150
- ----------------------------------------------------------------------------
ASSET-BACKED SECURITIES - TRADE RECEIVABLES - 3.97%
Asset Securitization Cooperative Corp.
5.10%, 03/10/00 3,000 2,998,622
- ----------------------------------------------------------------------------
BANKS - DOMESTIC - 1.31%
First Chicago Financial Corp.
4.85%, 09/13/99 1,000 990,031
- ----------------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 2.62%
Henkel Corp.
4.84%, 09/08/99 2,000 1,981,447
- ----------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.62%
Siemens Capital Corp.
4.78%, 09/30/99 2,000 1,975,834
- ----------------------------------------------------------------------------
FINANCE - MULTIPLE INDUSTRY - 2.62%
General Electric Capital Corp.
4.81%, 09/07/99 2,000 1,981,829
- ----------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 3.97%
Credit Suisse First Boston, Inc.
4.82%, 07/08/99 3,000 2,997,188
- ----------------------------------------------------------------------------
Total Commercial Paper 30,635,408
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
(000) VALUE
<S> <C> <C>
MASTER NOTE AGREEMENTS - 11.92%(b)
Citicorp Securities, Inc.
6.25%, 07/26/99(c) $ 3,000 $ 3,000,000
- ----------------------------------------------------------------------------
Merrill Lynch Mortgage Capital Inc.
6.28%, 08/16/99(d) 3,000 3,000,000
- ----------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.
6.10%, 11/22/99(e) 3,000 3,000,000
- ----------------------------------------------------------------------------
Total Master Note Agreements 9,000,000
- ----------------------------------------------------------------------------
Total Investments, excluding Repurchase Agreements 39,635,408
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 48.30%(f)
Bear, Stearns & Co., Inc.,
5.00%(g) 3,000 3,000,000
- ----------------------------------------------------------------------------
CIBC Oppenheimer Corp.
4.95%, 07/01/99(h) 18,000 18,000,000
- ----------------------------------------------------------------------------
Dean Witter Reynolds Inc.
4.85%, 07/01/99(i) 15,483 15,482,598
- ----------------------------------------------------------------------------
Total Repurchase Agreements 36,482,598
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.78% 76,118,006(j)
- ----------------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS - (0.78%) (592,443)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $75,525,563
- ----------------------------------------------------------------------------
</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) 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.
(c) 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 06/30/99.
(d) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon one business day notice to the issuer.
Interest rates on master notes are redetermined periodically. Rate shown
is the rate in effect on 06/30/99.
(e) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 3 days notice to the issuer. Interest rates
on master notes are redetermined periodically. Rate shown is the rate in
effect on 06/30/99.
(f) 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 is at least 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.
(g) Open repurchase agreement entered into 10/05/98. Either party may
terminate the agreement upon demand. Interest rates, par and collateral
are redetermined daily. Collateralized by U.S. Government obligations,
with an aggregate market value at 6/30/99 of $355,207,230.
(h) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$300,041,250. Collateralized by U.S. Government and Treasury obligations.
(i) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$100,013,472. Collateralized by U.S. Government and Treasury obligations.
(j) Also represents cost for federal income tax purposes.
AIM V.I. MONEY MARKET FUND
119
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value (cost
$39,635,408) $ 39,635,408
- --------------------------------------------------------------------------
Repurchase agreements (cost $36,482,598) 36,482,598
- --------------------------------------------------------------------------
Receivables for:
Capital stock sold 281,279
- --------------------------------------------------------------------------
Interest receivable 49,973
- --------------------------------------------------------------------------
Investment for deferred compensation plan 22,508
- --------------------------------------------------------------------------
Other assets 282
- --------------------------------------------------------------------------
Total assets 76,472,048
- --------------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 867,634
- --------------------------------------------------------------------------
Deferred compensation plan 22,508
- --------------------------------------------------------------------------
Accrued advisory fees 26,282
- --------------------------------------------------------------------------
Accrued directors' fees 2,640
- --------------------------------------------------------------------------
Accrued operating expenses 27,421
- --------------------------------------------------------------------------
Total liabilities 946,485
- --------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 75,525,563
==========================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- --------------------------------------------------------------------------
Outstanding 75,525,506
==========================================================================
Net asset value, offering and redemption price per share $ 1.00
==========================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $1,787,611
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 145,126
- --------------------------------------------------------------------------
Administrative services fees 23,409
- --------------------------------------------------------------------------
Custodian fees 12,436
- --------------------------------------------------------------------------
Directors' fees and expenses 4,471
- --------------------------------------------------------------------------
Other 24,891
- --------------------------------------------------------------------------
Total expenses 210,333
- --------------------------------------------------------------------------
Net investment income 1,577,278
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,577,278
==========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
120
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,577,278 $ 3,115,776
- ---------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,577,278 3,115,776
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment
income (1,577,278) (3,115,776)
- ---------------------------------------------------------------------------
Net increase from capital stock transactions 11,435,240 5,455,702
- ---------------------------------------------------------------------------
Net increase in net assets 11,435,240 5,455,702
- ---------------------------------------------------------------------------
NET ASSETS:
Beginning of year 64,090,323 58,634,621
- ---------------------------------------------------------------------------
End of year $75,525,563 $64,090,323
- ---------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $75,525,506 $64,090,266
- ---------------------------------------------------------------------------
Undistributed net realized gain from investment
securities 57 57
- ---------------------------------------------------------------------------
$75,525,563 $64,090,323
- ---------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 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 - The Fund's 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.
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.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six
AIM V.I. MONEY MARKET FUND
121
<PAGE>
months ended June 30, 1999, AIM was paid $23,409 for accounting and
administrative services rendered by AIM.
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, 1999, the Fund incurred legal fees of
$1,923 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 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1999 and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Sold 56,765,797 $56,765,797 100,181,770 $100,181,770
- -------------------------------------------------------------------------------
Issued as reinvestment of
dividends 1,577,278 1,577,278 3,115,776 3,115,776
- -------------------------------------------------------------------------------
Reacquired (46,907,835) (46,907,835) (97,841,844) (97,841,844)
- -------------------------------------------------------------------------------
11,435,240 $11,435,240 5,455,702 $ 5,455,702
===============================================================================
</TABLE>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the six months ended June 30, 1999, each of the years in the three-year
period ended December 31, 1998, the eleven months ended December 31, 1995 and
the year ended January 31, 1995.
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------------- JANUARY 31,
1999 1998 1997 1996 1995 1995
-------- ------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.02 0.05 0.05 0.05 0.05 0.04
- ------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
- ------------------------------------------------------------------------------------------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==========================================================================================
Total return 2.18% 5.06% 5.14% 4.97% 5.22% 3.98%
==========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $75,526 $64,090 $58,635 $63,529 $65,506 $31,017
==========================================================================================
Ratio of expenses to
average net assets 0.58%(a) 0.58% 0.59% 0.55% 0.53%(b) 0.63%(c)
==========================================================================================
Ratio of net investment
income to average net
assets 4.35%(a) 4.94% 5.01% 4.84% 5.40%(b) 4.14%(c)
==========================================================================================
</TABLE>
(a) Ratios are annualized and based on average daily net assets of
$73,164,059.
(b) Annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average daily net assets prior to fee waivers
and/or expense reimbursements were 0.70% and 4.07%, respectively.
AIM V.I. MONEY MARKET FUND
122
<PAGE>
<TABLE>
<CAPTION>
The Managers' Overview
AIM V.I. VALUE FUND OUTPACES
BENCHMARK INDEXES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Q. HOW DID AIM V.I. VALUE FUND PERFORM inflation. In May, the Fed hinted that it -----------------------------------------
DURING THE PAST SIX MONTHS? may raise interest rates, and at its June
A. The fund continued its stellar 30 meeting, it increased the federal We continued to invest in stocks of
performance, returning 14.44% for the funds rate from 4.75% to 5%, leaving the
six-month reporting period ended June 30, discount rate unchanged. At the same winning companies with strong current
1999. This performance beat the S&P time, the Fed announced that it had shifted
500, which rose 12.38%. The fund also from a tightening to a neutral bias, earnings trends and reasonable
outperformed its peers, represented by indicating that it planned no further rate
the 11.89% return of the Lipper Growth hikes in the near future. The announcement stock-price valuations.
Funds Index. sparked a "relief rally" in the markets.
The earnings landscape changed -----------------------------------------
Q. WHAT WERE THE MAJOR MARKET TRENDS drastically over the first six months
DURING THE REPORTING PERIOD? of 1999. For most of 1998, earnings returned to favor, as did small-cap and
A. Interest-rate changes and earnings reached a plateau for many companies, and mid-cap stocks.
surprises were the major factors driving the market favored large-company growth
the equity markets. In late 1998, the stocks. In the first quarter of 1999, Q. WHY DID AIM V.I. VALUE FUND
Federal Reserve Board (the Fed) lowered positive earnings broadened across a wide PERFORM SO WELL?
interest rates and spurred a market rally. spectrum of companies, surprising A. The fund remained diversified in a
That rally continued in 1999, and the Dow many analysts and forcing them to revise market in which diversification paid.
crossed the 11,000 threshold during the their estimates. Investors started We invested in stocks of winning companies
reporting period. In April, concerns about looking beyond large companies toward a with strong current earnings trends and
interest rates shook the markets when the much broader array of stocks. Value reasonable stock-price valuations. The fund
Consumer Price Index revealed an stocks--those considered to be benefited from its broad range of
unexpected increase in undervalued relative to the stock market investments in high-tech, insurance,
as a whole-- retail and other sectors. In the
PORTFOLIO COMPOSITION high-tech arena, the demand for wireless
telecommunications, cable TV and data
As of 6/30/99, based on total net assets transmission propelled some of the key
stocks in the fund's portfolio.
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
Q. WHAT STOCKS CONTRIBUTED MOST
1. MCI WorldCom, Inc. 4.60% 1. Computers TO THE FUND'S PERFORMANCE?
2. Nokia Oyj A.B.-Class A-ADR 4.46 (Software & Services) 6.12% A. The stocks that made the most
3. Pharmacia & Upjohn, Inc. 3.39 2. Communications Equipment 5.92 significant contributions to the fund's
4. American International 3. Telecommunications performance were Nokia, AIG, Tyco and
Group, Inc. 3.25 (Long Distance) 5.57 Dayton Hudson. Finland-based Nokia is one
5. Guidant Corp. 3.16 4. Broadcasting of the fastest-growing companies in the
6. Best Buy Company, Inc. 2.90 (Television, Radio & Cable) 5.28 wireless equipment and infrastructure
7. Tyco International Ltd. 2.89 5. Computers (Hardware) 5.17 industry. The world's largest
8. Dayton Hudson Corp. 2.85 6. Retail (General Merchandise) 4.95 cellular-phone maker has developed a
9. International Business 2.63 7. Financial (Diversified) 4.91 promising technology called WAP (wireless
Machines Corp. 8. Health Care application protocol) as a new standard
10. Microsoft Corp. 2.36 (Drugs-Major Pharmaceuticals) 3.77 for delivering Internet content to
9. Health Care (Medical Products cellular phones. During the six months
& Supplies) 3.61
10. Insurance (Multi-Line) 3.59
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
</TABLE>
AIM V.I. VALUE FUND 123
<PAGE>
<TABLE>
<S> <C> <C>
covered by this report, its stock price profit margins because of its favorable Q. WHAT IS YOUR OUTLOOK FOR THE REST OF THE
almost doubled. pricing policies. YEAR?
AIG is an insurance powerhouse. Its We like Tyco because it is a diversi- A. We expect the market to continue to be
acquisition of annuities company fied corporation with leading positions volatile and choppy throughout 1999. Inves-
SunAmerica took effect on January 1, 1999, in a wide array of businesses. The tors with a strong, well-defined discipline
giving AIG a foothold in the worldwide company has four divisions: health-care can benefit from this type of market because
retirement-savings business. AIG's stock products, fire and security systems, it gives them the opportunity buy when the
rose about 30% over the reporting period. flow-control technology (pipes, pipe market dips and to sell when it rises. We
Dayton Hudson's Target stores continue fittings and tubing) and electrical feel that the broadening of the market bodes
to perform well, offering more upscale components. The company has grown well for actively managed funds, and we be-
merchandise than competitors Wal-Mart and through acquisitions, buying nearly 100 lieve that AIM V.I. Value Fund's diversifi-
Kmart. Target has seen an increase in companies and growing its earnings 26% cation allows it to take advantage of the
same-store sales and higher over the past six years. wider opportunities available in the market.
RESULTS OF A $10,000 INVESTMENT --------------------------------------------
5/5/93 - 6/30/99
THE WORLD ACCORDING TO GARP
AVERAGE ANNUAL TOTAL RETURN GARP isn't just a character played by
As of 6/30/99 Robin Williams; it's an important investment
Inception (5/5/93) 22.63% discipline for AIM fund managers. GARP, or
5 Years 25.41% Growth at a Reasonable Price, combines AIM's
1 Year 27.94% growth and value investment strategies.
With GARP, we look for undervalued stocks
LIPPER that have what it takes to produce real
AIM V.I. GROWTH FUNDS S & P growth--earnings acceleration. These stocks
(In thousands) VALUE FUND INDEX 500 INDEX show
----------- ------------ --------- . Growth in earnings. We believe earnings
5/5/93 10,000 10,000 10,000 drive stock prices. Can the company sustain
6/30/93 10,690 10,417 10,254 earnings growth in the future?
6/30/94 11,592 10,906 10,783 . Momentum in earnings. Momentum helps us
6/30/95 15,833 13,691 13,591 determine when to buy and sell a stock.
6/30/96 16,387 14,904 15,835 . Value of earnings. Return and risk are
6/30/97 23,304 21,425 24,081 both important. It doesn't always pay to buy
6/30/98 27,424 25,380 29,029 a stock just because it's cheap. We look for
6/30/99 35,085 30,885 35,678 stocks that have a low price-to-earnings
ratio compared to their projected growth
rate.
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF Our GARP discipline has four basic rules:
AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL 1. Remain fully invested at all times.
PERFORMANCE SHOWN. 2. Focus on individual companies rather than
industries, sectors or countries.
The performance figures shown represent AIM V.I. Value Fund and are not 3. Strive to find the best earnings at
intended to reflect actual annuity values, and do not reflect charges at the attractive prices.
separate account level, which, if applied, would lower the performance 4. Maintain a strong sell discipline.
results. AIM V.I. Value Fund performance figures are historical and reflect Why GARP? We believe that stocks
reinvestment of all distributions and changes in net asset value. The fund's purchased at a discount relative to their
investment return and principal value will fluctuate, so an investor's potential for growth and the underlying
shares, when redeemed, may be worth more or less than their original cost. value of the company may realize greater
The Dow Jones Industrial Average (the Dow) is a price-weighted average rewards once earnings start to rise. This
of 30 actively traded primarily industrial stocks. The Standard & Poor's performance often comes from a change in
Composite Index of 500 stocks (the S&P 500) is a group of unmanaged management, a new product or some other
securities widely regarded by investors to be representative of the stock catalyst--factors we study carefully.
market in general. The Lipper Growth Funds Index represents an average of the
performance of the 30 largest growth funds. It is compiled by Lipper, Inc.,
an independent mutual-fund performance monitor. Returns for the S&P 500 and
the Lipper Index are for the period 4/30/93-6/30/99.
An investment cannot be made in any index listed. Unless otherwise
noted, index results include reinvested dividends.
</TABLE>
124 AIM V.I. VALUE FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 83.78%
AUTOMOBILES - 1.01%
Ford Motor Co. 317,100 $ 17,896,331
- ------------------------------------------------------------------
BANKS (MONEY CENTER) - 2.33%
Chase Manhattan Corp. (The) 475,000 41,146,875
- ------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 5.28%
Cablevision Systems Corp. - Class A(a) 45,000 3,150,000
- ------------------------------------------------------------------
Comcast Corp. - Class A 700,000 26,906,250
- ------------------------------------------------------------------
Cox Communications, Inc.(a)(b) 806,000 29,670,875
- ------------------------------------------------------------------
MediaOne Group, Inc.(a) 451,000 33,543,125
- ------------------------------------------------------------------
93,270,250
- ------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 1.09%
Monsanto Co. 490,000 19,324,375
- ------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.45%
Comverse Technology, Inc.(a) 80,000 6,040,000
- ------------------------------------------------------------------
Lucent Technologies, Inc. 130,000 8,766,875
- ------------------------------------------------------------------
Motorola, Inc. 114,900 10,886,775
- ------------------------------------------------------------------
25,693,650
- ------------------------------------------------------------------
COMPUTERS (HARDWARE) - 5.17%
Dell Computer Corp.(a) 110,000 4,070,000
- ------------------------------------------------------------------
Gateway, Inc.(a) 325,000 19,175,000
- ------------------------------------------------------------------
International Business Machines Corp. 360,000 46,530,000
- ------------------------------------------------------------------
Sun Microsystems, Inc.(a)(b) 312,000 21,489,000
- ------------------------------------------------------------------
91,264,000
- ------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.11%
Cisco Systems, Inc.(a)(b) 30,000 1,935,000
- ------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.85%
EMC Corp.(a)(b) 80,000 4,400,000
- ------------------------------------------------------------------
Lexmark International Group, Inc.(a) 162,000 10,702,125
- ------------------------------------------------------------------
15,102,125
- ------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 6.12%
BMC Software, Inc.(a) 500,000 27,000,000
- ------------------------------------------------------------------
Microsoft Corp.(a) 462,000 41,666,625
- ------------------------------------------------------------------
Unisys Corp.(a) 1,012,400 39,420,325
- ------------------------------------------------------------------
108,086,950
- ------------------------------------------------------------------
CONSUMER FINANCE - 0.47%
Providian Financial Corp. 88,000 8,228,000
- ------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.36%
Cardinal Health, Inc. 99,925 6,407,691
- ------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT - 2.01%
General Electric Co. 265,000 $ 29,945,000
- ------------------------------------------------------------------
Solectron Corp.(a) 84,500 5,635,094
- ------------------------------------------------------------------
35,580,094
- ------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.10%
Waters Corp.(a) 31,800 1,689,375
- ------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 0.16%
Texas Instruments, Inc. 19,400 2,813,000
- ------------------------------------------------------------------
ENTERTAINMENT - 2.17%
Time Warner, Inc. 521,200 38,308,200
- ------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.13%
Teradyne, Inc.(a) 32,400 2,324,700
- ------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 4.91%
American Express Co. 115,000 14,964,375
- ------------------------------------------------------------------
Associates First Capital Corp. - Class A 560,000 24,815,000
- ------------------------------------------------------------------
Citigroup, Inc. 147,750 7,018,125
- ------------------------------------------------------------------
Fannie Mae 248,000 16,957,000
- ------------------------------------------------------------------
Freddie Mac 395,000 22,910,000
- ------------------------------------------------------------------
86,664,500
- ------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 3.46%
Bristol-Myers Squibb Co. 450,000 31,696,875
- ------------------------------------------------------------------
Warner-Lambert Co. 426,000 29,553,750
- ------------------------------------------------------------------
61,250,625
- ------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 3.77%
Merck & Co., Inc. 90,000 6,660,000
- ------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 1,055,000 59,937,188
- ------------------------------------------------------------------
66,597,188
- ------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.61%
Guidant Corp.(b) 1,084,700 55,794,256
- ------------------------------------------------------------------
Medtronic, Inc. 103,000 8,021,125
- ------------------------------------------------------------------
63,815,381
- ------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 1.58%
Colgate-Palmolive Co. 284,000 28,045,000
- ------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 3.59%
American International Group, Inc.(b) 490,000 57,360,625
- ------------------------------------------------------------------
Hartford Financial Services Group, Inc.
(The) 103,900 6,058,669
- ------------------------------------------------------------------
63,419,294
- ------------------------------------------------------------------
INSURANCE (PROPERTY - CASUALTY) - 0.49%
Progressive Corp. 36,000 5,220,000
- ------------------------------------------------------------------
XL Capital Ltd. 60,000 3,390,000
- ------------------------------------------------------------------
8,610,000
- ------------------------------------------------------------------
</TABLE>
AIM V.I. VALUE FUND
125
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT BANKING/BROKERAGE - 0.74%
Morgan Stanley, Dean Witter, Discover & Co. 127,000 $ 13,017,500
- ----------------------------------------------------------------------
LODGING - HOTELS - 1.44%
Carnival Corp. 525,000 25,462,500
- ----------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 2.94%
Tyco International Ltd. 539,300 51,098,675
- ----------------------------------------------------------------------
United Technologies Corp. 11,900 853,081
- ----------------------------------------------------------------------
51,951,756
- ----------------------------------------------------------------------
PERSONAL CARE - 1.73%
Avon Products, Inc. 552,000 30,636,000
- ----------------------------------------------------------------------
PUBLISHING - 0.27%
Dow Jones & Co., Inc. 90,000 4,775,625
- ----------------------------------------------------------------------
RESTAURANTS - 1.85%
McDonald's Corp. 490,000 20,243,125
- ----------------------------------------------------------------------
Tricon Global Restaurants, Inc.(a) 230,000 12,448,750
- ----------------------------------------------------------------------
32,691,875
- ----------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 1.51%
Lowe's Companies, Inc. 470,000 26,643,125
- ----------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 2.90%
Best Buy Co., Inc.(a) 760,000 51,300,000
- ----------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 3.45%
Albertson's, Inc. 21,700 1,118,906
- ----------------------------------------------------------------------
Kroger Co.(a) 1,070,000 29,893,125
- ----------------------------------------------------------------------
Safeway, Inc.(a) 605,000 29,947,500
- ----------------------------------------------------------------------
60,959,531
- ----------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 4.95%
Costco Companies, Inc.(a) 234,000 18,734,625
- ----------------------------------------------------------------------
Dayton Hudson Corp. 773,900 50,303,500
- ----------------------------------------------------------------------
Wal-Mart Stores, Inc. 380,000 18,335,000
- ----------------------------------------------------------------------
87,373,125
- ----------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 0.02%
Gap, Inc. (The) 7,200 362,700
- ----------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.79%
Omnicom Group, Inc. 395,000 31,600,000
- ----------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 0.39%
SunGard Data Systems, Inc.(a) 200,000 6,900,000
- ----------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.51%
Equifax, Inc. 73,900 2,637,306
- ----------------------------------------------------------------------
First Data Corp. 490,500 24,003,844
- ----------------------------------------------------------------------
26,641,150
- ----------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.66%
Nextel Communications, Inc. - Class A(a) 584,300 29,324,556
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE) - 5.57%
AT & T Corp.(b) 307,000 $ 17,134,438
- ----------------------------------------------------------------------------
MCI WorldCom, Inc.(a)(b) 942,413 81,283,121
- ----------------------------------------------------------------------------
98,417,559
- ----------------------------------------------------------------------------
WASTE MANAGEMENT - 0.84%
Waste Management, Inc. 275,000 14,781,250
- ----------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $1,084,486,897) 1,480,310,856
- ----------------------------------------------------------------------------
FOREIGN STOCKS - 5.60%
FINLAND - 4.47%
Nokia Oyj A.B. - Class A (Communications
Equipment) 2,000 175,202
- ----------------------------------------------------------------------------
Nokia Oyj A.B.-ADR (Communications Equipment) 860,000 78,743,750
- ----------------------------------------------------------------------------
78,918,952
- ----------------------------------------------------------------------------
UNITED KINGDOM - 1.13%
Vodafone Airtouch PLC-ADR (Telecommunications -
Cellular/Wireless) 80,000 15,760,000
- ----------------------------------------------------------------------------
WPP Group PLC (Services - Advertising/Marketing) 491,400 4,155,600
- ----------------------------------------------------------------------------
19,915,600
- ----------------------------------------------------------------------------
Total Foreign Stocks
(Cost $45,499,184) 98,834,552
- ----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TIME DEPOSITS - 9.34%
CIBC Oppenheimer Corp.
5.50%, 07/01/99 $85,000,000 $ 85,000,000
- ----------------------------------------------------------------------------
SBC Warburg Dillon Read, Inc.,
5.75%, 07/01/99 80,000,000 80,000,000
- ----------------------------------------------------------------------------
Total Time Deposits
(Cost $165,000,000) 165,000,000
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.28%
BankOne Capital Markets, Inc.,
5.10%, 07/01/99 (Cost $22,632,014) 22,632,014 22,632,014
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.00% 1,766,777,422
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.00% 44,196
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $1,766,821,618
============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value is at least 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.
(d) Joint repurchase agreement entered into 06/30/99 with a maturing value of
$125,017,708. Collateralized by U.S. Government obligations.
Investment Abbreviations:
ADR - American Depositary Receipt
See Notes to Financial Statements.
AIM V.I. VALUE FUND
126
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,317,618,095) $1,766,777,422
- ------------------------------------------------------------------------
Receivables for:
Investments sold 12,102,819
- ------------------------------------------------------------------------
Capital stock sold 2,640,126
- ------------------------------------------------------------------------
Dividends and interest 450,940
- ------------------------------------------------------------------------
Forward currency contracts 2,031,444
- ------------------------------------------------------------------------
Forward currency contracts closed 83,807
- ------------------------------------------------------------------------
Investment for deferred compensation plan 27,330
- ------------------------------------------------------------------------
Other assets 11,196
- ------------------------------------------------------------------------
Total assets 1,784,125,084
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 14,603,161
- ------------------------------------------------------------------------
Fund shares reacquired 151,081
- ------------------------------------------------------------------------
Deferred compensation 27,330
- ------------------------------------------------------------------------
Options written (Premiums received $2,213,895) 1,379,594
- ------------------------------------------------------------------------
Accrued advisory fees 829,758
- ------------------------------------------------------------------------
Accrued directors' fees 3,500
- ------------------------------------------------------------------------
Accrued operating expenses 309,042
- ------------------------------------------------------------------------
Total liabilities 17,303,466
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,766,821,618
========================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ------------------------------------------------------------------------
Outstanding 58,819,385
- ------------------------------------------------------------------------
Net asset value, offering and redemption price per share $30.04
========================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $71,503 foreign withholding tax) $ 3,783,138
- -------------------------------------------------------------------------------
Interest 3,926,143
- -------------------------------------------------------------------------------
Total investment income 7,709,281
- -------------------------------------------------------------------------------
EXPENSES:
Advisory fees 4,377,401
- -------------------------------------------------------------------------------
Administrative services fees 710,092
- -------------------------------------------------------------------------------
Custodian fees 85,853
- -------------------------------------------------------------------------------
Directors' fees and expenses 8,494
- -------------------------------------------------------------------------------
Other 70,563
- -------------------------------------------------------------------------------
Total expenses 5,252,403
- -------------------------------------------------------------------------------
Net investment income 2,456,878
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FORWARD CURRENCY CONTRACTS AND OPTION
CONTRACTS:
Net realized gain from:
Investment securities 70,778,592
- -------------------------------------------------------------------------------
Foreign currencies 25,406
- -------------------------------------------------------------------------------
Forward currency contracts 4,108,353
- -------------------------------------------------------------------------------
Option contracts 888
- -------------------------------------------------------------------------------
74,913,239
- -------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 118,075,061
- -------------------------------------------------------------------------------
Foreign currencies (1,292)
- -------------------------------------------------------------------------------
Forward currency contracts 1,706,836
- -------------------------------------------------------------------------------
Option contracts 826,782
- -------------------------------------------------------------------------------
120,607,387
- -------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies, forward
currency contracts and option contracts 195,520,626
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $197,977,504
===============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. VALUE FUND
127
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 and the year ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,456,878 $ 6,184,686
- -------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, forward currency
contracts, futures and option contracts 74,913,239 30,475,488
- -------------------------------------------------------------------------------
Change in net unrealized appreciation of
investment securities, foreign currencies,
forward currency contracts, futures and option
contracts 120,607,387 230,113,292
- -------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 197,977,504 266,773,466
- -------------------------------------------------------------------------------
Distributions to shareholders from net
investment income -- (5,622,957)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (49,732,413)
- -------------------------------------------------------------------------------
Net increase from capital stock transactions 347,460,569 319,123,956
- -------------------------------------------------------------------------------
Net increase in net assets 545,438,073 530,542,052
- -------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 1,221,383,545 690,841,493
- -------------------------------------------------------------------------------
End of year $1,766,821,618 $1,221,383,545
===============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,202,963,289 $ 855,502,720
- -------------------------------------------------------------------------------
Undistributed net investment income 8,648,047 6,191,169
- -------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, forward
currency contracts, futures and option
contracts 103,187,240 28,274,001
- -------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies, forward
currency contracts, futures and option
contracts 452,023,042 331,415,655
- -------------------------------------------------------------------------------
$1,766,821,618 $1,221,383,545
===============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. VALUE FUND
128
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(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 sixteen 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 the Fund's investment advisor to be undervalued relative
to the investment advisor's appraisal of 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 closing bid price on that day. 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 closing bid price. 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 based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are either not readily available or are questionable are valued
at fair value as determined in good faith by or under the supervision of
the Company's officers in a manner specifically authorized by the Board of
Directors. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. Generally,
trading in foreign securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange. The values
of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events affecting the values of such securities and
such exchange rates may occur between the times at which they are
determined and the close of the New York Stock Exchange which will not be
reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value as determined in
good faith by or under the supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. 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. Such distributions are
declared and paid annually.
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. 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.
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. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign 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 foreign currency contract to attempt
to minimize the risk to the Fund from adverse
AIM V.I. VALUE FUND
129
<PAGE>
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 forward currency
contracts at June 30, 1999 were as follows:
<TABLE>
<CAPTION>
SETTLEMENT CONTRACT TO
CURRENCY ---------------------- UNREALIZED
DATE DELIVER RECEIVE VALUE APPRECIATION
---------- ------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
7/19/99 EUR 7,000,000 $ 7,460,170 $ 7,224,486 $235,684
7/20/99 EUR 33,850,000 36,238,808 34,938,165 1,300,643
7/21/99 EUR 6,000,000 6,369,120 6,193,344 175,776
7/22/99 EUR 8,500,000 9,011,330 8,774,561 236,769
7/20/99 GBP 1,000,000 1,613,800 1,576,440 37,360
8/17/99 GBP 1,100,000 1,779,651 1,734,439 45,212
-------------------------------------------------------------
$62,472,879 $60,441,435 $2,031,444
=============================================================
</TABLE>
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.
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 pay certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the six months ended June 30,
1999, AIM was paid $41,414 for accounting and administrative services rendered
by AIM.
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, 1999, the Fund incurred legal fees of
$12,358 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 a director's
fees, if so elected by such director, in mutual fund shares in accordance with
a deferred compensation plan.
NOTE 4 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $975,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
AIM V.I. VALUE FUND
130
<PAGE>
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, 1999 was
$629,720,326 and $340,754,303, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of June 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $459,463,096
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (14,453,490)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $445,009,606
===========================================================================
</TABLE>
Cost of investments for tax purposes is $1,321,767,816.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30,
1999 and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 15,084,473 $427,699,890 13,690,852 $321,377,374
- ------------------------------------------------------------------------------
Issued as reinvestment of
distributions -- -- 2,225,788 55,355,370
- ------------------------------------------------------------------------------
Reacquired (2,800,711) (80,239,321) (2,542,811) (57,608,788)
- ------------------------------------------------------------------------------
12,283,762 $347,460,569 13,373,829 $319,123,956
==============================================================================
</TABLE>
NOTE 7 - CALL OPTIONS CONTRACTS WRITTEN
Transactions in call option contracts written during the six months ended
June 30, 1999 are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION
CONTRACTS
--------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of period 200 $ 83,771
- -----------------------------------------------------------------------------
Written 4,200 2,705,005
- -----------------------------------------------------------------------------
Exercised (849) (573,993)
- -----------------------------------------------------------------------------
Expired (1) (888)
- -----------------------------------------------------------------------------
End of period 3,550 $2,213,895
- -----------------------------------------------------------------------------
</TABLE>
Open call option contracts written at June 30, 1999 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS JUNE 30, 1999 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
- ----- -------- ------ --------- -------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
American International
Group, Inc. Aug. 99 $ 130 250 $ 194,953 $ 35,935 $ 159,018
- -------------------------------------------------------------------------------------------
AT&T Corp. Oct. 99 60 365 167,712 104,938 62,774
- -------------------------------------------------------------------------------------------
Cisco Systems, Inc. Oct. 99 55 300 250,804 376,875 (126,071)
- -------------------------------------------------------------------------------------------
Cox Communications, Inc. Sep. 99 45 880 493,224 77,000 416,224
- -------------------------------------------------------------------------------------------
EMC Corp. Jul. 99 57.50 200 122,096 28,750 93,346
- -------------------------------------------------------------------------------------------
Guidant Corp. Jul. 99 75 180 103,524 2,250 101,274
- -------------------------------------------------------------------------------------------
MCI WorldCom, Inc. Sep. 99 90 109.5 689,093 554,344 134,749
- -------------------------------------------------------------------------------------------
Sun Microsystems, Inc. Jul. 99 62.50 280 192,489 199,500 (7,011)
- -------------------------------------------------------------------------------------------
$2,213,895 $1,379,592 $ 834,303
===========================================================================================
</TABLE>
AIM V.I. VALUE FUND
131
<PAGE>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during six months ended June 30, 1999, each of the years in the three-year
period ended December 31, 1998, the eleven months ended December 31, 1995 and
the year ended January 31, 1995.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
---------- ---------------------------------------- JANUARY 31,
1999(A) 1998 1997 1996 1995 1995
---------- ---------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 26.25 $ 20.83 $ 17.48 $ 16.11 $ 11.83 $ 12.17
- -------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.05 0.09 0.08 0.30 0.11 0.10
- -------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 3.74 6.59 4.05 2.09 4.18 (0.35)
- -------------------------------------------------------------------------------------------------
Total from investment
operations 3.79 6.68 4.13 2.39 4.29 (0.25)
- -------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.13) (0.19) (0.10) (0.01) (0.09)
- -------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (1.13) (0.59) (0.92) -- --
- -------------------------------------------------------------------------------------------------
Total distributions -- (1.26) (0.78) (1.02) (0.01) (0.09)
- -------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 30.04 $ 26.25 $ 20.83 $ 17.48 $ 16.11 $ 11.83
- -------------------------------------------------------------------------------------------------
Total return(b) 14.44% 32.41% 23.69% 15.02% 36.25% (2.03)%
- -------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of
period (000s omitted) $1,766,822 $1,221,384 $690,841 $369,735 $257,212 $109,257
- -------------------------------------------------------------------------------------------------
Ratio of expenses to
average net assets 0.73%(c) 0.66% 0.70% 0.73% 0.75%(d) 0.82%
- -------------------------------------------------------------------------------------------------
Ratio of net investment
income to average net
assets 0.34%(c) 0.68% 1.05% 2.00% 1.11%(d) 1.17%
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 100% 127% 129% 145% 143%
=================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $1,450,392,564.
(d) Annualized.
AIM V.I. VALUE FUND
132
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <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
Director INVESTMENT ADVISOR
ACE Limited; Carol F. Relihan
Formerly Director, President, and Senior Vice President and A I M Advisors, Inc.
Chief Executive Officer Secretary 11 Greenway Plaza
COMSAT Corporation Suite 100
Gary T. Crum Houston, TX 77046
Owen Daly II Senior Vice President
Director TRANSFER AGENT AND CUSTODIAN
Cortland Trust Inc. Dana R. Sutton
Vice President and State Street Bank and Trust Company
Edward K. Dunn Jr. Treasurer 225 Franklin Street
Chairman, Mercantile Mortgage Corp.; Boston, MA 02110
Formerly Vice Chairman and President, Robert G. Alley
Mercantile-Safe Deposit & Trust Co.; and Vice President COUNSEL TO THE FUNDS
President, Mercantile Bankshares
Stuart W. Coco Freedman, Levy, Kroll &
Jack Fields Vice President Simonds
Chief Executive Officer 1050 Conn. Avenue, N.W.
Texana Global Inc.; Melville B. Cox Washington, D.C. 20036
Formerly, Member of the Vice President
U.S. House of Representatives COUNSEL TO THE DIRECTORS
Karen Dunn Kelley
Carl Frischling Vice President Kramer, Levin, Naftalis & Frankel LLP
Partner 919 Third Avenue
Kramer, Levin, Naftalis & Frankel LLP Edgar M. Larsen New York, NY 10022
Vice President
Robert H. Graham DISTRIBUTOR
President and Chief Executive Officer Mary J. Benson
A I M Management Group Inc. Assistant Vice President A I M Distributors, Inc.
and Assistant Treasurer 11 Greenway Plaza
Prema Mathai-Davis Suite 100
Chief Executive Officer, YWCA of the Sheri Morris Houston, TX 77046
U.S.A.; Commissioner, New York City Dept. Assistant Vice President
for the Aging; and member of the Board of and Assistant Treasurer
Directors, Metropolitan Transportation
Authority of New York State Renee A. Friedli
Assistant Secretary
Lewis F. Pennock
Attorney P. Michelle Grace
Assistant Secretary
Louis S. Sklar
Executive Vice President Jeffery H. Kupor
Hines Interests Assistant Secretary
Limited Partnership
Nancy L. Martin
Assistant Secretary
Ofelia M. Mayo
Assistant Secretary
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
