<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. Blue Chip Fund................................................... 28
AIM V.I. Capital Appreciation Fund........................................ 37
AIM V.I. Capital Development Fund......................................... 48
AIM V.I. Dent Demographic Trends Fund..................................... 60
AIM V.I. Diversified Income Fund.......................................... 69
AIM V.I. Global Growth and Income Fund.................................... 83
AIM V.I. Global Utilities Fund............................................ 91
AIM V.I. Government Securities Fund....................................... 102
AIM V.I. Growth Fund...................................................... 111
AIM V.I. Growth and Income Fund........................................... 121
AIM V.I. High Yield Fund.................................................. 131
AIM V.I. International Equity Fund........................................ 142
AIM V.I. Money Market Fund................................................ 153
AIM V.I. Telecommunications and Technology Fund........................... 161
AIM V.I. Value Fund....................................................... 170
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM V.I. AGGRESSIVE GROWTH FUND
FUND CHALKS UP IMPRESSIVE GAINS
DESPITE A VOLATILE MARKET ENVIRONMENT, MID- earnings were particularly hard hit. appealing earnings prospects of small and
AND SMALL-CAP STOCKS POSTED POSITIVE Investors were also concerned that the mid-sized companies. We also took
RETURNS FOR THE REPORTING PERIOD. HOW DID Federal Reserve Board (the Fed) might advantage of the market sell-off in the
AIM V.I. AGGRESSIVE GROWTH FUND PERFORM? continue to raise interest rates to slow spring to buy the stocks of quality
The fund weathered a steep market torrid economic growth and to contain companies at reduced prices.
decline in April and May, recording an inflation. On May 16, the Fed, which
impressive 20.35% cumulative total return launched a monetary tightening policy in HOW WAS THE FUND POSITIONED AS OF JUNE 30?
for the six months ended June 30, 2000. June 1999, raised the key federal funds At the end of the reporting period, the
The fund significantly outperformed the rate--the rate banks charge one another fund had 174 equity holdings. Technology
Russell 2000 Index, the Russell 2500 Index for overnight loans--from 6.0% to 6.5%. stocks made up 47% of the portfolio. The
and the Lipper Small-Cap Growth Fund Interest-rate concerns before and after fund's significant exposure to the
Index, which recorded gains of 3.04%, the Fed's action prompted a sell-off that technology sector was a result of our
5.69% and 11.60%, respectively, over the affected nearly every stock-market sector stock-selection process, which is based on
same period. in April and May, causing markets to be earnings growth prospects, not
extremely volatile. macroeconomic predictions. We continued to
TOTAL RETURNS OF FUND VS. INDEXES Markets rallied in June as key economic find many companies with excellent
data, such as housing starts and retail earnings prospects in the technology
12/31/99-6/30/00 sales, indicated that the economy might be sector. Moreover, we generally do not buy
slowing, diminishing the possibility of the stocks of companies that have no
Lipper further Fed rate hikes. At its June 28 earnings. During the reporting period, we
AIM V.I. Small Cap meeting, the Fed left interest rates sold the stocks of tech companies whose
Aggressive Russell Russell Growth unchanged. The June rally enabled the economic fundamentals showed signs of
Growth 2000 2500 Fund Nasdaq, which lost 37.3% of its value deteriorating.
Fund Index Index Index between March 10 and May 23, to end the Industries within the technology sector
---------- ------- ------- --------- reporting period down only 2.54%. that were prominently represented in the
20.35% 3.04% 5.69% 11.60% While the Dow was down 8.44% for the portfolio included computer software and
six months ended June 30, the S&P 400 was services, communications equipment and
WHAT WERE THE KEY TRENDS IN THE STOCK up 9.06%, surpassing the gains of the semiconductors. These industries are
MARKET? Russell 2000 Index. Investors generally benefiting from the steady sales of
Markets soared, then declined before favored the stocks of companies with personal computers, the proliferation of
staging a comeback as the reporting period tangible earnings. In the small-cap stock new communications devices and the
drew to a close. During the first three universe, value stocks slightly expansion of the Internet.
months of 2000, several key market indexes outperformed growth stocks, while in the
rose to new heights, with the Dow setting large- and mid-cap stock categories, WHAT WERE A FEW OF THE TECH STOCKS IN THE
a record in January and the technology- growth stocks were the better performers. PORTFOLIO?
dominated Nasdaq following suit in March. . Microchip Technology, the fund's
High-flying technology stocks helped WAS THE FUND ABLE TO TAKE ADVANTAGE OF largest holding, makes low-cost embedded
propel these advances. Toward the end of THESE MARKET TRENDS? control products for the automotive,
March, however, investors became concerned Yes, because mid-, small- and micro-cap consumer, communications, industrial and
that tech stocks might be overvalued, stocks, which recorded positive gains for office automation markets.
sparking a sharp sell-off in this sector. the reporting period, made up 95% of the . Power-One, the fund's second-largest
In April, a federal court ruling against fund's stock portfolio. Investors holding, makes power supplies that
software giant Microsoft (not a fund gravitated to mid- and small-cap stocks include AC/DC converters and voltage
holding) helped perpetuate the sell-off. because of their attractive valuations power switchers used in communications,
The stocks of Internet companies with no compared to large-cap stocks and the medical and other electronic equipment.
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND 1
<PAGE>
<TABLE>
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<S> <C> <C>
PORTFOLIO COMPOSITION may refrain from further
interest-rate increases.
As of 6/30/00, based on total net assets Moreover, a presidential
election is looming in the fall.
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES To appear unbiased, the Fed has
--------------------------------------------- ------------------------------------------------ tended to leave interest rates
1. Microchip Technology Inc. 2.76% 1. Electronics (Semiconductors) 11.10% unchanged in the months
--------------------------------------------- ------------------------------------------------ immediately preceding a
2. Power-One, Inc. 2.68 2. Computers (Software & Services) 9.44 presidential election. If Fed
--------------------------------------------- ------------------------------------------------ policy ultimately succeeds in
3. Integrated Device Technology, Inc. 1.57 3. Communications Equipment 6.41 slowing economic growth to a
--------------------------------------------- ------------------------------------------------ more sustainable rate and in
4. Alpha Industries, Inc. 1.49 4. Oil & Gas (Drilling & Equipment) 6.26 keeping inflation at bay, it
--------------------------------------------- ------------------------------------------------ could prolong the current record
5. Polycom, Inc. 1.48 5. Electrical Equipment 5.09 economic expansion. Such an
--------------------------------------------- ------------------------------------------------ environment could help sustain
6. Actel Corp. 1.44 6. Equipment (Semiconductor) 4.58 corporate earnings growth and
--------------------------------------------- ------------------------------------------------ prove favorable for stocks,
7. Dallas Semiconductor Corp. 1.29 7. Computers (Peripherals) 4.25 particularly mid-cap issues
--------------------------------------------- ------------------------------------------------ because of their attractive
8. Robert Half International Inc. 1.28 8. Electronics (Component Distributors) 3.37 valuations.
--------------------------------------------- ------------------------------------------------ However, uncertainty over the
9. Credence Systems Corp. 1.25 9. Telecommunications (Cellular/Wireless) 2.44 Fed's actions and other factors
--------------------------------------------- ------------------------------------------------ could perpetuate the volatility
10. Kopin Corp. 1.17 10. Health Care (Hospital Management) 2.38 that has characterized markets
in recent months. In such an
The fund's portfolio composition is subject to change, and there is no assurance that the fund environment, investors would be
will continue to hold any particular security. well advised to take a long-term
perspective on their investment.
. Integrated Device Technology makes high- WHAT OTHER STOCKS PERFORMED WELL FOR THE
performance semiconductor products for FUND? FUND PERFORMANCE
computers and communications and . Robert Half International provides
networking devices. temporary and permanent staffing for AVERAGE ANNUAL TOTAL RETURNS
. Alpha Industries sells integrated accounting and financial-services firms.
circuits that help send and receive . National-Oilwell makes oil and natural- As of 6/30/00
radio frequencies. gas drilling equipment for offshore and ---------------------------------
. Polycom makes long-distance video-, land drilling rigs. Inception (5/1/98) 28.64%
audio- and data-conferencing products. ---------------------------------
. Actel makes integrated circuits WHAT IS YOUR OUTLOOK FOR THE NEAR TERM? 1 Year 61.18
communications, computer, electronics The near-term outlook for stocks could ---------------------------------
and other manufacturers can adapt to depend to a large extent on the Fed's
meet their product needs. ability to bring the economy to a "soft RESULTS OF A $10,000 INVESTMENT
landing." With increasing evidence that FUND VS. INDEXES
economic growth could be slowing, the Fed
------------------------------------------------------------------------------------------------ 5/1/98-6/30/00*
The performance figures shown here, which The unmanaged National Association of Lipper
re-present AIM V.I. Aggressive Growth Securities Dealers Automated Quotation Fund Small-Cap Russell
Fund, are intended to reflect actual System Composite Index (the Nasdaq) is a Class A Growth Fund 2000
annuity values, and they do not reflect market-value-weighted index comprising all Shares Index Index
charges at the separate-account level domestic and non-U.S.-based common stocks ------- ----------- -------
which (if applied) would lower them. AIM listed on the Nasdaq system. It includes $17,247 $16,198 $11,002
V.I. Aggressive Growth Fund's performance more than 5,000 companies, and it is often
figures are historical, and they reflect considered representative of the small and * Index performance is from
the reinvestment of distributions and medium-sized company stock universe. While 4/30/98-6/30/00
changes in net asset value. The fund's it includes many small and mid-sized The fund's performance figures
investment return and principal value will company stocks, large-capitalization are historical, and they reflect
fluctuate, so an investor's shares, when technology companies tend to dominate the changes in net asset value and
redeemed, may be worth more or less than index. the reinvestment of
their original cost. The unmanaged Russell 2000 Index distributions. The fund's
Had fees and expenses not been waived represents the performance of the stocks investment return and principal
during the reporting period, returns of small-capitalization companies. value will fluctuate, so an
would have been lower. The unamanged Russell 2500 Index investor's shares, when
Investing in small and mid-sized measures the performance of the 2,500 redeemed, may be worth more or
companies may involve greater risk and smallest companies in the Russell 3000 less than their original cost.
potential reward than investing in more Index, which measures the performance of Past performance cannot
established companies. the 3,000 largest U.S. companies based on guarantee comparable future
The unmanaged Dow Jones Industrial total market capitalization. results. MARKET VOLATILITY CAN
Average (the Dow) is a price-weighted The unmanaged Standard & Poor's MidCap SIGNIFICANTLY IMPACT SHORT-TERM
average of 30 actively traded primarily 400 Index (the S&P 400) comprises the PERFORMANCE. RESULTS OF AN
industrial stocks. common stocks of approximately 400 mid- INVESTMENT MADE TODAY MAY DIFFER
The unmanaged Lipper Small Cap Growth capitalization companies. SUBSTANTIALLY FROM THE
Fund Index represents an average of the An investment cannot be made in an HISTORICAL PERFORMANCE SHOWN.
performance of the 30 largest small- index. Unless otherwise indicated, index
capitalization growth funds tracked by results include reinvested dividends.
Lipper, Inc., an independent mutual fund
performance monitor.
</TABLE>
2 AIM V.I. AGGRESSIVE GROWTH FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY INTERESTS - 90.38%
AIR FREIGHT - 0.30%
Expeditors International of Washington, Inc. 2,700 $ 128,250
-------------------------------------------------------------------
AIRLINES - 0.21%
Ryanair Holdings PLC - ADR (Ireland)(a) 2,500 91,250
-------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.39%
Gentex Corp.(a) 6,600 165,825
-------------------------------------------------------------------
BANKS (REGIONAL) - 0.65%
Bank United Corp. - Class A 2,700 95,006
-------------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 6,600 136,950
-------------------------------------------------------------------
Trustmark Corp. 2,600 45,337
-------------------------------------------------------------------
277,293
-------------------------------------------------------------------
BEVERAGES (ALCOHOLIC) - 0.15%
Canandaigua Brands, Inc. - Class A(a) 1,300 65,569
-------------------------------------------------------------------
BIOTECHNOLOGY - 0.56%
Aurora Biosciences Corp.(a) 1,700 115,919
-------------------------------------------------------------------
PE Corp. - Celera Genomics Group(a) 1,300 121,550
-------------------------------------------------------------------
237,469
-------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.80%
Hispanic Broadcasting Corp.(a) 3,800 125,875
-------------------------------------------------------------------
Radio One, Inc. - Class A(a) 2,800 82,775
-------------------------------------------------------------------
Radio One, Inc. - Class D(a) 6,100 134,581
-------------------------------------------------------------------
343,231
-------------------------------------------------------------------
BUILDING MATERIALS - 0.20%
Simpson Manufacturing Co., Inc.(a) 1,800 86,062
-------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 1.01%
Cambrex Corp. 3,100 139,500
-------------------------------------------------------------------
OM Group, Inc. 6,600 290,400
-------------------------------------------------------------------
429,900
-------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 6.41%
Aspect Communications Corp.(a) 3,100 121,869
-------------------------------------------------------------------
BreezeCom Ltd. (Israel)(a) 2,000 87,000
-------------------------------------------------------------------
Comverse Technology, Inc.(a) 3,600 334,800
-------------------------------------------------------------------
Digital Lightwave, Inc.(a) 2,200 221,100
-------------------------------------------------------------------
Dycom Industries, Inc.(a) 4,100 188,600
-------------------------------------------------------------------
Finisar Corp.(a) 3,700 96,894
-------------------------------------------------------------------
MasTec, Inc.(a) 3,963 151,337
-------------------------------------------------------------------
Polycom, Inc.(a) 6,700 630,428
-------------------------------------------------------------------
Proxim, Inc.(a) 2,200 217,731
-------------------------------------------------------------------
REMEC, Inc.(a) 5,300 221,937
-------------------------------------------------------------------
Sawtek Inc.(a) 3,900 224,494
-------------------------------------------------------------------
Tollgrade Communications, Inc.(a) 1,800 238,500
-------------------------------------------------------------------
2,734,690
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (HARDWARE) - 1.27%
National Instruments Corp.(a) 11,250 $ 490,781
--------------------------------------------------------------
Visual Networks, Inc.(a) 1,800 51,300
--------------------------------------------------------------
542,081
--------------------------------------------------------------
COMPUTERS (NETWORKING) - 1.92%
MRV Communications, Inc.(a) 2,600 174,850
--------------------------------------------------------------
SonicWALL, Inc.(a) 4,500 396,281
--------------------------------------------------------------
VeriSign, Inc.(a) 500 88,250
--------------------------------------------------------------
Virata Corp.(a) 2,700 160,987
--------------------------------------------------------------
820,368
--------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 4.25%
Actel Corp.(a) 13,500 615,937
--------------------------------------------------------------
Cybex Computer Products Corp.(a) 2,250 96,750
--------------------------------------------------------------
QLogic Corp.(a) 6,600 436,012
--------------------------------------------------------------
SanDisk Corp.(a) 4,500 275,344
--------------------------------------------------------------
Silicon Storage Technology, Inc.(a) 4,400 388,575
--------------------------------------------------------------
1,812,618
--------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 9.44%
American Management Systems, Inc.(a) 8,100 265,908
--------------------------------------------------------------
Aspen Technology, Inc.(a) 9,000 346,500
--------------------------------------------------------------
Business Objects S.A. - ADR (France)(a) 2,600 229,125
--------------------------------------------------------------
Diamond Technology Partners Inc.(a) 2,600 228,800
--------------------------------------------------------------
Entrust Technologies Inc. 1,700 140,675
--------------------------------------------------------------
Gemstar International Group Ltd.(a) 2,700 165,923
--------------------------------------------------------------
Inforte Corp.(a) 1,800 64,800
--------------------------------------------------------------
ISS Group, Inc.(a) 1,300 128,355
--------------------------------------------------------------
Jack Henry & Associates 8,800 441,100
--------------------------------------------------------------
Macromedia, Inc.(a) 2,000 193,375
--------------------------------------------------------------
Macrovision Corp.(a) 4,500 287,648
--------------------------------------------------------------
Mercator Software, Inc.(a) 1,200 82,500
--------------------------------------------------------------
Mercury Interactive Corp.(a) 1,800 174,150
--------------------------------------------------------------
Micromuse Inc.(a) 900 148,936
--------------------------------------------------------------
NetIQ Corp.(a) 1,241 73,995
--------------------------------------------------------------
Peregrine Systems, Inc.(a) 3,500 121,406
--------------------------------------------------------------
Rational Software Corp.(a) 1,700 157,994
--------------------------------------------------------------
Secure Computing Corp.(a) 9,000 169,312
--------------------------------------------------------------
Symantec Corp.(a) 6,600 355,987
--------------------------------------------------------------
Verity, Inc.(a) 6,600 250,800
--------------------------------------------------------------
4,027,289
--------------------------------------------------------------
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND 3
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.18%
Fossil, Inc.(a) 3,950 $ 76,778
--------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.43%
Patterson Dental Co.(a) 3,600 183,600
--------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 5.09%
Black Box Corp.(a) 2,600 205,847
--------------------------------------------------------------------
Cohu, Inc. 2,200 59,331
--------------------------------------------------------------------
CommScope, Inc.(a) 9,000 369,000
--------------------------------------------------------------------
Cree, Inc.(a) 1,800 240,300
--------------------------------------------------------------------
Molex, Inc. - Class A 8,750 306,250
--------------------------------------------------------------------
Plexus Corp.(a) 3,100 350,300
--------------------------------------------------------------------
Sanmina Corp.(a) 3,500 299,250
--------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 8,950 339,541
--------------------------------------------------------------------
2,169,819
--------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 3.37%
C-COR.net Corp.(a) 10,900 294,300
--------------------------------------------------------------------
Power-One, Inc.(a) 10,050 1,145,072
--------------------------------------------------------------------
1,439,372
--------------------------------------------------------------------
ELECTRONICS (DEFENSE) - 1.02%
Anaren Microwave, Inc.(a) 3,300 433,073
--------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 2.29%
Alpha Industries, Inc.(a) 14,400 634,500
--------------------------------------------------------------------
PerkinElmer, Inc. 1,700 112,412
--------------------------------------------------------------------
Tektronix, Inc. 3,100 229,400
--------------------------------------------------------------------
976,312
--------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 11.10%
Amkor Technology, Inc.(a) 4,400 155,375
--------------------------------------------------------------------
ANADIGICS, Inc.(a) 6,600 224,812
--------------------------------------------------------------------
ATMI, Inc.(a) 2,200 102,300
--------------------------------------------------------------------
Dallas Semiconductor Corp. 13,500 550,125
--------------------------------------------------------------------
Fairchild Semiconductor Corp. - Class A(a) 4,400 178,200
--------------------------------------------------------------------
GlobeSpan, Inc.(a) 1,300 158,702
--------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 11,200 670,600
--------------------------------------------------------------------
Intersil Holding Corp.(a) 4,500 243,281
--------------------------------------------------------------------
Micrel, Inc.(a) 5,400 234,562
--------------------------------------------------------------------
Microchip Technology Inc.(a) 20,200 1,176,966
--------------------------------------------------------------------
SDL, Inc.(a) 900 256,669
--------------------------------------------------------------------
Semtech Corp.(a) 3,700 282,992
--------------------------------------------------------------------
TranSwitch Corp.(a) 2,650 204,547
--------------------------------------------------------------------
Zoran Corp.(a) 4,500 296,719
--------------------------------------------------------------------
4,735,850
--------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
EQUIPMENT (SEMICONDUCTOR) - 4.58%
Advanced Energy Industries, Inc.(a) 4,500 $ 265,219
-------------------------------------------------------------------------
Asyst Technologies, Inc.(a) 6,500 222,625
-------------------------------------------------------------------------
Brooks Automation, Inc.(a) 3,600 230,175
-------------------------------------------------------------------------
Credence Systems Corp.(a) 9,700 535,319
-------------------------------------------------------------------------
Cymer, Inc.(a) 5,000 238,750
-------------------------------------------------------------------------
EMCORE Corp.(a) 1,500 180,000
-------------------------------------------------------------------------
Varian Semiconductor Equipment Associates, Inc.(a) 4,500 282,656
-------------------------------------------------------------------------
1,954,744
-------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.44%
SEI Investments Co. 4,700 187,119
-------------------------------------------------------------------------
FOODS - 0.56%
Hain Celestial Group, Inc.(a) 6,500 238,469
-------------------------------------------------------------------------
FOOTWEAR - 0.27%
Steven Madden, Ltd.(a) 3,800 24,937
-------------------------------------------------------------------------
Vans, Inc.(a) 6,300 92,137
-------------------------------------------------------------------------
117,074
-------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.26%
Station Casinos, Inc.(a) 4,500 112,500
-------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.68%
Alpharma Inc. - Class A 6,600 410,850
-------------------------------------------------------------------------
Biovail Corp. (Canada)(a) 2,000 110,875
-------------------------------------------------------------------------
Jones Pharma Inc. 1,700 67,894
-------------------------------------------------------------------------
Medicis Pharmaceutical Corp. - Class A(a) 2,200 125,400
-------------------------------------------------------------------------
715,019
-------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 2.38%
Health Management Associates, Inc. - Class A(a) 21,900 286,069
-------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 8,600 191,350
-------------------------------------------------------------------------
Province Healthcare Co.(a) 10,800 390,150
-------------------------------------------------------------------------
Triad Hospitals, Inc.(a) 6,100 147,544
-------------------------------------------------------------------------
1,015,113
-------------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.41%
First Health Group Corp.(a) 5,300 173,906
-------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.42%
Biosite Diagnostics Inc.(a) 3,900 187,931
-------------------------------------------------------------------------
Novoste Corp.(a) 2,100 128,100
-------------------------------------------------------------------------
PolyMedica Corp.(a) 2,600 112,450
-------------------------------------------------------------------------
Zoll Medical Corp.(a) 3,600 176,400
-------------------------------------------------------------------------
604,881
-------------------------------------------------------------------------
</TABLE>
4 AIM V.I. AGGRESSIVE GROWTH FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES) - 0.82%
Techne Corp.(a) 2,700 $ 351,000
-------------------------------------------------------------------
INSURANCE (PROPERTY - CASUALTY) - 0.24%
HCC Insurance Holdings, Inc. 5,400 101,925
-------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.57%
Affiliated Managers Group, Inc.(a) 2,500 113,750
-------------------------------------------------------------------
Eaton Vance Corp. 2,800 129,500
-------------------------------------------------------------------
243,250
-------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.16%
International Speedway Corp. - Class A 600 24,574
-------------------------------------------------------------------
Meade Instruments Corp.(a) 1,800 45,225
-------------------------------------------------------------------
69,799
-------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 1.39%
Kopin Corp.(a) 7,200 498,600
-------------------------------------------------------------------
Spartech Corp. 3,500 94,500
-------------------------------------------------------------------
593,100
-------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.50%
Dril-Quip, Inc.(a) 2,700 126,225
-------------------------------------------------------------------
Insituform Technologies, Inc. - Class A(a) 3,200 86,800
-------------------------------------------------------------------
213,025
-------------------------------------------------------------------
METAL FABRICATORS - 0.44%
Shaw Group Inc. (The)(a) 4,000 188,500
-------------------------------------------------------------------
NATURAL GAS - 0.47%
Kinder Morgan, Inc. 5,800 200,462
-------------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.18%
Miami Computer Supply Corp.(a) 2,900 75,037
-------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 6.26%
Cal Dive International, Inc.(a) 4,400 238,425
-------------------------------------------------------------------
Cooper Cameron Corp.(a) 4,500 297,000
-------------------------------------------------------------------
Core Laboratories N.V. (Netherlands)(a) 11,200 324,800
-------------------------------------------------------------------
Hanover Compressor Co.(a) 6,900 262,200
-------------------------------------------------------------------
Marine Drilling Cos., Inc.(a) 10,900 305,200
-------------------------------------------------------------------
Maverick Tube Corp.(a) 6,700 195,138
-------------------------------------------------------------------
National-Oilwell, Inc.(a) 13,500 443,813
-------------------------------------------------------------------
Patterson Energy, Inc.(a) 13,500 384,750
-------------------------------------------------------------------
Pride International, Inc.(a) 8,800 217,800
-------------------------------------------------------------------
2,669,126
-------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.81%
Evergreen Resources, Inc.(a) 3,200 94,800
-------------------------------------------------------------------
Newfield Exploration Co.(a) 4,400 172,150
-------------------------------------------------------------------
Stone Energy Corp.(a) 1,300 77,675
-------------------------------------------------------------------
344,625
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PHOTOGRAPHY/IMAGING - 0.38%
Pinnacle Systems, Inc.(a) 7,200 $ 161,888
--------------------------------------------------------------------
RESTAURANTS - 1.11%
CEC Entertainment Inc.(a) 7,050 180,656
--------------------------------------------------------------------
Jack in the Box, Inc.(a) 6,600 162,525
--------------------------------------------------------------------
Sonic Corp.(a) 4,400 129,250
--------------------------------------------------------------------
472,431
--------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.42%
Fastenal Co. 3,500 177,188
--------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 0.22%
Tweeter Home Entertainment Group, Inc.(a) 3,100 94,163
--------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 0.86%
99 Cents Only Stores(a) 2,166 86,369
--------------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 7,050 278,916
--------------------------------------------------------------------
365,285
--------------------------------------------------------------------
RETAIL (SPECIALTY) - 1.89%
Genesco, Inc.(a) 9,000 144,563
--------------------------------------------------------------------
Linens 'n Things, Inc.(a) 7,400 200,725
--------------------------------------------------------------------
Michaels Stores, Inc.(a) 6,600 302,363
--------------------------------------------------------------------
Zale Corp.(a) 4,400 160,600
--------------------------------------------------------------------
808,251
--------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 1.91%
Children's Place Retail Stores, Inc. (The)(a) 4,100 84,050
--------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 15,337 342,207
--------------------------------------------------------------------
Talbots, Inc. (The) 3,000 164,813
--------------------------------------------------------------------
Too Inc.(a) 8,800 223,850
--------------------------------------------------------------------
814,920
--------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.48%
Forrester Research, Inc.(a) 2,800 203,875
--------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.37%
Copart, Inc.(a) 5,100 81,600
--------------------------------------------------------------------
Iron Mountain Inc.(a) 2,200 74,800
--------------------------------------------------------------------
156,400
--------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 1.00%
Keane, Inc.(a) 13,500 291,938
--------------------------------------------------------------------
SunGard Data Systems Inc.(a) 4,400 136,400
--------------------------------------------------------------------
428,338
--------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.35%
Concord EFS, Inc.(a) 6,550 170,300
--------------------------------------------------------------------
Fiserv, Inc.(a) 4,400 190,300
--------------------------------------------------------------------
National Computer Systems, Inc. 4,400 216,700
--------------------------------------------------------------------
577,300
--------------------------------------------------------------------
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND 5
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (EMPLOYMENT) - 2.31%
Hall, Kinion & Associates, Inc.(a) 9,000 $ 299,813
---------------------------------------------------------------------------
On Assignment, Inc.(a) 4,500 137,250
---------------------------------------------------------------------------
Robert Half International Inc.(a) 19,200 547,200
---------------------------------------------------------------------------
984,263
---------------------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL) - 0.25%
Tetra Tech, Inc.(a) 4,700 107,513
---------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 2.44%
AirGate PCS, Inc.(a) 4,400 231,275
---------------------------------------------------------------------------
Powertel, Inc.(a) 1,700 120,594
---------------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 6,700 294,800
---------------------------------------------------------------------------
Rural Cellular Corp. - Class A(a) 1,800 137,813
---------------------------------------------------------------------------
SBA Communications Corp.(a) 2,700 140,231
---------------------------------------------------------------------------
Western Wireless Corp. - Class A(a) 2,100 114,450
---------------------------------------------------------------------------
1,039,163
---------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.51%
Guess ?, Inc.(a) 6,300 88,200
---------------------------------------------------------------------------
Quicksilver, Inc.(a) 8,450 131,503
---------------------------------------------------------------------------
219,703
---------------------------------------------------------------------------
Total Common Stocks & Other Equity Interests (Cost
$30,261,307) 38,556,054
---------------------------------------------------------------------------
MONEY MARKET FUNDS - 10.56%
STIC Liquid Assets Portfolio(b) 2,252,598 2,252,598
---------------------------------------------------------------------------
STIC Prime Portfolio(b) 2,252,598 2,252,598
---------------------------------------------------------------------------
Total Money Market Funds (Cost $4,505,196) 4,505,196
---------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.94%
(Cost $34,766,503) 43,061,250
---------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (0.94%) (400,412)
---------------------------------------------------------------------------
NET ASSETS - 100.00% $42,660,838
===========================================================================
</TABLE>
INVESTMENT ABBREVIATIONS:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
6 AIM V.I. AGGRESSIVE GROWTH FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $34,766,503) $43,061,250
---------------------------------------------------------------------
Receivables for:
Investments sold 33,233
---------------------------------------------------------------------
Fund shares sold 342,067
---------------------------------------------------------------------
Dividends 18,419
---------------------------------------------------------------------
Investment for deferred compensation plan 9,918
---------------------------------------------------------------------
Total assets 43,464,887
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 746,198
---------------------------------------------------------------------
Deferred compensation plan 9,918
---------------------------------------------------------------------
Accrued advisory fees 5,242
---------------------------------------------------------------------
Accrued administrative services fees 21,829
---------------------------------------------------------------------
Accrued trustees' fees 1,562
---------------------------------------------------------------------
Accrued operating expenses 19,300
---------------------------------------------------------------------
Total liabilities 804,049
---------------------------------------------------------------------
Net assets applicable to shares outstanding $42,660,838
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 2,487,402
=====================================================================
Net asset value, offering and redemption price per share $ 17.15
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 78,585
---------------------------------------------------------------------------
EXPENSES:
Advisory fees 115,284
---------------------------------------------------------------------------
Administrative services fee 40,185
---------------------------------------------------------------------------
Custodian fees 26,347
---------------------------------------------------------------------------
Trustee's fees 3,448
---------------------------------------------------------------------------
Other 20,234
---------------------------------------------------------------------------
Total expenses 205,498
---------------------------------------------------------------------------
Less: Fees waived (38,652)
---------------------------------------------------------------------------
Expenses paid indirectly (84)
---------------------------------------------------------------------------
Net expenses 166,762
---------------------------------------------------------------------------
Net investment income (loss) (88,177)
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT SECURITIES
Net realized gain from investment securities 1,131,823
---------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities 3,102,907
---------------------------------------------------------------------------
Net gain on investment securities 4,234,730
---------------------------------------------------------------------------
Net increase in net assets resulting from operations $4,146,553
===========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND 7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (88,177) $ (34,296)
------------------------------------------------------------------------------
Net realized gain (loss) from investment securities 1,131,823 (13,688)
------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 3,102,907 4,503,331
------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 4,146,553 4,455,347
------------------------------------------------------------------------------
Share transactions-net 21,188,441 8,471,394
------------------------------------------------------------------------------
Net increase in net assets 25,334,994 12,926,741
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 17,325,844 4,399,103
------------------------------------------------------------------------------
End of period $42,660,838 $17,325,844
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $33,740,357 $12,551,916
------------------------------------------------------------------------------
Undistributed net investment income (loss) (96,865) (8,688)
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities 722,598 (409,225)
------------------------------------------------------------------------------
Unrealized appreciation of investment securities 8,294,748 5,191,841
------------------------------------------------------------------------------
$42,660,838 $17,325,844
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Aggressive Growth Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve long-term growth of capital.
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 preparation 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 as of the close of
the customary trading session 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 as of
the close of the customary trading session 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 Trust's
8 AIM V.I. AGGRESSIVE GROWTH FUND
<PAGE>
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. 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 NYSE. 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
customary trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $398,629 which may be carried forward to offset future
taxable gains, if any, which expires in varying increments, if not
previously utilized, in the year 2007.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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, 2000, AIM waived fees of $38,652.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $40,185 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,733
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $84 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $84.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $31,416,209 and $12,429,461, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $9,117,112
-------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (824,731)
-------------------------------------------------------------------------
Net unrealized appreciation of investment securities $8,292,381
=========================================================================
</TABLE>
Cost of investments for tax purposes is $34,768,869.
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold 1,337,754 $22,321,270 1,128,485 $12,082,374
-----------------------------------------------------------
Reacquired (65,882) (1,132,829) (359,576) (3,610,980)
-----------------------------------------------------------
1,271,872 $21,188,441 768,909 $ 8,471,394
===========================================================
</TABLE>
AIM V.I. AGGRESSIVE GROWTH FUND 9
<PAGE>
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
MAY 1, 1998
(DATE
OPERATIONS
SIX MONTHS ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2000 1999(A) 1998
---------------- ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 14.25 $ 9.85 $10.00
--------------------------------------------------------------------------------
Income from investment
operations:
Net investment income (loss) (0.03) (0.04) 0.04
--------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized and
unrealized) 2.93 4.44 (0.14)
--------------------------------------------------------------------------------
Total from investment
operations 2.90 4.40 (0.10)
--------------------------------------------------------------------------------
Less dividends from net
investment income -- -- (0.05)
--------------------------------------------------------------------------------
Net asset value, end of period $ 17.15 $ 14.25 $ 9.85
================================================================================
Total return(b) 20.35% 44.67% 0.94%
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $42,661 $17,326 $4,399
================================================================================
Ratio of expenses to average
net assets:
With fee waivers 1.16%(c) 1.19%(d) 1.16%(d)
--------------------------------------------------------------------------------
Without fee waivers 1.42%(c) 2.42%(d) 4.62%(d)
================================================================================
Ratio of net investment income
(loss) to average net assets (0.61)%(c) (0.41)%(d) 0.96%(d)
================================================================================
Portfolio turnover rate 46% 89% 30%
================================================================================
</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 $29,046,452.
(d) Annualized.
10 AIM V.I. AGGRESSIVE GROWTH FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Aggressive Growth Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 1,047,996 50,339 196,496
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 987,014 48,249 259,568
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 1,039,481 47,109 208,241
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 1,115,904 48,520 130,407
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 1,122,325 28,685 143,821
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 1,110,959 39,815 144,057
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 1,093,453 29,422 171,956
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 1,109,990 29,970 154,871
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 1,129,624 31,922 133,285
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 1,038,484 47,897 208,450
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 1,156,951 22,095 115,785
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. AGGRESSIVE GROWTH FUND 11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. BALANCED FUND
FUND SAILS OVER ROUGH MARKETS
HOW DID THE FUND PERFORM FOR THE FIRST funds rate to 6.50%, its highest level in PORTFOLIO ALLOCATION
HALF OF 2000? nine years. This marks the sixth time the
Despite the turbulent environment that Fed has raised the rate since it began its As of 6/30/00
plagued both stocks and bonds, the fund tightening drive in June 1999. As new
succeeded in beating the broad stock bonds are issued at higher interest rates, [PIE CHART APPEARS HERE]
market, as represented by the S&P 500. the value of existing bonds declines,
That index dropped into the negative cutting into portfolio returns. This year COMMON STOCKS CORPORATE
numbers, ending the period with a return the situation was worsened by a very (DOMESTIC & INTERNATIONAL) BONDS
of -0.43%. The fund, in contrast, produced unusual event: The flourishing economy 46% 29%
cumulative total returns of 1.84%. This is generated the first federal budget surplus
impressive performance for a fund that in many years. Capitalizing on this rare CONVERTIBLE GOVERNMENT
keeps an average of 40% of its assets in opportunity, the Treasury Department PREFERRED BONDS
fixed-income securities. initiated a program of buying back 30-year STOCKS 12%
Treasury bonds to reduce the federal debt. 1%
WHAT FACTORS CREATED SUCH A VOLATILE This created a shortage of long-term
PERIOD IN THE MARKETS? bonds, driving their prices up and their CASH & CASH CONVERTIBLE
In the stock market, a serious correction yields below those of shorter-term EQUIVALENTS BONDS
occurred in March and April. Though instruments, a condition called an 9% 3%
definitely affected, the fund avoided the inverted yield curve.
worst of the carnage, as it was not have been prospering. In communications
heavily involved with the parts of the HOW DID THE FUND DEAL WITH THE TURBULENCE? and technology, many stocks experienced
technology sector that bore the brunt of The fund focused on its proven strategy of declines in price though their earnings
the impact. The fund's technology holdings holding 60% stocks and 40% bonds. Its remained very good. We regarded this as a
had been selected on the basis of good broadly diversified portfolio helped buying opportunity and added to our
earnings, and while some of them moderate the effects of market turbulence. holdings in those areas.
experienced drops in value at the time, In addition, the flexibility to invest in
their earnings continued to be strong, and stocks across all market-capitalization WHAT STOCKS PERFORMED ESPECIALLY WELL FOR
their values have already begun to bounce ranges has bolstered stability, as small- THE FUND?
back. and mid-cap stocks have been performing Many of our holdings have done well.
For bonds, the difficulty was rising better than large-caps since the tech A few examples:
interest rates. In May, the Federal shock. . SDL designs and produces semi-conductor
Reserve Board (the Fed) raised the federal The fixed-income securities in the lasers and fiber-optic networks used in
portfolio are higher-quality bonds (an the telecommunications, cable-
FUND PERFORMANCE average quality rating of A) with television and satellite-communication
intermediate maturities, so they are less markets.
As of 6/30/00 volatile. In the latter half of the . EMC produces information-storage
reporting period, the fund reduced the infrastructure used by some very large
AVERAGE ANNUAL TOTAL RETURNS average duration of its bonds to a companies to manage the accessibility
relatively short 5.217 years in response and movement of their data. Major
------------------------------------------ to the Fed's continuing rate hikes, appeals of their products are real-time
Inception (5/1/98) 15.78% especially the half-percent increase in access and dependable network-service
------------------------------------------ May. Shortening the duration reduces a availability, as well as the flexibility
1 Year 15.00 portfolio's sensitivity to interest-rate to adapt to explosive growth.
------------------------------------------ swings. . In June, after the completion of its
The fund moved more heavily into the merger with Warner-Lambert, Pfizer
Past performance cannot guarantee broadcasting and telephone sectors while became the world's second-largest
comparable future results. MARKET maintaining significant exposure to drugmaker. Its prescription drugs
VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT- computer software and services firms. include such market-leading names as
TERM PERFORMANCE. RESULTS OF AN INVESTMENT Producers of semiconductors and other arthritis pain medicine Celebrex and
MADE TODAY MAY DIFFER SUBSTANTIALLY FROM electronics have continued to be important
THE HISTORICAL PERFORMANCE SHOWN. holdings, as have pharmaceuticals, which
</TABLE>
12 AIM V.I. BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
cholesterol-lowering Lipitor. Its consumer remaining well diversified among The performance figures shown here, which
brands are even better known, and include industries and market-capitalization represent AIM V.I. Balanced Fund, are not
Zantac 75, Visine, Sudafed, Benadryl, ranges. This is the mix we have found most intended to reflect actual annuity values,
Dentyne, Certs, Desitin, Listerine, effective for achieving an optimal and they do not reflect changes at the
Schick, Efferdent and Ben Gay. risk/return balance. Because we believe separate-account level which (if applied)
. Cisco controls more than three-quarters that technology is still the sector that would lower them. AIM V.I. Balanced Fund's
of the global market for products that holds the greatest promise for solid and performance figures are historical, and
link networks and power the Internet, ongoing growth, we anticipate that they reflect the reinvestment of
including routers and switches. Indeed, technology stocks will continue to be an distributions and changes in net asset
Cisco has a 60% share of the router important part of the portfolio. We select value. The fund's investment return and
market, which is growing 40% annually. only firms with solid earnings and strong principal value will fluctuate, so an
It also makes dial-up access servers and growth prospects. investor's shares, when redeemed, may be
network-management software. Last year, If, as it appears, the economy has worth more or less than their original
the company's annual revenues increased begun to moderate its pace to a cost.
by 43.7%, and its net income increased sustainable level, then we would The unmanaged Standard & Poor's
by 55.2%. anticipate that the Fed would not raise Composite of 500 Stocks (the S&P 500)
the federal funds rate further. If it does represents the performance of the stock
WHAT IS YOUR OUTLOOK FOR THE COMING SIX not, the outlook would be favorable for a market.
MONTHS? stabilization of interest rates, which An investment cannot be made in an
We will continue targeting an investment would benefit the bond portfolio. index. Index results include reinvested
blend of 60% stocks and 40% bonds, ------------------------------------ dividends.
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
PERCENTAGE OF
TOP 10 EQUITY HOLDINGS TOP 10 FIXED-INCOME HOLDINGS COUPON MATURITY TOTAL NET ASSETS
---------------------------------------------- -------------------------------------------------------------------------------
1. EMC Corp. 1.26% 1. Countrywide Home Loans, Inc.
---------------------------------------------- Series H Unsec. Gtd. Med. Term Notes 6.25% 4/15/09 0.80%
2. Pfizer Inc. 1.25 -------------------------------------------------------------------------------
---------------------------------------------- 2. Comverse Technology, Inc.
3. SDL, Inc. 1.25 Conv. Unsec. Sub. Deb. 4.50 7/01/05 0.77
---------------------------------------------- -------------------------------------------------------------------------------
4. Cisco Systems, Inc. 1.17 3. VERITAS Software Corp.
---------------------------------------------- Conv. Unsec. Disc. Notes 1.86 8/13/06 0.67
5. Sun Microsystems, Inc. 1.04 -------------------------------------------------------------------------------
---------------------------------------------- 4. Continental Cablevision, Inc.
6. Infospace.com, Inc. 1.01 Sr. Deb. 9.50 8/01/13 0.62
---------------------------------------------- -------------------------------------------------------------------------------
7. Qwest Communications 5. Union Planters Bank N.A.
International Inc. 0.86 Unsec. Sub. Notes 6.50 3/15/08 0.54
---------------------------------------------- -------------------------------------------------------------------------------
8. Univision Communications, Inc. - 6. General Electric Capital Corp.
Class A 0.82 Series A Medium Term Notes 7.38 1/19/10 0.44
---------------------------------------------- -------------------------------------------------------------------------------
9. Quanta Services, Inc. 0.82 7. NBD Bank N.A. Michigan
---------------------------------------------- Putable Sub. Deb. 8.25 11/01/24 0.44
10. Intel Corp. 0.81 -------------------------------------------------------------------------------
---------------------------------------------- 8. Fannie Mae
Medium Term Notes 6.18 3/15/01 0.42
-------------------------------------------------------------------------------
9. Niagara Mohawk Holdings, Inc.
Series G Sr. Unsec. Notes 7.75 10/01/08 0.41
-------------------------------------------------------------------------------
10. Mercantile Bancorp, Inc.
Unsec. Sub. Notes 7.30 6/15/07 0.41
-------------------------------------------------------------------------------
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. BALANCED FUND 13
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS & NOTES - 30.71%
AIRLINES - 0.63%
AMR Corp., Deb., 10.00%, 04/15/21 $ 50,000 $ 53,374
-------------------------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 100,000 96,310
-------------------------------------------------------------------------------
10.38%, 12/15/22 100,000 107,176
-------------------------------------------------------------------------------
Series C, Medium Term Notes, 6.65%, 03/15/04 100,000 94,531
-------------------------------------------------------------------------------
United Air Lines, Inc., Deb., 9.75%, 08/15/21 100,000 96,495
-------------------------------------------------------------------------------
447,886
-------------------------------------------------------------------------------
AUTOMOBILES - 0.62%
DaimlerChrysler N.A. Holding Corp.
Gtd. Notes, 8.00%, 06/15/10 100,000 101,770
-------------------------------------------------------------------------------
Notes, 7.40%, 01/20/05 130,000 129,441
-------------------------------------------------------------------------------
Ford Motor Co., Bonds, 6.63%, 10/01/28 245,000 207,620
-------------------------------------------------------------------------------
438,831
-------------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 1.49%
BB&T Corp., Putable Sub. Notes, 6.38%, 06/30/05 110,000 102,921
-------------------------------------------------------------------------------
Crestar Financial Corp., Sub. Notes, 8.75%, 11/15/04 60,000 62,242
-------------------------------------------------------------------------------
Midland Bank PLC (United Kingdom), Yankee Sub. Notes,
7.65%, 05/01/25 20,000 19,938
-------------------------------------------------------------------------------
Regions Financial Corp., Putable Sub. Notes,
7.75%, 09/15/24 200,000 200,968
-------------------------------------------------------------------------------
Republic New York Corp.,
Sub. Deb., 9.50%, 04/15/14 70,000 77,484
-------------------------------------------------------------------------------
Sub. Notes, 9.70%, 02/01/09 65,000 71,130
-------------------------------------------------------------------------------
Skandinaviska Enskilda Banken (Sweden), Sub. Yankee
Notes, 6.88%, 02/15/09 150,000 138,702
-------------------------------------------------------------------------------
Union Planters Bank N.A., Unsec. Sub. Notes,
6.50%, 03/15/08 435,000 380,895
-------------------------------------------------------------------------------
1,054,280
-------------------------------------------------------------------------------
BANKS (MONEY CENTER) - 0.95%
Bank of Tokyo - Mitsubishi Ltd. (The) (Japan), Sr. Sub.
Yankee Notes, 8.40%, 04/15/10 30,000 30,338
-------------------------------------------------------------------------------
First Union Corp., Putable Sub. Deb.,
6.55%, 10/15/35 185,000 174,568
-------------------------------------------------------------------------------
7.50%, 04/15/35 200,000 197,266
-------------------------------------------------------------------------------
NCNB Corp., Sub. Notes, 9.38%, 09/15/09 200,000 218,316
-------------------------------------------------------------------------------
Sanwa Finance Aruba AEC (Aruba), Gtd. Unsec. Sub.
Notes, 8.35%, 07/15/09 50,000 49,873
-------------------------------------------------------------------------------
670,361
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BANKS (REGIONAL) - 1.31%
Banponce Trust I - Series A, Gtd. Notes,
8.33%, 02/01/27 $ 160,000 $ 141,907
----------------------------------------------------------------------------
Mercantile Bancorp., Inc., Unsec. Sub. Notes,
7.30%, 06/15/07 300,000 289,686
----------------------------------------------------------------------------
NBD Bank N.A. Michigan, Putable Sub. Deb.,
8.25%, 11/01/24 300,000 309,192
----------------------------------------------------------------------------
Riggs Capital Trust II - Series C, Gtd. Sec. Bonds,
8.88%, 03/15/27 110,000 90,364
----------------------------------------------------------------------------
US Bancorp, Sub. Deb., 7.50%, 06/01/26 100,000 98,377
----------------------------------------------------------------------------
929,526
----------------------------------------------------------------------------
BEVERAGES (ALCOHOLIC) - 0.24%
J Seagram & Sons, Gtd. Deb., 9.65%, 08/15/18 150,000 170,434
----------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.81%
AT&T Corp. - Liberty Media Group, Bonds,
7.88%, 07/15/09 50,000 48,251
----------------------------------------------------------------------------
Sr. Unsec. Deb., 8.25%, 02/01/30 160,000 147,800
----------------------------------------------------------------------------
British Sky Broadcasting Group PLC (United Kingdom),
Sr. Unsec. Gtd. Yankee Notes,
8.20%, 07/15/09 190,000 179,240
----------------------------------------------------------------------------
Continental Cablevision, Inc., Sr. Deb.,
9.50%, 08/01/13 400,000 437,316
----------------------------------------------------------------------------
Cox Communications, Inc., Unsec. Notes,
7.75%, 08/15/06 200,000 199,894
----------------------------------------------------------------------------
Cox Enterprises, Inc., Notes, 8.00%, 02/15/07
(Acquired 02/16/00-03/23/00; Cost $199,505)(a) 200,000 199,022
----------------------------------------------------------------------------
CSC Holdings Inc.,
Sr. Unsec. Deb., 7.88%, 02/15/18 200,000 184,588
----------------------------------------------------------------------------
Sr. Unsec. Notes, 7.88%, 12/15/07 175,000 169,668
----------------------------------------------------------------------------
Lenfest Communications, Inc.,
Sr. Unsec. Notes, 8.38%, 11/01/05 100,000 101,847
----------------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 8.25%, 02/15/08 150,000 148,600
----------------------------------------------------------------------------
TCI Communications, Inc., Sr. Deb., 9.80%, 02/01/12 150,000 170,676
----------------------------------------------------------------------------
1,986,902
----------------------------------------------------------------------------
CHEMICALS - 0.13%
Airgas, Inc., Medium Term Notes, 7.14%, 03/08/04 100,000 94,992
----------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.77%
Comverse Technology, Inc., Conv. Unsec. Sub. Deb.,
4.50%, 07/01/05 125,000 544,844
----------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.28%
Candescent Technology Corp., Sr. Conv. Sub. Deb.,
8.00%, 05/01/03 (Acquired 11/06/98-03/07/00; Cost
$221,150)(a) 273,000 197,925
----------------------------------------------------------------------------
</TABLE>
14 AIM V.I. BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES) - 0.67%
VERITAS Software Corp., Conv. Unsec. Disc. Notes,
1.86%, 08/13/06(b) $ 150,000 $ 473,250
--------------------------------------------------------------------------------
CONSUMER FINANCE - 1.77%
Capital One Financial Corp., Unsec. Notes,
7.25%, 05/01/06 165,000 152,206
--------------------------------------------------------------------------------
Countrywide Home Loans, Inc. - Series H, Unsec. Gtd.
Medium Term Sub. Notes, 6.25%, 04/15/09 650,000 567,820
--------------------------------------------------------------------------------
General Motors Acceptance Corp.,
Notes, 5.75%, 11/10/03 270,000 257,699
--------------------------------------------------------------------------------
Putable Notes, 9.00%, 10/15/02(b) 100,000 103,347
--------------------------------------------------------------------------------
Household Finance Corp., Sr. Unsec. Notes,
8.00%, 05/09/05 90,000 90,688
--------------------------------------------------------------------------------
MBNA Capital I - Series A, Gtd. Bonds,
8.28%, 12/01/26 100,000 83,826
--------------------------------------------------------------------------------
1,255,586
--------------------------------------------------------------------------------
ELECTRIC COMPANIES - 2.74%
CMS Energy Corp., Sr. Unsec. Notes, 8.13%, 05/15/02 200,000 199,302
--------------------------------------------------------------------------------
Commonwealth Edison Co. - Series 94, First Mortgage
Notes, 7.50%, 07/01/13 200,000 193,118
--------------------------------------------------------------------------------
El Paso Electric Co. - Series D, Sec. First Mortgage
Bonds, 8.90%, 02/01/06 200,000 208,220
--------------------------------------------------------------------------------
Empire District Electric Co. (The), Sr. Notes,
7.70%, 11/15/04 150,000 149,914
--------------------------------------------------------------------------------
Niagara Mohawk Holdings Inc.,
Series G, Sr. Unsec. Notes, 7.75%, 10/01/08 300,000 293,646
--------------------------------------------------------------------------------
Series H, Sr. Unsec. Disc. Notes,
8.50%, 07/01/10(b) 200,000 152,986
--------------------------------------------------------------------------------
Public Service Company of New Mexico - Series A, Sr.
Unsec. Notes, 7.10%, 08/01/05 130,000 126,361
--------------------------------------------------------------------------------
Southern Energy, Inc., Sr. Notes, 7.90%, 07/15/09
(Acquired 07/21/99; Cost $274,898)(a) 275,000 254,435
--------------------------------------------------------------------------------
Texas-New Mexico Power Co., Sr. Sec. Notes,
6.25%, 01/15/09 250,000 214,587
--------------------------------------------------------------------------------
UtiliCorp United, Inc., Sr. Unsec. Putable Notes, 6.70%,
10/15/06 150,000 146,323
--------------------------------------------------------------------------------
1,938,892
--------------------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.24%
Israel Electric Corp. Ltd. (Israel),
Yankee Deb., 7.75%, 12/15/27 (Acquired 06/09/00; Cost
$87,798)(a) 100,000 87,606
--------------------------------------------------------------------------------
Series E, Sr. Sec. Medium Term Yankee Notes, 7.75%,
03/01/09 (Acquired 04/13/00; Cost $82,610)(a) 85,000 82,110
--------------------------------------------------------------------------------
169,716
--------------------------------------------------------------------------------
ENTERTAINMENT - 0.54%
Time Warner Inc., Deb.,
9.13%, 01/15/13 200,000 217,396
--------------------------------------------------------------------------------
9.15%, 02/01/23 150,000 164,622
--------------------------------------------------------------------------------
382,018
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED) - 2.13%
Associates Corp. of North America, Sr. Deb.,
6.95%, 11/01/18 $ 185,000 $ 163,610
-------------------------------------------------------------------------------
Beaver Valley Funding Corp., Sec. Lease Obligations
Deb., 9.00%, 06/01/17 200,000 197,822
-------------------------------------------------------------------------------
Citicorp Lease - Class A2, Series 1999-1, Pass Through
Ctfs., 8.04%, 12/15/19 (Acquired 06/01/00; Cost
$98,767)(a) 100,000 99,708
-------------------------------------------------------------------------------
Dow Capital B.V. (Netherlands), Gtd. Yankee Deb.,
9.20%, 06/01/10 150,000 166,456
-------------------------------------------------------------------------------
General Electric Capital Corp. - Series A, Medium Term
Notes, 7.38%, 01/19/10 310,000 312,771
-------------------------------------------------------------------------------
Heller Financial, Inc., Sr. Unsec. Notes,
7.38%, 11/01/09 200,000 188,288
-------------------------------------------------------------------------------
8.00%, 06/15/05 200,000 199,566
-------------------------------------------------------------------------------
Source One Mortgage Services Corp., Deb.,
9.00%, 06/01/12 80,000 85,000
-------------------------------------------------------------------------------
Sun Canada Financial Co., Gtd. Sub. Notes, 6.63%,
12/15/07 (Acquired 03/15/00; Cost $91,980)(a) 100,000 95,362
-------------------------------------------------------------------------------
1,508,583
-------------------------------------------------------------------------------
FOODS - 0.34%
ConAgra, Inc., Sr. Unsec. Putable Notes,
7.13%, 10/01/26 250,000 241,415
-------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.15%
Procter & Gamble Co. (The), Putable Deb.,
8.00%, 09/01/24 100,000 105,845
-------------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.58%
American General Finance Corp., Sr. Notes,
8.45%, 10/15/09 180,000 185,098
-------------------------------------------------------------------------------
John Hancock Global Funding II, Sec. Medium Term Notes,
7.90%, 07/02/10 (Acquired 06/23/00; Cost $99,761)(a) 100,000 100,690
-------------------------------------------------------------------------------
Torchmark Corp., Notes, 7.88%, 05/15/23 145,000 123,405
-------------------------------------------------------------------------------
409,193
-------------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.36%
AIG SunAmerica Global Financing II, Sr. Sec. Notes,
7.60%, 06/15/05 (Acquired 06/08/00;
Cost $250,000)(a) 250,000 251,803
-------------------------------------------------------------------------------
INSURANCE (PROPERTY & CASUALTY) - 0.47%
GE Global Insurance Holdings Corp., Notes,
7.75%, 06/15/30 125,000 123,961
-------------------------------------------------------------------------------
Terra Nova Insurance PLC (United Kingdom), Sr. Unsec.
Gtd. Yankee Notes,
7.00%, 05/15/08 150,000 140,511
-------------------------------------------------------------------------------
7.20%, 08/15/07 70,000 66,642
-------------------------------------------------------------------------------
331,114
-------------------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND 15
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
INVESTMENT BANKING/BROKERAGE - 1.01%
Bear Stearns Cos., Inc., Sr. Unsec. Notes,
7.63%, 12/07/09 $ 130,000 $ 124,762
------------------------------------------------------------------------------
E*Trade Group Inc.,
Conv. Sub Notes, 6.00%, 02/01/07 (Acquired 04/17/00-
05/24/00; Cost $97,417)(a) 110,000 100,375
------------------------------------------------------------------------------
Conv. Unsec. Sub. Notes, 6.00%, 02/01/07 100,000 91,250
------------------------------------------------------------------------------
Lehman Brothers Holdings Inc.,
Notes, 8.50%, 08/01/15 200,000 197,180
------------------------------------------------------------------------------
Sr. Sub. Notes, 7.38%, 01/15/07 45,000 42,716
------------------------------------------------------------------------------
Putable Sr. Notes, 8.80%, 03/01/15 160,000 161,699
------------------------------------------------------------------------------
717,982
------------------------------------------------------------------------------
NATURAL GAS - 2.25%
CMS Panhandle Holding Co., Sr. Notes,
6.13%, 03/15/04 200,000 188,262
------------------------------------------------------------------------------
Enron Corp.,
Sr. Sub. Deb., 8.25%, 09/15/12 200,000 204,140
------------------------------------------------------------------------------
Series A, Medium Term Notes, 8.38%, 05/23/05 50,000 51,349
------------------------------------------------------------------------------
Ferrellgas Partners L.P., - Series B, Sr. Sec. Gtd.
Notes, 9.38%, 06/15/06 50,000 48,500
------------------------------------------------------------------------------
Kinder Morgan Energy Partners, L.P., Sr. Unsec. Notes,
6.30%, 02/01/09 200,000 180,522
------------------------------------------------------------------------------
Kinder Morgan, Inc., Unsec. Deb., 7.35%, 08/01/26 200,000 196,816
------------------------------------------------------------------------------
KN Capital Trust III, Gtd. Sub. Bonds,
7.63%, 04/15/28 150,000 129,029
------------------------------------------------------------------------------
National Fuel Gas Co. - Series D, Medium Term Notes,
6.30%, 05/27/08 100,000 90,449
------------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee Deb.,
8.50%, 12/15/12 150,000 156,722
------------------------------------------------------------------------------
Sonat Inc., Unsec. Notes, 7.63%, 07/15/11 160,000 156,858
------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., Unsec. Deb.,
7.50%, 04/01/17 200,000 192,490
------------------------------------------------------------------------------
1,595,137
------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.27%
NRG Energy, Inc., Sr. Unsec. Notes, 7.50%, 06/01/09 200,000 188,432
------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.46%
ONEOK, Inc., Unsec. Notes, 7.75%, 08/15/06 100,000 99,744
------------------------------------------------------------------------------
Den Norske Stats Oljeselkap (Norway), Yankee Deb.,
7.38%, 05/01/16 (Acquired 06/01/00;
Cost $93,849)(a) 100,000 94,630
------------------------------------------------------------------------------
Union Pacific Resources Group Inc., Unsec. Deb.,
7.50%, 10/15/26 140,000 131,582
------------------------------------------------------------------------------
325,956
------------------------------------------------------------------------------
OIL & GAS (REFINING & MARKETING) - 0.14%
Tosco Corp., Unsec. Deb., 7.80%, 01/01/27 100,000 96,821
------------------------------------------------------------------------------
OIL (DOMESTIC INTEGRATED) - 0.42%
Amerada Hess Corp., Bonds, 7.88%, 10/01/29 75,000 73,331
------------------------------------------------------------------------------
Occidental Petroleum Corp.,
Sr. Deb., 9.25%, 08/01/19 120,000 130,913
------------------------------------------------------------------------------
Sr. Unsec. Notes, 7.38%, 11/15/08 100,000 96,496
------------------------------------------------------------------------------
300,740
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
OIL (INTERNATIONAL INTEGRATED) - 0.10%
YPF Sociedad Anonima (Argentina), Yankee Bonds, 9.13%,
02/24/09 $ 70,000 $ 71,194
------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.40%
AES Corp. (The), Sr. Unsec. Sub. Notes,
10.25%, 07/15/06 100,000 100,250
------------------------------------------------------------------------------
CE Generation LLC, Sr. Sec. Sub Notes,
7.42%, 12/15/18 197,400 181,547
------------------------------------------------------------------------------
281,797
------------------------------------------------------------------------------
PUBLISHING (NEWSPAPERS) - 0.59%
News America Holdings, Inc.,
Putable Notes, 8.45%, 08/01/34 200,000 203,466
------------------------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 200,000 214,140
------------------------------------------------------------------------------
417,606
------------------------------------------------------------------------------
RAILROADS - 0.64%
CSX Corp., Deb., 9.00%, 08/15/06 250,000 259,170
------------------------------------------------------------------------------
Norfolk Southern Corp., Notes, 7.05%, 05/01/37 200,000 196,236
------------------------------------------------------------------------------
455,406
------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.21%
ERP Operating L.P., Unsec. Notes, 7.13%, 10/15/17 70,000 57,980
------------------------------------------------------------------------------
Spieker Properties, Inc., Unsec. Deb.,
7.35%, 12/01/17 100,000 87,579
------------------------------------------------------------------------------
145,559
------------------------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.49%
Dime Capital Trust I - Series A, Gtd. Bonds,
9.33%, 05/06/27 140,000 128,037
------------------------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec. Notes,
7.13%, 02/15/04 75,000 72,317
------------------------------------------------------------------------------
Washington Mutual Cap I,
Sec. Gtd. Bonds, 8.38%, 06/01/27 55,000 49,325
------------------------------------------------------------------------------
Sub. Notes, 8.25%, 04/01/10 100,000 99,396
------------------------------------------------------------------------------
349,075
------------------------------------------------------------------------------
SOVEREIGN DEBT - 1.09%
British Columbia (Province of) (Canada), Unsec. Unsub.
Yankee Notes, 5.38%, 10/29/08 50,000 44,145
------------------------------------------------------------------------------
Hydro-Quebec - Series B (Canada), Gtd. Medium Term
Yankee Notes, 8.62%, 12/15/11 200,000 218,146
------------------------------------------------------------------------------
Manitoba (Province of) - Series AZ (Canada), Putable
Yankee Deb., 7.75%, 07/17/16 200,000 205,956
------------------------------------------------------------------------------
Newfoundland (Province of) (Canada), Unsec. Yankee
Deb., 9.00%, 06/01/19 100,000 112,777
------------------------------------------------------------------------------
Quebec (Province of) (Canada),
Series A, Medium Term Putable Yankee Notes, 6.29%,
03/06/26(c) 100,000 97,591
------------------------------------------------------------------------------
Unsec. Yankee Deb., 6.50%, 01/17/06 100,000 96,021
------------------------------------------------------------------------------
774,636
------------------------------------------------------------------------------
</TABLE>
16 AIM V.I. BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.21%
Vodafone AirTouch PLC (United Kingdom), Unsec. Unsub.
Yankee Notes, 7.75%, 02/15/10 (Acquired 02/07/00;
Cost $149,072)(a) $ 150,000 $ 149,193
-----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.32%
AT&T Corp., Deb., 8.63%, 12/01/31 200,000 199,198
-----------------------------------------------------------------------------
MCI Communications Corp.,
Sr. Unsec. Notes, 6.50%, 04/15/10 100,000 90,906
-----------------------------------------------------------------------------
Sr. Unsec. Putable Deb., 7.13%, 06/15/27 200,000 197,986
-----------------------------------------------------------------------------
Sprint Corp., Putable Deb., 9.00%, 10/15/19 200,000 227,292
-----------------------------------------------------------------------------
WorldCom, Inc., Notes, 8.00%, 05/15/06 220,000 223,227
-----------------------------------------------------------------------------
938,609
-----------------------------------------------------------------------------
TELEPHONE - 1.43%
AT&T Canada Inc. (Canada),
Sr. Unsec. Yankee Notes 7.65%, 09/15/06 100,000 99,142
-----------------------------------------------------------------------------
Sr. Unsec. Yankee Sub. Notes, 7.63%, 03/15/05 200,000 199,364
-----------------------------------------------------------------------------
Deutsche Telekom International Finance B.V.
(Netherlands), Unsec. Unsub. Yankee Bonds, 8.00%,
06/15/10 130,000 131,439
-----------------------------------------------------------------------------
Electric Lightwave, Inc. Notes, 6.05%, 05/15/04
(Acquired 04/21/99; Cost $199,854)(a) 200,000 188,764
-----------------------------------------------------------------------------
GTE Corp., Unsec. Deb., 6.84%, 04/15/18 100,000 89,777
-----------------------------------------------------------------------------
NTL Inc., Conv. Sub. Notes, 5.75%, 12/15/09 (Acquired
12/17/99-03/01/00; Cost $201,702)(a) 200,000 159,750
-----------------------------------------------------------------------------
Qwest Communications International Inc., Sr. Unsec.
Notes, 7.50%, 11/01/08 150,000 144,938
-----------------------------------------------------------------------------
1,013,174
-----------------------------------------------------------------------------
WASTE MANAGEMENT - 0.46%
Browning-Ferris Industries, Inc., Deb.,
7.40%, 09/15/35 200,000 125,000
-----------------------------------------------------------------------------
Waste Management, Inc.,
Sr. Unsec. Notes, 7.13%, 12/15/17 10,000 8,267
-----------------------------------------------------------------------------
Unsec. Putable Notes, 7.10%, 08/01/26 200,000 190,344
-----------------------------------------------------------------------------
323,611
-----------------------------------------------------------------------------
Total U.S. Dollar Denominated Bonds & Notes (Cost
$21,795,160) 21,748,324
-----------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
DOMESTIC COMMON STOCKS - 41.72%
AUTO PARTS & EQUIPMENT - 0.01%
Visteon Corp.(d) 354 4,286
-----------------------------------------------------------------------------
AUTOMOBILES - 0.16%
Ford Motor Co. 2,700 116,100
-----------------------------------------------------------------------------
BANKS (MONEY CENTER) - 0.54%
Chase Manhattan Corp. (The) 8,250 380,016
-----------------------------------------------------------------------------
BIOTECHNOLOGY - 0.62%
Genzyme Corp.(d) 7,400 439,837
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.22%
Clear Channel Communications, Inc.(d) 4,600 $ 345,000
-----------------------------------------------------------------------------
Comcast Corp. - Class A(d) 5,100 206,550
-----------------------------------------------------------------------------
Hispanic Broadcasting Corp.(d) 8,200 271,625
-----------------------------------------------------------------------------
Infinity Broadcasting Corp. - Class A(d) 9,450 344,334
-----------------------------------------------------------------------------
UnitedGlobalCom Inc. - Class A(d) 1,200 56,100
-----------------------------------------------------------------------------
Univision Communications, Inc. - Class A(d) 5,600 579,600
-----------------------------------------------------------------------------
Viacom Inc. - Class B(d) 7,018 478,540
-----------------------------------------------------------------------------
2,281,749
-----------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 3.73%
Copper Mountain Networks, Inc.(d) 2,600 229,125
-----------------------------------------------------------------------------
Corning Inc. 1,200 323,850
-----------------------------------------------------------------------------
JDS Uniphase Corp.(d) 2,400 287,700
-----------------------------------------------------------------------------
Juniper Networks, Inc.(d) 3,000 436,687
-----------------------------------------------------------------------------
Lucent Technologies Inc. 7,700 456,225
-----------------------------------------------------------------------------
Redback Networks Inc.(d) 2,200 391,600
-----------------------------------------------------------------------------
Sycamore Networks, Inc.(d) 4,700 518,762
-----------------------------------------------------------------------------
2,643,949
-----------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 1.32%
International Business Machines Corp. 1,800 197,212
-----------------------------------------------------------------------------
Sun Microsystems, Inc.(d) 8,100 736,594
-----------------------------------------------------------------------------
933,806
-----------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 1.79%
Cisco Systems, Inc.(d) 13,000 826,312
-----------------------------------------------------------------------------
Foundry Networks, Inc.(d) 1,100 121,550
-----------------------------------------------------------------------------
VeriSign, Inc.(d) 1,800 317,700
-----------------------------------------------------------------------------
1,265,562
-----------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.12%
Brocade Communications Systems, Inc.(d) 2,800 513,756
-----------------------------------------------------------------------------
EMC Corp.(d) 11,600 892,475
-----------------------------------------------------------------------------
Immersion Corp.(d) 3,100 93,000
-----------------------------------------------------------------------------
1,499,231
-----------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 4.03%
America Online, Inc.(d) 8,800 464,200
-----------------------------------------------------------------------------
BEA Systems, Inc.(d) 7,000 346,062
-----------------------------------------------------------------------------
InfoSpace, Inc.(d) 13,000 718,250
-----------------------------------------------------------------------------
ISS Group, Inc.(d) 3,900 385,064
-----------------------------------------------------------------------------
Microsoft Corp.(d) 4,200 336,000
-----------------------------------------------------------------------------
Oracle Corp.(d) 3,800 319,437
-----------------------------------------------------------------------------
PSINet Inc.(d) 2,300 57,787
-----------------------------------------------------------------------------
VERITAS Software Corp.(d) 2,000 226,031
-----------------------------------------------------------------------------
2,852,831
-----------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.50%
General Electric Co. 6,700 355,100
-----------------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND 17
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (DEFENSE) - 0.42%
General Motors Corp. - Class H(d) 3,400 $ 298,350
------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 3.67%
Analog Devices, Inc.(d)(e) 7,400 562,400
------------------------------------------------------------------
Intel Corp. 4,300 574,856
------------------------------------------------------------------
Microchip Technology Inc.(d) 3,450 201,016
------------------------------------------------------------------
SDL, Inc.(d) 3,100 884,081
------------------------------------------------------------------
Vitesse Semiconductor Corp.(d) 5,100 375,169
------------------------------------------------------------------
2,597,522
------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 0.82%
Quanta Services, Inc.(d) 10,500 577,500
------------------------------------------------------------------
ENTERTAINMENT - 0.32%
Time Warner Inc. 3,000 228,000
------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.59%
Applied Materials, Inc.(d) 4,600 416,875
------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.90%
American Express Co. 3,900 203,287
------------------------------------------------------------------
Citigroup Inc. 4,650 280,163
------------------------------------------------------------------
MGIC Investment Corp. 3,300 150,150
------------------------------------------------------------------
633,600
------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 0.52%
American Home Products Corp. 6,300 370,125
------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.37%
Forest Laboratories, Inc.(d) 2,600 262,600
------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 1.73%
Merck & Co., Inc. 4,400 337,150
------------------------------------------------------------------
Pfizer Inc. 18,500 888,000
------------------------------------------------------------------
1,225,150
------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.43%
Baxter International, Inc. 5,200 365,625
------------------------------------------------------------------
Guidant Corp.(d) 4,000 198,000
------------------------------------------------------------------
Medtronic, Inc. 9,000 448,313
------------------------------------------------------------------
1,011,938
------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 0.08%
MAXIMUS, Inc.(d) 2,600 57,525
------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.25%
AXA Financial, Inc. 5,300 180,200
------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.51%
American International Group, Inc. 3,100 364,250
------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 1.70%
Merrill Lynch & Co., Inc. 3,500 402,500
------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 5,500 457,875
------------------------------------------------------------------
Schwab (Charles) Corp. (The) 10,300 346,338
------------------------------------------------------------------
1,206,713
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS - 0.87%
Enron Corp. 5,400 $ 348,300
--------------------------------------------------------------------
Williams Cos., Inc. (The) 6,400 266,800
--------------------------------------------------------------------
615,100
--------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.51%
Apache Corp. 1,800 105,863
--------------------------------------------------------------------
Kerr-McGee Corp. 4,300 253,431
--------------------------------------------------------------------
359,294
--------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 0.17%
Exxon Mobil Corp. 1,500 117,750
--------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.51%
AES Corp. (The)(d) 7,900 360,438
--------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.38%
Home Depot, Inc. (The) 5,400 269,663
--------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.31%
Safeway Inc.(d) 4,800 216,600
--------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 0.49%
Target Corp. 6,000 348,000
--------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.64%
Amazon.com, Inc.(d) 1,800 65,363
--------------------------------------------------------------------
Bed Bath & Beyond, Inc.(d) 6,700 242,875
--------------------------------------------------------------------
Linens 'n Things, Inc.(d) 5,400 146,475
--------------------------------------------------------------------
454,713
--------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.81%
Lamar Advertising Co.(d) 7,200 311,850
--------------------------------------------------------------------
Omnicom Group Inc. 2,900 258,281
--------------------------------------------------------------------
570,131
--------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 0.56%
Critical Path, Inc.(d) 4,600 268,238
--------------------------------------------------------------------
MarchFirst, Inc.(d) 7,201 131,418
--------------------------------------------------------------------
399,656
--------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 0.20%
DST Systems, Inc.(d) 1,900 144,638
--------------------------------------------------------------------
TELECOMMUNICATIONS - 0.27%
Williams Communications Group, Inc.(d) 5,800 192,488
--------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.06%
Level 3 Communications, Inc.(d) 2,360 207,680
--------------------------------------------------------------------
Phone.com, Inc.(d) 4,600 299,575
--------------------------------------------------------------------
Western Wireless Corp. - Class A(d) 4,500 245,250
--------------------------------------------------------------------
752,505
--------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.39%
Winstar Communications, Inc.(d) 218 7,385
--------------------------------------------------------------------
WorldCom, Inc.(d) 5,850 268,369
--------------------------------------------------------------------
275,754
--------------------------------------------------------------------
</TABLE>
18 AIM V.I. BALANCED FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELEPHONE - 3.20%
Bell Atlantic Corp. 4,100 $ 208,331
-----------------------------------------------------------------------------
Broadwing Inc.(d) 9,014 233,801
-----------------------------------------------------------------------------
McLeodUSA, Inc. - Class A(d) 17,400 359,963
-----------------------------------------------------------------------------
NEXTLINK Communications, Inc. - Class A(d) 7,600 288,325
-----------------------------------------------------------------------------
Qwest Communications International Inc.(d) 12,200 606,188
-----------------------------------------------------------------------------
SBC Communications Inc. 4,500 194,625
-----------------------------------------------------------------------------
Time Warner Telecom, Inc. - Class A(d) 5,800 373,375
-----------------------------------------------------------------------------
2,264,608
-----------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $22,302,938) 29,544,153
-----------------------------------------------------------------------------
DOMESTIC PREFERRED STOCKS - 1.38%
OIL & GAS (EXPLORATION & PRODUCTION) - 0.25%
Kerr-McGee Corp. - $1.83 Pfd. DECS 3,500 174,125
-----------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.50%
Calpine Capital Trust - $2.88 Conv. Pfd. 3,000 354,750
-----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.33%
Winstar Communications, Inc. - Series F,
$72.50 Conv. Pfd. 237 234,512
-----------------------------------------------------------------------------
TELEPHONE - 0.16%
Broadwing Inc. - Series B, $3.38 Conv. Pfd. 990 46,530
-----------------------------------------------------------------------------
NEXTLINK Communications, Inc. - $3.25 Conv. Pfd. 400 70,600
-----------------------------------------------------------------------------
117,130
-----------------------------------------------------------------------------
WATER UTILITIES - 0.14%
AES Trust III - $3.38 Conv. Pfd. 1,400 96,600
-----------------------------------------------------------------------------
Total Domestic Preferred Stocks
(Cost $780,980) 977,117
-----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT(f)
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED BONDS & NOTES - 0.33%
AUSTRALIA - 0.03%
State Bank New South Wales - Series E (Banks - Major
Regional), Sr. Unsec. Gtd. Medium Term Notes, 8.63%,
08/20/01 AUD 30,000 18,340
-----------------------------------------------------------------------------
CANADA - 0.07%
Clearnet Communications Inc. (Telecommunications -
Cellular/Wireless), Sr. Unsec. Disc. Notes,
10.75%, 02/15/09(b) CAD 50,000 18,929
-----------------------------------------------------------------------------
Export Development Corp. (Sovereign Debt), Sr. Unsec.
Unsub. Notes, 6.50%, 12/21/04 NZD 75,000 33,503
-----------------------------------------------------------------------------
52,432
-----------------------------------------------------------------------------
NETHERLANDS - 0.05%
Mannesmann Finance B.V. (Machinery - Diversified),
Gtd. Unsec. Unsub. Notes, 4.75%, 05/27/09 EUR 10,000 8,335
-----------------------------------------------------------------------------
Tecnost International N.V. - Series E (Telephone),
Gtd. Medium Term Notes, 6.13%, 07/30/09 EUR 30,000 25,666
-----------------------------------------------------------------------------
34,001
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(f) VALUE
<S> <C> <C>
NEW ZEALAND - 0.12%
International Bank for Reconstruction & Development -
Class E (Banks - Money Center), Unsec. Medium Term
Notes, 5.50%, 04/15/04 NZD 200,000 $ 87,455
------------------------------------------------------------------------------
UNITED KINGDOM - 0.06%
British Sky Broadcasting Group PLC (Broadcasting -
Television, Radio & Cable), Sr. Gtd. Unsec. Unsub.
Notes, 7.75%, 07/09/09(g) GBP 30,000 43,753
------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost
$272,275) 235,981
------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 4.55%
BERMUDA - 0.60%
Global Crossing Ltd. (Telecommunications - Long
Distance)(d) 7,054 185,608
------------------------------------------------------------------------------
Tyco International Ltd. (Manufacturing - Diversified) 5,000 236,875
------------------------------------------------------------------------------
422,483
------------------------------------------------------------------------------
CANADA - 1.08%
360networks Inc. (Telecommunications - Long
Distance)(d) 11,400 173,850
------------------------------------------------------------------------------
AT&T Canada Inc. (Telephone)(d) 6,200 205,762
------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 5,700 389,025
------------------------------------------------------------------------------
768,637
------------------------------------------------------------------------------
FINLAND - 1.18%
Nokia Oyj - ADR (Communications Equipment) 11,300 564,294
------------------------------------------------------------------------------
Sonera Oyj (Telecommunications - Cellular/Wireless) 5,900 268,442
------------------------------------------------------------------------------
832,736
------------------------------------------------------------------------------
FRANCE - 0.39%
AXA (Insurance - Multi-Line) 740 116,343
------------------------------------------------------------------------------
AXA - ADR (Insurance - Multi-Line) 2,000 159,125
------------------------------------------------------------------------------
275,468
------------------------------------------------------------------------------
JAPAN - 0.15%
NTT DoCoMo, Inc. (Telecommunications -
Cellular/Wireless) 4 108,134
------------------------------------------------------------------------------
MEXICO - 0.23%
Grupo Televisa S.A. - GDR (Entertainment)(d) 2,400 165,450
------------------------------------------------------------------------------
NETHERLANDS - 0.18%
Libertel N.V. (Telecommunications -
Cellular/Wireless)(d) 8,200 124,623
------------------------------------------------------------------------------
SOUTH KOREA - 0.22%
Korea Telecom Corp. - ADR (Telephone) 3,184 154,026
------------------------------------------------------------------------------
SPAIN - 0.34%
Telefonica S.A. (Telephone)(d) 11,400 244,406
------------------------------------------------------------------------------
UNITED KINGDOM - 0.18%
Vodafone AirTouch PLC (Telecommunications -
Cellular/Wireless) 31,000 125,223
------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $2,613,948) 3,221,186
------------------------------------------------------------------------------
</TABLE>
AIM V.I. BALANCED FUND 19
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 1.09%
FEDERAL NATIONAL MORTGAGE ASSOCIATION
("FNMA") - 0.83%
Medium Term Notes, 6.18%, 03/15/01(h) $ 300,000 $ 298,554
----------------------------------------------------------------------
Pass through certificates,
6.50%, 11/01/28 308,391 290,658
----------------------------------------------------------------------
589,212
----------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
("GNMA") - 0.26%
Pass through certificates, 6.50%, 03/15/29 194,785 184,863
----------------------------------------------------------------------
Total U.S. Government Agency Securities
(Cost $807,065) 774,075
----------------------------------------------------------------------
U.S. TREASURY SECURITIES - 11.19%
U.S. Treasury Notes - 11.19%
6.63%, 05/31/02 1,200,000 1,205,316
----------------------------------------------------------------------
7.25%, 08/15/04 300,000 310,239
----------------------------------------------------------------------
5.88%, 11/15/04 1,000,000 986,010
----------------------------------------------------------------------
6.75%, 05/15/05 1,300,000 1,331,083
----------------------------------------------------------------------
6.50%, 08/15/05 to 02/15/10 3,000,000(h) 3,057,970
----------------------------------------------------------------------
6.88%, 05/15/06 1,000,000(h) 1,029,750
----------------------------------------------------------------------
7,920,368
----------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $7,905,466) 7,920,368
----------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS - 8.82%
STIC Liquid Assets Portfolio(i) 3,120,828 3,120,828
----------------------------------------------------------------------
STIC Prime Portfolio(i) 3,120,828 3,120,828
----------------------------------------------------------------------
Total Money Market Funds (Cost $6,241,656) 6,241,656
----------------------------------------------------------------------
TOTAL INVESTMENTS - 99.79%
(COST $62,719,488) 70,662,860
----------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.21% 146,248
----------------------------------------------------------------------
NET ASSETS - 100.00% $70,809,108
======================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollar
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DECS - Dividend Enhanced Convertible Stock
Disc. - Discounted
EUR - Euro
GBP - British Pound Sterling
GDR - Global Depositary Receipt
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
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 Trustees. The
aggregate market value of these securities at 06/30/00 was $ 2,061,373
which represented 2.91% of the Fund's net assets.
(b) Discounted bond at purchase. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(c) Step-up bond. The interest rate represents the coupon rate at which the
bond will accrue at a specified future date.
(d) Non-income producing security.
(e) A portion of this security is subject to call options written. See Note 6.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(h) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 7.
(i) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
20 AIM V.I. BALANCED FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $62,719,488) $70,662,860
---------------------------------------------------------------------
Receivables for:
Foreign currency contracts closed 6,570
---------------------------------------------------------------------
Investments sold 200,575
---------------------------------------------------------------------
Variation margin 60,675
---------------------------------------------------------------------
Fund shares sold 168,078
---------------------------------------------------------------------
Dividends and interest 599,347
---------------------------------------------------------------------
Investment for deferred compensation plan 9,990
---------------------------------------------------------------------
Total assets 71,708,095
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 757,763
---------------------------------------------------------------------
Fund shares reacquired 4,878
---------------------------------------------------------------------
Options written (premiums received $11,170) 375
---------------------------------------------------------------------
Deferred compensation plan 9,990
---------------------------------------------------------------------
Accrued advisory fees 41,839
---------------------------------------------------------------------
Accrued administrative services fees 46,463
---------------------------------------------------------------------
Accrued trustees' fees 1,482
---------------------------------------------------------------------
Accrued operating expenses 36,197
---------------------------------------------------------------------
Total liabilities 898,987
---------------------------------------------------------------------
Net assets applicable to shares outstanding $70,809,108
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 5,332,477
=====================================================================
Net asset value, offering and redemption price per share $ 13.28
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 860,521
------------------------------------------------------------------------------
Dividends (net of foreign withholding tax $983) 254,644
------------------------------------------------------------------------------
Total investment income 1,115,165
------------------------------------------------------------------------------
EXPENSES:
Advisory fees 219,410
------------------------------------------------------------------------------
Administrative services fee 65,079
------------------------------------------------------------------------------
Custodian fees 26,727
------------------------------------------------------------------------------
Trustees' fees 3,393
------------------------------------------------------------------------------
Other 32,536
------------------------------------------------------------------------------
Total expenses 347,145
------------------------------------------------------------------------------
Less: Expenses paid indirectly (143)
------------------------------------------------------------------------------
Net expenses 347,002
------------------------------------------------------------------------------
Net investment income 768,163
------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FOREIGN CURRENCY CONTRACTS, FUTURES AND
OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities (1,325,692)
------------------------------------------------------------------------------
Foreign currencies (15,543)
------------------------------------------------------------------------------
Foreign currency contracts 26,804
------------------------------------------------------------------------------
Futures contracts 40,276
------------------------------------------------------------------------------
Option contracts written 11,160
------------------------------------------------------------------------------
(1,262,995)
------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 1,778,189
------------------------------------------------------------------------------
Foreign currencies 1,285
------------------------------------------------------------------------------
Foreign currency contracts (8,322)
------------------------------------------------------------------------------
Futures contracts (144,351)
------------------------------------------------------------------------------
Option contracts written 6,874
------------------------------------------------------------------------------
1,633,675
------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies, foreign
currency contracts, futures and option contracts 370,680
------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 1,138,843
==============================================================================
</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, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 768,163 $ 746,439
--------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts,
futures and option contracts (1,262,995) 8,710
--------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, foreign currency
contracts, futures and option contracts 1,633,675 5,577,116
--------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,138,843 6,332,265
--------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (600,086)
--------------------------------------------------------------------------------
Distributions to shareholders from net realized gains -- (230,004)
--------------------------------------------------------------------------------
Share transactions - net 21,363,195 32,461,559
--------------------------------------------------------------------------------
Net increase in net assets 22,502,038 37,963,734
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 48,307,070 10,343,336
--------------------------------------------------------------------------------
End of period $70,809,108 $48,307,070
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $63,361,175 $41,997,980
--------------------------------------------------------------------------------
Undistributed net investment income 890,791 122,628
--------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies, foreign
currency contracts, futures and option contracts (1,354,337) (91,342)
--------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, foreign currency contracts,
futures and option contracts 7,911,479 6,277,804
--------------------------------------------------------------------------------
$70,809,108 $48,307,070
================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Balanced Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization between the Fund and the Trust, the Fund was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve as high a total return to investors as possible, consistent with
preservation of capital.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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
22 AIM V.I. BALANCED FUND
<PAGE>
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 Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of the customary trading session of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. 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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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. Futures Contracts - The Fund may purchase or sell 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 that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
H. Covered Call Options - The Fund may write call options, 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.
I. 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, the
Fund pays an option premium. The option's underlying instrument may be a
security or a futures contract. Put options may be used by the 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
AIM V.I. BALANCED FUND 23
<PAGE>
potential for the Fund to profit from an increase in the value of the
securities hedged.
J. Bond Premiums - It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $65,079 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,744
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $143 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $143.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION
CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period 47 $ 20,258
----------------------------------------
Written 20 11,170
----------------------------------------
Closed (30) (11,564)
----------------------------------------
Exercised (17) (8,694)
----------------------------------------
End of period 20 $ 11,170
----------------------------------------
</TABLE>
Open call option contracts written at June 30, 2000 were as follows:
<TABLE>
<CAPTION>
JUNE 30,
CONTRACT STRIKE NUMBER OF PREMIUMS 2000 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
-------------------- -------- ------ --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Analog Devices, Inc. Jul-00 $105 20 $11,170 $375 $10,795
----------------------------------------------------------------------------------
</TABLE>
24 AIM V.I. BALANCED FUND
<PAGE>
NOTE 7 - FUTURES CONTRACTS
On June 30, 2000, $400,000 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>
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
---------------- --------- ---------- ----------- --------------
<S> <C> <C> <C> <C>
NASDAQ 100 Index 5 Sep-00/Buy $ 1,908,500 $(33,775)
-----------------------------------------------------------------
S&P 500 Index 7 Sep-00/Buy 2,569,175 (6,241)
-----------------------------------------------------------------
$ 4,477,675 $(40,016)
=================================================================
</TABLE>
NOTE 8 - 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,
2000 was $35,612,714 and $14,474,905, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $9,541,768
-------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,606,909)
-------------------------------------------------------------------------
Net unrealized appreciation of investment securities $7,934,859
=========================================================================
</TABLE>
Cost of investments for tax purposes is $62,728,001.
NOTE 9 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold 1,774,117 $23,275,967 2,956,052 $34,512,915
--------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 66,460 830,090
--------------------------------------------------------------------------
Reacquired (144,901) (1,912,772) (247,878) (2,881,446)
--------------------------------------------------------------------------
1,629,216 $21,363,195 2,774,634 $32,461,559
==========================================================================
</TABLE>
AIM V.I. BALANCED FUND 25
<PAGE>
NOTE 10 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
MAY 1, 1998
(DATE
SIX MONTHS OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2000(a) 1999(a) 1998
----------- ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.04 $ 11.14 $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.17 0.31 0.12
-------------------------------------------------------------------------------
Net gains on securities (both
realized and unrealized) 0.07 1.83 1.18
-------------------------------------------------------------------------------
Total from investment operations 0.24 2.14 1.30
-------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.17) (0.14)
-------------------------------------------------------------------------------
Distributions from net realized
gains -- (0.07) (0.02)
-------------------------------------------------------------------------------
Total distributions -- (0.24) (0.16)
-------------------------------------------------------------------------------
Net asset value, end of period $ 13.28 $ 13.04 $ 11.14
===============================================================================
Total return(b) 1.84% 19.31% 13.02%
===============================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $70,809 $48,307 $10,343
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.19%(c) 1.21% 1.18%(d)
-------------------------------------------------------------------------------
Without fee waivers 1.19%(c) 1.31% 2.83%(d)
===============================================================================
Ratio of net investment income to
average net assets 2.63%(c) 2.66% 3.71%(d)
===============================================================================
Portfolio turnover rate 16% 57% 9%
===============================================================================
</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 $58,802,783.
(d) Annualized.
26 AIM V.I. BALANCED FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Balanced Fund (the "Fund"), a
portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized
as AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was
held on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 3,540,401 90,035 290,586
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 3,447,753 143,079 330,190
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 3,449,424 145,828 325,770
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 3,471,747 107,007 342,268
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 3,492,745 100,491 327,786
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 3,425,867 169,613 325,542
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 3,397,078 191,881 332,063
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 3,445,042 139,394 336,586
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 3,421,294 179,133 320,595
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 3,342,268 179,156 399,598
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 3,551,821 57,911 311,290
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. BALANCED FUND 27
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGER'S OVERVIEW
AIM V.I. Blue Chip Fund
FUND PERFORMS WELL IN CHALLENGING MARKET
HOW DID THE FUND PERFORM DURING THE But many non-technology stocks, TOTAL RETURNS
REPORTING PERIOD? particularly those that warned of
Benefiting from its wide diversification potential earnings shortfalls, were For the six months ended 6/30/00
across all sectors, AIM V.I. Blue volatile as well during the first half
Chip Fund performed well for shareholders of the year. AIM V.I. Blue Chip Fund 4.60%
despite volatility in the financial Following the March/April technology -----------------------------------------
markets during the first half of 2000. sell-off, some investors sought safety by Russell 1000 Index 0.78%
For the six months ended June 30, 2000, shifting from growth stocks to value -----------------------------------------
the fund's total return was 4.60%, stocks, or from less-established to more- S&P 500 Index -0.43%
exceeding that of the Russell 1000 Index, established companies. Other investors -----------------------------------------
which rose by 0.78% for the same period. simply moved to cash--and waited. They
(The S&P 500, considered representative waited to see whether the Federal Reserve Past performance cannot guarantee
of the stock market as a whole, declined Board (the Fed) would continue its year- comparable future results. Market
0.43% during the first six months of long series of interest-rate increases, volatility can significantly impact
2000.) Because the fund's shares have been waited to see where the economy was headed short-term performance. Results of an
offered for less than a year, the returns and waited to evaluate mid-year corporate investment made today may differ
provided are cumulative total returns that earnings reports. As they waited, the substantially from the historical
have not yet been annualized. markets drifted for much of May and June. performance shown.
The fund's total net assets stood at
$8.5 million on June 30, 2000. WHY WERE THE MARKETS SO VOLATILE expressed concern about a tight labor
DURING THE FIRST HALF OF THE YEAR? market, higher oil prices and increased
WHAT WERE THE MAJOR TRENDS IN THE There were many reasons, but the Fed's consumer spending.
FINANCIAL MARKETS? decision to continue raising the key Several economic indicators have begun
U.S. equity markets experienced federal funds rate (the interest rate to suggest that the hikes may be slowing
significant volatility during the first banks charge one another for overnight the economy. In recent months, housing
half of 2000, and investors changed their loans) clearly unnerved many investors. starts, new-home sales, new-construction
investment strategies to deal with this Since June 1999, the Fed has increased spending and retail sales have declined or
volatility. Volatility was most pronounced interest rates six times (for a cumulative increased more slowly in reaction to the
among high-flying technology stocks, total increase of 1.75%) in an effort to Fed's actions.
many of which fell sharply in March and contain inflation and cool off
April. the economy. The Fed has repeatedly
HOW WE SEEK THE BLUEST OF THE BLUE CHIPS
How does AIM V.I. Blue Chip Fund pursue its goal of seeking positions? Because a strong position in its industry can give
long-term growth of capital for its shareholders? The short a company pricing flexibility--as well as the potential for
answer is by owning the stocks, convertible securities and strong unit sales. These factors, in turn, can lead to higher
bonds of large, established companies that managers believe earnings growth and greater share-price appreciation.
are (or can become) leaders in their fields. The longer answer
is more complex. To be considered for purchase by fund managers, Fund managers base their buying decisions on a bottom-up
a company must: analysis of each stock they consider. Each blue-chip company
. have superior growth fundamentals compared to other companies must also possess at least one of these financial characteristics:
within its industry . faster earnings growth than its competitors and the market
. have attractive valuations relative to other companies within in general
its industry . higher profit margins than its competitors
. be a market leader (or have the potential to become a market . stronger cash flow than its competitors
leader) as evidenced by strong market share, strong cash . a balance sheet with relatively low debt and a high return on
flows, etc., relative to its competitors equity compared to its competitors
Why do fund managers search for the stocks of companies that
occupy (or have the potential to occupy) industry-leading
</TABLE>
28 AIM V.I. BLUE CHIP FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
HOW WAS THE FUND'S PORTFOLIO POSITIONED AT PORTFOLIO COMPOSITION
THE CLOSE OF THE REPORTING PERIOD? As of 6/30/00, based on total net assets
The fund held 82 stocks in a broad range
of industries at the end of June. While we TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
select stocks for the portfolio company by 1. General Electric Co. 4.56% 1. Computers (Software & Services) 9.05%
company, based on each company's market 2. Cisco Systems, Inc. 4.05 2. Communications Equipment 6.84
leadership and growth potential, we 3. Pfizer Inc. 3.90 3. Health Care
believe that some sectors are likely to 4. Intel Corp. 2.84 (Drugs--Major Pharmaceuticals) 6.43
continue to experience above-average 5. Nortel Networks Corp. 4. Electrical Equipment 5.57
growth. These include the technology, (Canada) 2.82 5. Electronics (Semiconductors) 5.22
health-care and financial sectors. The 6. Oracle Corp. 2.68 6. Computers (Hardware) 4.37
fund owned stocks of leading companies 7. Microsoft Corp. 2.55 7. Financial (Diversified) 4.24
in each: 8. Tyco International Ltd. 8. Broadcasting
. Nortel Networks, VERITAS Software, (Bermuda) 2.40 (Television, Radio & Cable) 4.24
Oracle and Cisco Systems in the 9. Sun Microsystems, Inc. 2.14 9. Computers (Networking) 4.05
technology sector 10. American International Group, Inc. 2.08 10. Retail (General Merchandise) 3.72
. Pfizer, Schering-Plough, Medtronic,
Pharmacia and Amgen in the health-care The fund's portfolio is subject to change, and there is no assurance that the
sector fund will continue to hold any particular security.
. Morgan Stanley Dean Witter, American
Express, Citigroup, Chase Bank and
American International Group in the
financial sector
WHAT WERE SOME OF THE FUND'S WHAT IS YOUR OUTLOOK FOR THE FUTURE? investor sentiment shifts from growth to
LARGEST HOLDINGS? There are signs that Fed rate hikes are value, or vice versa.
General Electric and Cisco Systems were beginning to slow the economy, possibly
the fund's two largest holdings at the obviating the need for additional ------------------------------
close of the reporting period--and increases. While a continuing tight labor
illustrate what we mean when we say market and high oil prices remain The performance figures shown here, which
"market leaders." concerns, we are cautiously optimistic represent AIM V.I. Blue Chip Fund, are not
General Electric is a dominant force that the Fed will succeed in piloting intended to reflect actual annuity values,
in a wide range of industries. Its National the U.S. economy to a "soft landing." and they do not reflect charges at the
Broadcasting Company delivers network Indeed, shortly after the close of the separate-account level which (if applied)
television programming, operates television reporting period, based on positive would lower them. AIM V.I. Blue Chip Fund's
stations, and provides cable, Internet second-quarter earnings reports and the performance figures are historical, and
and multimedia programming and increasing likelihood that the Fed was they reflect the reinvestment of distribut-
distribution services. GE Capital Services, approaching the end of its tightening ions and changes in net asset value. The
which accounts for half the company's cycle, investor confidence seemed to fund's investment return and principal
sales, is among the largest financial- increase, and the markets rallied. value will fluctuate, so an investor's
services companies in the United States. We continue to believe that the shares, when redeemed, may be worth more or
GE manufactures everything from household outlook for AIM V.I. Blue Chip Fund less than their original cost.
appliances to light bulbs to medical- is positive. In any market environment, Had fees and expenses not been waived,
imaging equipment--as well as the power but particularly in times of volatility returns would have been lower.
plants to run them. or uncertainty, it can be beneficial to The unmanaged Russell 1000 Index (the
Cisco controls more than three-quarters own stocks of large, established, Russell 1000) represents the performance of
of the global market for products that link industry-leading companies. Also, when the stocks of large-capitalization
networks and power the Internet, including selecting stocks for the portfolio, the companies. The unmanaged Standard & Poor's
routers and switches. Indeed, Cisco has a fund's flexible investment strategy allows Composite Index of 500 Stocks (the S&P 500)
60% share of the router market, which is it to buy stocks with superior growth represents the performance of the stock
growing 40% annually. It also makes dial- fundamentals as well as stocks with favor- market.
up access servers and network-management able relative valuations. This representa- An investment cannot be made in an
software. Last year, the company's annual tion across all sectors and investment index. Index results include reinvested
revenues increased by 43.7% and its net styles helps dampen volatility when dividends.
income increased by 55.2%
</TABLE>
AIM V.I. BLUE CHIP FUND 29
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY INTERESTS - 93.27%
AIRLINES - 0.30%
Delta Air Lines, Inc. 500 $ 25,280
------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 1.15%
Fifth Third Bancorp 700 44,275
------------------------------------------------------------------
State Street Corp. 500 53,031
------------------------------------------------------------------
97,306
------------------------------------------------------------------
BANKS (MONEY CENTER) - 1.30%
Chase Manhattan Corp. (The) 2,400 110,550
------------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 0.41%
Coca-Cola Co. (The) 600 34,462
------------------------------------------------------------------
BIOTECHNOLOGY - 1.24%
Amgen Inc.(a) 1,500 105,375
------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 4.24%
AT&T Corp. - Liberty Media Group - Class A(a) 3,900 94,575
------------------------------------------------------------------
Clear Channel Communications, Inc.(a) 600 45,000
------------------------------------------------------------------
Comcast Corp. - Class A(a) 1,600 64,800
------------------------------------------------------------------
MediaOne Group, Inc.(a) 700 46,287
------------------------------------------------------------------
Viacom Inc. - Class B(a) 1,600 109,100
------------------------------------------------------------------
359,762
------------------------------------------------------------------
CHEMICALS - 0.74%
Air Products & Chemicals, Inc. 900 27,730
------------------------------------------------------------------
Du Pont (E. I.) de Nemours & Co. 800 35,000
------------------------------------------------------------------
62,730
------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 6.84%
Comverse Technology, Inc.(a) 600 55,800
------------------------------------------------------------------
JDS Uniphase Corp.(a) 900 107,888
------------------------------------------------------------------
Lucent Technologies Inc. 900 53,325
------------------------------------------------------------------
Nokia Oyj - ADR (Finland) 2,500 124,844
------------------------------------------------------------------
Nortel Networks Corp. (Canada) 3,500 238,875
------------------------------------------------------------------
580,732
------------------------------------------------------------------
COMPUTERS (HARDWARE) - 4.37%
Dell Computer Corp.(a) 1,700 83,831
------------------------------------------------------------------
Gateway, Inc.(a) 700 39,725
------------------------------------------------------------------
International Business Machines Corp. 600 65,738
------------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,000 181,875
------------------------------------------------------------------
371,169
------------------------------------------------------------------
COMPUTERS (NETWORKING) - 4.05%
Cisco Systems, Inc.(a) 5,400 343,238
------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.00%
EMC Corp.(a) 2,200 169,262
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES) - 9.05%
America Online, Inc.(a) 1,300 $ 68,575
------------------------------------------------------------
Microsoft Corp.(a) 2,700 216,000
------------------------------------------------------------
Oracle Corp.(a) 2,700 226,969
------------------------------------------------------------
VERITAS Software Corp.(a) 1,500 169,523
------------------------------------------------------------
Yahoo! Inc.(a) 700 86,713
------------------------------------------------------------
767,780
------------------------------------------------------------
ELECTRIC COMPANIES - 0.44%
Edison International 1,800 36,900
------------------------------------------------------------
ELECTRICAL EQUIPMENT - 5.57%
General Electric Co. 7,300 386,900
------------------------------------------------------------
Sanmina Corp.(a) 1,000 85,500
------------------------------------------------------------
472,400
------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 5.22%
Intel Corp. 1,800 240,638
------------------------------------------------------------
Texas Instruments Inc. 1,500 103,031
------------------------------------------------------------
Xilinx, Inc.(a) 1,200 99,075
------------------------------------------------------------
442,744
------------------------------------------------------------
ENTERTAINMENT - 1.25%
Time Warner Inc. 1,400 106,400
------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.96%
Applied Materials, Inc.(a) 900 81,562
------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 4.24%
American Express Co. 1,800 93,825
------------------------------------------------------------
Citigroup Inc. 2,400 144,600
------------------------------------------------------------
Fannie Mae 1,400 73,062
------------------------------------------------------------
Freddie Mac 1,200 48,600
------------------------------------------------------------
360,087
------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 2.49%
Allergan, Inc. 900 67,050
------------------------------------------------------------
American Home Products Corp. 800 47,000
------------------------------------------------------------
Bristol-Myers Squibb Co. 800 46,600
------------------------------------------------------------
Johnson & Johnson 500 50,937
------------------------------------------------------------
211,587
------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) -
6.43%
Merck & Co., Inc. 600 45,975
------------------------------------------------------------
Pfizer Inc. 6,900 331,200
------------------------------------------------------------
Pharmacia Corp. 1,300 67,194
------------------------------------------------------------
Schering-Plough Corp. 2,000 101,000
------------------------------------------------------------
545,369
------------------------------------------------------------
</TABLE>
30 AIM V.I. BLUE CHIP FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.99%
Guidant Corp.(a) 900 $ 44,550
---------------------------------------------------------------------
Medtronic, Inc. 2,500 124,531
---------------------------------------------------------------------
169,081
---------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.64%
Colgate-Palmolive Co. 900 53,887
---------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 2.08%
American International Group, Inc. 1,500 176,250
---------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 3.01%
Merrill Lynch & Co., Inc. 700 80,500
---------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 2,100 174,825
---------------------------------------------------------------------
255,325
---------------------------------------------------------------------
LODGING - HOTELS - 0.39%
Carnival Corp. 1,700 33,150
---------------------------------------------------------------------
MACHINERY (DIVERSIFIED) - 0.38%
Ingersoll-Rand Co. 800 32,200
---------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 3.09%
Tyco International Ltd. (Bermuda) 4,300 203,712
---------------------------------------------------------------------
United Technologies Corp. 1,000 58,875
---------------------------------------------------------------------
262,587
---------------------------------------------------------------------
NATURAL GAS - 1.45%
El Paso Energy Corp. 900 45,844
---------------------------------------------------------------------
Enron Corp. 1,200 77,400
---------------------------------------------------------------------
123,244
---------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 1.14%
Halliburton Co. 1,100 51,906
---------------------------------------------------------------------
Schlumberger Ltd. 600 44,775
---------------------------------------------------------------------
96,681
---------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 2.45%
Exxon Mobil Corp. 2,100 164,850
---------------------------------------------------------------------
Royal Dutch Petroleum Co. - ADR - New York Shares
(Netherlands) 700 43,094
---------------------------------------------------------------------
207,944
---------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.26%
Bowater Inc. 500 22,063
---------------------------------------------------------------------
RAILROADS - 0.31%
Canadian National Railway Co. (Canada) 900 26,269
---------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 1.82%
Home Depot, Inc. (The) 3,100 154,806
---------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.69%
Safeway Inc.(a) 1,300 58,663
---------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 3.72%
Costco Wholesale Corp.(a) 1,700 56,100
---------------------------------------------------------------------
Target Corp. 1,600 92,800
---------------------------------------------------------------------
Wal-Mart Stores, Inc. 2,900 167,113
---------------------------------------------------------------------
316,013
---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL) - 0.44%
Gap, Inc. (The) 1,200 $ 37,500
------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.61%
Interpublic Group of Companies, Inc. (The) 1,200 51,600
------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.49%
First Data Corp. 1,500 74,438
------------------------------------------------------------------------
Fiserv, Inc.(a) 1,200 51,900
------------------------------------------------------------------------
126,338
------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 2.33%
Nextel Communications, Inc. - Class A(a) 1,600 97,900
------------------------------------------------------------------------
Vodafone AirTouch PLC - ADR (United Kingdom) 2,400 99,450
------------------------------------------------------------------------
197,350
------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.32%
AT&T Corp. 500 15,813
------------------------------------------------------------------------
WorldCom, Inc.(a) 2,100 96,338
------------------------------------------------------------------------
112,151
------------------------------------------------------------------------
TELEPHONE - 1.37%
BellSouth Corp. 1,100 46,888
------------------------------------------------------------------------
SBC Communications Inc. 1,600 69,200
------------------------------------------------------------------------
116,088
------------------------------------------------------------------------
Total Common Stocks & Other Equity Interests
(Cost $7,614,110) 7,913,885
------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES - 0.18%
U.S. TREASURY BILLS - 0.18%
5.66%, 09/21/00 (Cost $14,808)(b) $ 15,000(c) 14,815
------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS - 13.45%
STIC Liquid Assets Portfolio(d) 570,564 570,564
------------------------------------------------------------------------
STIC Prime Portfolio(d) 570,564 570,564
------------------------------------------------------------------------
Total Money Market Funds (Cost $1,141,128) 1,141,128
------------------------------------------------------------------------
TOTAL INVESTMENTS - 106.90%
(COST $8,770,046) 9,069,828
------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (6.90%) (585,147)
------------------------------------------------------------------------
NET ASSETS - 100.00% $8,484,681
========================================================================
</TABLE>
Investment Abbreviations:
ADR-American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) The principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(d) The money market fund has the same investment advisor as the Fund.
AIM V.I. BLUE CHIP FUND 31
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $8,770,046) $9,069,828
--------------------------------------------------------------------
Receivables for:
Investments sold 41,030
--------------------------------------------------------------------
Variation margin 1,515
--------------------------------------------------------------------
Fund shares sold 177,789
--------------------------------------------------------------------
Dividends 6,044
--------------------------------------------------------------------
Investment for deferred compensation plan 1,382
--------------------------------------------------------------------
Total assets 9,297,588
--------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 798,049
--------------------------------------------------------------------
Deferred compensation plan 1,382
--------------------------------------------------------------------
Accrued advisory fees 4,498
--------------------------------------------------------------------
Accrued administrative services fees 4,098
--------------------------------------------------------------------
Accrued trustees' fees 1,549
--------------------------------------------------------------------
Accrued operating expenses 3,331
--------------------------------------------------------------------
Total liabilities 812,907
--------------------------------------------------------------------
Net assets applicable to shares outstanding $8,484,681
--------------------------------------------------------------------
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 810,708
====================================================================
Net asset value, offering and redemption price per share $ 10.47
====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $67) $ 23,006
-----------------------------------------------------------------------------
Interest 1,891
-----------------------------------------------------------------------------
Total investment income 24,897
-----------------------------------------------------------------------------
EXPENSES:
Advisory fees 14,590
-----------------------------------------------------------------------------
Administrative services fee 24,863
-----------------------------------------------------------------------------
Custodian fees 21,112
-----------------------------------------------------------------------------
Printing 16,142
-----------------------------------------------------------------------------
Professional fees 15,900
-----------------------------------------------------------------------------
Trustees' fees 3,376
-----------------------------------------------------------------------------
Other 421
-----------------------------------------------------------------------------
Total expenses 96,404
-----------------------------------------------------------------------------
Less:Fees waived and reimbursed by Advisor (69,833)
-----------------------------------------------------------------------------
Expenses paid indirectly (1,338)
-----------------------------------------------------------------------------
Net expenses 25,233
-----------------------------------------------------------------------------
Net investment income (loss) (336)
-----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND
FUTURES CONTRACTS
Net realized gain (loss) from:
Investment securities (48,407)
-----------------------------------------------------------------------------
Futures contracts (40,031)
-----------------------------------------------------------------------------
(88,438)
-----------------------------------------------------------------------------
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities 299,778
-----------------------------------------------------------------------------
Futures contracts (3,607)
-----------------------------------------------------------------------------
296,171
-----------------------------------------------------------------------------
Net gain on investment securities and futures contracts 207,733
-----------------------------------------------------------------------------
Net increase in net assets resulting from operations $207,397
=============================================================================
</TABLE>
See Notes to Financial Statements.
32 AIM V.I. BLUE CHIP FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (336) $ 168
-------------------------------------------------------------------------------
Net realized gain (loss) from investment securities
and futures contracts (88,438) (574)
-------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and futures contracts 296,171 --
-------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 207,397 (406)
-------------------------------------------------------------------------------
Share transactions-net 7,277,680 1,000,010
-------------------------------------------------------------------------------
Net increase in net assets 7,485,077 999,604
-------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 999,604 --
-------------------------------------------------------------------------------
End of period $8,484,681 $ 999,604
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $8,277,668 $ 999,988
-------------------------------------------------------------------------------
Undistributed net investment income (loss) (146) 190
-------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and futures contracts (88,438) --
-------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and futures contracts 295,597 (574)
-------------------------------------------------------------------------------
$8,484,681 $ 999,604
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Blue Chip Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve long-term growth of capital, with a secondary objective of current
income.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 Trust's officers in a manner specifically authorized by
the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. 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
AIM V.I. BLUE CHIP FUND
33
<PAGE>
generally determined prior to the close of the NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
E. Futures Contracts - The Fund may purchase or sell 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 that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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, 2000, AIM waived fees of $14,590 and reimbursed expenses
of $55,243.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $24,863 for accounting services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,725
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $1,338 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $1,338.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $7,845,294 and $182,777, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $545,223
-----------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (245,441)
-----------------------------------------------------------------------
Net unrealized appreciation of investment securities $299,782
-----------------------------------------------------------------------
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7 - FUTURES CONTRACTS
On June 30, 2000, $15,000 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>
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-------- --------- ---------- ------- --------------
<S> <C> <C> <C> <C>
S&P 500 Mini 3 Sep-00/Buy $73,405 $(4,185)
</TABLE>
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the period December 29, 1999 (date operations commenced) through December 31,
1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------- ------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Sold 741,895 $7,590,483 100,001 $1,000,010
---------------------------------------------------------------------
Reacquired (31,188) (312,803) -- --
---------------------------------------------------------------------
710,707 $7,277,680 100,001 $1,000,010
=====================================================================
</TABLE>
34 AIM V.I. BLUE CHIP FUND
<PAGE>
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
DECEMBER 29,
1999 (DATE
SIX MONTHS OPERATIONS
ENDED COMMENCED) TO
JUNE 30, DECEMBER 31,
2000 1999
---------- -------------
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
------------------------------------------------------------------------------
Income from investment operations:
Net investment income -- --
------------------------------------------------------------------------------
Net gains on securities (both realized and
unrealized) 0.47 --
------------------------------------------------------------------------------
Total from investment operations 0.47 --
------------------------------------------------------------------------------
Net asset value, end of period $10.47 $10.00
==============================================================================
Total return(a) 4.70% --
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $8,485 $1,000
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.36%(b) 1.30%(c)
------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 4.92%(b) 12.49%(c)
==============================================================================
Ratio of net investment income (loss) to average
net assets (0.02)%(b) 3.07%(c)
==============================================================================
Portfolio turnover rate 5% --
==============================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $3,942,995.
(c) Annualized.
AIM V.I. BLUE CHIP FUND 35
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Blue Chip Fund (the "Fund"), a
portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized
as AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was
held on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 118,492 N/A 3,529
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 122,021 N/A N/A
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 122,021 N/A N/A
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 118,492 N/A 3,529
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 122,021 N/A N/A
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 122,021 N/A N/A
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 122,021 N/A N/A
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 122,021 N/A N/A
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 122,021 N/A N/A
(5) Approval of changing the Investment
Objective and so that it is Non-
Fundamental........................ 122,021 N/A N/A
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 122,021 N/A N/A
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
36 AIM V.I. BLUE CHIP FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. CAPITAL APPRECIATION FUND
FUND RECORDS SOLID RETURNS
IN A VOLATILE MARKET ENVIRONMENT, MID- AND the Federal Reserve Board (the Fed) might prospects of mid-sized companies. We also
SMALL-CAP STOCKS OUTPERFORMED LARGE-CAP continue to raise interest rates to slow took advantage of the market sell-off
STOCKS. HOW DID AIM V.I. CAPITAL torrid economic growth and to contain in the spring to buy the stocks of
APPRECIATION FUND PERFORM? inflation. On May 16, the Fed, which quality companies at reduced prices.
Despite a sharp market sell-off in April launched a monetary tightening policy in
and May, the fund posted a solid 8.24% June 1999, raised the key federal funds HOW WAS THE FUND POSITIONED AS OF JUNE 30?
cumulative total return for the six months rate--the rate banks charge one another At the end of the reporting period, the
ended June 30, 2000. The fund outperformed for overnight loans--from 6.0% to 6.5%. fund had 136 equity holdings. Technology
the Lipper Multi-Cap Growth Fund Index, Interest-rate concerns before and after stocks made up 45% of the portfolio. The
the Russell Midcap Index and the S&P 500, the Fed's action prompted a sell-off fund's significant exposure to the
which had total returns of 7.40%, 5.12% that affected nearly every stock-market technology sector was a result of our
and -0.43%, respectively, for the same sector in April and May, causing markets stock-selection process, which is based
period. to be extremely volatile. on earnings growth prospects, not
Markets rallied in June as key economic macroeconomic predictions. We continued to
TOTAL RETURNS OF FUND VS. INDEXES data, such as housing starts and retail find many companies with excellent earnings
sales, indicated that the economy might be prospects in the technology sector.
12/31/99-6/30/00 slowing, diminishing the possibility of Moreover, we generally do not buy the
further Fed rate hikes. At its June 28 stocks of companies that have no earnings.
AIM V.I. Capital Appreciation Fund 8.24% meeting, the Fed left interest rates Industries within the technology sector
------------------------------------------ unchanged. The June rally enabled the that were prominently represented in the
Lipper Multi-Cap Growth Fund Index 7.40% Nasdaq, which lost 37.3% of its value portfolio included computer software and
------------------------------------------ between March 10 and May 23, to end the services, communications equipment and
Russell Midcap Index 5.12% reporting period down only 2.54%. semiconductors. These industries are
------------------------------------------ While the Dow, a barometer of the benefiting from the steady sales of
S&P 500 Index -0.43% performance of large-cap stocks, was down personal computers, the proliferation
8.44% for the six months ended June 30, of new communications devices and the
WHAT WERE THE KEY TRENDS IN THE STOCK mid- and small-cap stocks posted positive expansion of the Internet. We believe that
MARKET? returns for the period. Additionally, the outlook is favorable for tech
Markets soared, then declined before investors generally favored the stocks of companies, which stand to benefit from
staging a comeback as the reporting period companies with tangible earnings. In the global economic expansion, mergers and
drew to a close. During the first three small-cap stock universe, value stocks acquisitions and the growth of wireless
months of 2000, several key market indexes slightly outperformed growth stocks, while communications and the Internet.
rose to new heights, with the Dow setting in the large- and mid-cap stock categories,
a record in January and the technology- growth stocks were the better performers. WHAT WERE A FEW OF THE TECH STOCKS IN THE
dominated Nasdaq following suit in March. PORTFOLIO AT THE END OF THE REPORTING
High-flying technology stocks helped propel WAS THE FUND ABLE TO TAKE ADVANTAGE OF PERIOD?
these advances. Toward the end of March, THESE MARKET TRENDS? . Corning, the fund's largest holding, is
however, investors became concerned that Yes, because even though large- and the inventor and one of the world's top
tech stocks might be overvalued, sparking super-cap stocks made up the bulk of the manufacturers of fiber-optic cable.
a sharp sell-off in this sector. In April, portfolio, mid-cap stocks, the market . VERITAS is the world's largest maker of
a federal court ruling against software leaders, made up more than a quarter of storage-management software, which
giant Microsoft (not a fund holding) helped the fund's holdings. Investors gravitated protects networks against data loss
perpetuate the sell-off. The stocks of to mid-cap stocks because of their from crashes and errors, expedites
Internet companies with no earnings were attractive valuations compared to large-cap data recovery and manages corporate
particularly hard hit. stocks and the appealing earnings storage.
Investors were also concerned that
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND 37
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
PORTFOLIO COMPOSITION Past performance cannot guarantee comparable
As of 6/30/00, based on total net assets future results. Market volatility can
significantly impact short-term performance.
Results of an investment made today may
differ substantially from the historical
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES performance shown.
1. Corning Inc. 3.10% 1. Communications Equipment 16.79%
2. VERITAS Software Corp. 3.00 2. Electronics (Semiconductors) 10.57 The performance figures shown here, which
3. JDS Uniphase Corp. 2.99 3. Computers (Software & Services) 8.94 represent AIM V.I. Capital Appreciation
4. ADC Telecommunications, Inc. 2.61 4. Oil & Gas (Drilling & Equipment) 5.63 Fund, are intended to reflect actual
5. Analog Devices, Inc. 1.81 5. Investment Banking/Brokerage 3.85 annuity values, and they do not reflect
6. Scientific-Atlanta, Inc. 1.77 6. Broadcasting (Television, charges at the separate-account level which
7. PMC-Sierra, Inc.-ADR (Canada) 1.54 Radio & Cable) 3.30 (if applied) would lower them. AIM V.I.
8. Check Point Software Technologies, 7. Telecommunications Capital Appreciation Fund's performance
Ltd.-ADR (Israel) 1.47 (Cellular/Wireless) 2.58 figures are historical, and they reflect
9. Comverse Technology, Inc. 1.29 8. Computers (Peripherals) 2.32 the reinvestment of distributions and the
10. Nortel Networks Corp.-- 1.26 9. Electrical Equipment 2.25 changes in net asset value. The fund's in-
ADR (Canada) 10. Computers (Networking) 2.18 vestment return and principal value will
fluctuate, so an investor's shares, when
The fund's portfolio composition is subject to change, and there is no assurance redeemed, may be worth more or less than
that the fund will continue to hold any particular security. their original cost.
Investing in small and mid-sized
. JDS Uniphase is the world's leading in slowing economic growth to a more companies may involve greater risk and
supplier of parts for fiber-optic sustainable rate and in keeping inflation potential reward than investing in more
equipment. at bay, it could prolong the current record established companies.
. Analog Devices is a leading maker of economic expansion. Such an environment The unmanaged Dow Jones Industrial
both analog and digital integrated could help sustain corporate earnings Average (the Dow) is a price-weighted
circuits, which translate such pheno- growth and prove favorable for stocks. average of 30 actively traded primarily
mena as pressure, temperature and sound However, uncertainty over the Fed's industrial stocks.
into digital signals. actions and other factors could perpetuate The unmanaged Lipper Multi-Cap
. ADC Telecommunications makes sys- the volatility that has characterized Growth Fund Index represents an average
tems that speed up the rate at which markets in recent months. In such an of the performance of the 30 largest
voice, data and video signals are environment, investors would be well multi-cap growth mutual funds tracked by
transmitted. advised to take a long-term perspective Lipper, Inc., an independent mutual fund
. Scientific-Atlanta makes set-top on their investment. performance monitor.
boxes for receiving cable-television The unmanaged National Association
programming. of Securities Dealers Automated Quotation
. PMC-Sierra develops semiconductor FUND PERFORMANCE System Composite Index (the Nasdaq) is a
components that improve Internet market-value-weighted index comprising all
transmission. AVERAGE ANNUAL TOTAL RETURNS domestic and non-U.S.-based common stocks
listed on the Nasdaq system. It includes
WHAT OTHER STOCKS PERFORMED WELL FOR As of 6/30/00, including sales charges more than 5,000 companies, and it is often
THE FUND? considered representative of the small and
. Jones Pharma produces specialty drugs, ----------------------------------------- medium-sized company stock universe. While
including treatments for thyroid Inception (5/5/93) 21.98% it includes many small and mid-sized
disorders ----------------------------------------- company stocks, large-capitalization
. Kohl's operates about 300 department 5 Years 22.36 technology companies tend to dominate
stores, primarily targeting middle- ----------------------------------------- the index.
income customers. 1 Year 42.91 The Russell Midcap Index represents
. Cooper Cameron makes equipment for ----------------------------------------- the performance of the stocks of
the oil and gas industry. mid-capitalization companies.
RESULTS OF A $10,000 INVESTMENT The unmanaged Standard & Poor's
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM? FUND VS. INDEXES Composite Index of 500 Stocks (the S&P 500)
The near-term outlook for stocks could represents the performance of the stock
depend to a large extent on the Fed's 5/5/93-6/30/00* market.
ability to bring the economy to a "soft An investment cannot be made in an
landing." With increasing evidence that AIM V.I Capital Appreciation Fund $41,416 index. Unless otherwise indicated, index
economic growth could be slowing, the Fed ------------------------------------------ results include reinvested dividends.
may refrain from further interest-rate Russell Midcap Index $30,794
increases. Moreover, a presidential ------------------------------------------
election is looming in the fall. To appear S&P 500 Index $38,261
unbiased, the Fed has tended to leave ------------------------------------------
interest rates unchanged in the months
immediately preceding a presidential * Index performance is from
election. If Fed policy ultimately succeeds 4/30/93-6/30/00
</TABLE>
38 AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS - 91.07%
AUTO PARTS & EQUIPMENT - 0.44%
Danaher Corp. 132,500 $ 6,550,469
-------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 0.84%
Northern Trust Corp. 122,600 7,976,662
-------------------------------------------------------------------------
State Street Corp. 43,300 4,592,506
-------------------------------------------------------------------------
12,569,168
-------------------------------------------------------------------------
BANKS (MONEY CENTER) - 0.51%
J.P. Morgan & Co., Inc. 70,000 7,708,750
-------------------------------------------------------------------------
BIOTECHNOLOGY - 1.49%
Amgen Inc.(a) 107,500 7,551,875
-------------------------------------------------------------------------
Biogen, Inc.(a) 230,000 14,835,000
-------------------------------------------------------------------------
22,386,875
-------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.30%
AMFM Inc.(a) 105,300 7,265,700
-------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group - Class A(a) 416,400 10,097,700
-------------------------------------------------------------------------
Cox Communications, Inc. - Class A(a) 106,000 4,829,625
-------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 220,000 7,287,500
-------------------------------------------------------------------------
Univision Communications, Inc. - Class A(a) 105,500 10,919,250
-------------------------------------------------------------------------
Westwood One, Inc.(a) 271,900 9,278,587
-------------------------------------------------------------------------
49,678,362
-------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 16.79%
ADC Telecommunications, Inc.(a) 468,400 39,287,050
-------------------------------------------------------------------------
Alcatel - ADR (France) 278,300 18,506,950
-------------------------------------------------------------------------
CIENA Corp.(a) 107,100 17,852,231
-------------------------------------------------------------------------
Comverse Technology, Inc.(a) 208,200 19,362,600
-------------------------------------------------------------------------
Corning Inc. 172,900 46,661,387
-------------------------------------------------------------------------
JDS Uniphase Corp.(a)(b) 374,700 44,917,162
-------------------------------------------------------------------------
Juniper Networks, Inc.(a) 66,200 9,636,237
-------------------------------------------------------------------------
Nokia Oyj - ADR (Finland) 212,800 10,626,700
-------------------------------------------------------------------------
Nortel Networks Corp. - ADR (Canada) 277,000 18,905,250
-------------------------------------------------------------------------
Scientific-Atlanta, Inc.(b) 357,400 26,626,300
-------------------------------------------------------------------------
252,381,867
-------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.88%
Comdisco, Inc. 4,200 93,712
-------------------------------------------------------------------------
Dell Computer Corp.(a) 82,800 4,083,075
-------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 99,400 9,039,187
-------------------------------------------------------------------------
13,215,974
-------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (NETWORKING) - 2.18%
Cisco Systems, Inc.(a) 138,800 $ 8,822,475
------------------------------------------------------------------------
Exodus Communications, Inc.(a) 220,000 10,133,750
------------------------------------------------------------------------
VeriSign, Inc.(a) 78,500 13,855,250
------------------------------------------------------------------------
32,811,475
------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.32%
Brocade Communications Systems, Inc.(a) 88,400 16,220,019
------------------------------------------------------------------------
EMC Corp.(a) 173,200 13,325,575
------------------------------------------------------------------------
Network Appliance, Inc.(a) 66,300 5,337,150
------------------------------------------------------------------------
34,882,744
------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 8.94%
BEA Systems, Inc.(a) 145,800 7,207,987
------------------------------------------------------------------------
Business Objects S.A. - ADR (France)(a) 76,300 6,723,937
------------------------------------------------------------------------
Check Point Software Technologies Ltd. - ADR
(Israel)(a) 104,100 22,043,175
------------------------------------------------------------------------
Gemstar International Group Ltd.(a) 68,200 4,191,103
------------------------------------------------------------------------
i2 Technologies, Inc.(a) 52,855 5,510,960
------------------------------------------------------------------------
Oracle Corp.(a) 130,000 10,928,125
------------------------------------------------------------------------
PeopleSoft, Inc.(a) 100,000 1,675,000
------------------------------------------------------------------------
Portal Software, Inc.(a) 121,600 7,767,200
------------------------------------------------------------------------
Rational Software Corp.(a) 49,700 4,618,994
------------------------------------------------------------------------
Siebel Systems, Inc.(a) 86,900 14,213,581
------------------------------------------------------------------------
VERITAS Software Corp.(a) 399,075 45,101,711
------------------------------------------------------------------------
Yahoo! Inc.(a) 35,900 4,447,112
------------------------------------------------------------------------
134,428,885
------------------------------------------------------------------------
CONSUMER FINANCE - 1.16%
Capital One Financial Corp. 135,100 6,028,837
------------------------------------------------------------------------
Providian Financial Corp. 126,600 11,394,000
------------------------------------------------------------------------
17,422,837
------------------------------------------------------------------------
ELECTRIC COMPANIES - 0.23%
Montana Power Co. (The) 100,000 3,531,250
------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.25%
American Power Conversion Corp.(a)(b) 364,300 14,867,994
------------------------------------------------------------------------
Sanmina Corp.(a)(b) 138,800 11,867,400
------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 186,600 7,079,137
------------------------------------------------------------------------
33,814,531
------------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.34%
Agilent Technologies, Inc.(a) 70,000 5,162,500
------------------------------------------------------------------------
ELECTRONICS (DEFENSE) - 1.16%
General Motors Corp. - Class H(a) 199,200 17,479,800
------------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL APPRECIATION FUND 39
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS) - 10.57%
Altera Corp.(a) 69,400 $ 7,074,462
---------------------------------------------------------------------------
Analog Devices, Inc.(a) 357,300 27,154,800
---------------------------------------------------------------------------
ASM Lithography Holding N.V. - ADR - New York
Shares (Netherlands)(a) 110,000 4,853,750
---------------------------------------------------------------------------
Celestica Inc. - ADR (Canada)(a) 265,900 13,195,287
---------------------------------------------------------------------------
Cypress Semiconductor Corp.(a) 87,100 3,679,975
---------------------------------------------------------------------------
Intel Corp. 53,000 7,085,438
---------------------------------------------------------------------------
Linear Technology Corp. 173,500 11,093,156
---------------------------------------------------------------------------
LSI Logic Corp.(a) 173,500 9,390,688
---------------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 146,200 9,932,463
---------------------------------------------------------------------------
Microchip Technology Inc.(a) 132,500 7,720,195
---------------------------------------------------------------------------
PMC-Sierra, Inc. - ADR (Canada)(a) 130,400 23,170,450
---------------------------------------------------------------------------
SDL, Inc.(a) 47,500 13,546,406
---------------------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 120,000 8,827,500
---------------------------------------------------------------------------
Xilinx, Inc.(a) 147,300 12,161,456
---------------------------------------------------------------------------
158,886,026
---------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 1.41%
Applied Materials, Inc.(a) 39,200 3,552,500
---------------------------------------------------------------------------
KLA-Tencor Corp.(a) 116,000 6,793,250
---------------------------------------------------------------------------
Novellus Systems, Inc.(a) 99,400 5,622,313
---------------------------------------------------------------------------
Teradyne, Inc.(a)(b) 70,600 5,189,100
---------------------------------------------------------------------------
21,157,163
---------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.53%
American Express Co. 152,500 7,949,063
---------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.82%
Forest Laboratories, Inc.(a) 74,600 7,534,600
---------------------------------------------------------------------------
Jones Pharma Inc. 384,275 15,346,983
---------------------------------------------------------------------------
Medicis Pharmaceutical Corp. - Class A(a) 77,500 4,417,500
---------------------------------------------------------------------------
27,299,083
---------------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 1.00%
Pfizer Inc. 312,300 14,990,400
---------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 1.14%
HCA-Healthcare Corp. (The) 208,200 6,324,075
---------------------------------------------------------------------------
Health Management Associates, Inc. - Class A(a) 565,200 7,382,925
---------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 125,000 3,375,000
---------------------------------------------------------------------------
17,082,000
---------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 2.05%
Biomet, Inc. 137,000 5,265,938
---------------------------------------------------------------------------
Medtronic, Inc. 240,000 11,955,000
---------------------------------------------------------------------------
PE Corp - PE Biosystems Group 205,700 13,550,488
---------------------------------------------------------------------------
30,771,426
---------------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 0.25%
Lincare Holdings, Inc.(a) 150,000 3,693,750
---------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (LIFE/HEALTH) - 0.63%
AFLAC, Inc. 206,800 $ 9,499,875
--------------------------------------------------------------------
INSURANCE BROKERS - 0.28%
Aon Corp. 137,600 4,274,200
--------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 3.85%
Goldman Sachs Group, Inc. (The) 195,000 18,500,625
--------------------------------------------------------------------
Merrill Lynch & Co., Inc. 60,700 6,980,500
--------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 190,000 15,817,500
--------------------------------------------------------------------
Schwab (Charles) Corp. (The) 494,450 16,625,881
--------------------------------------------------------------------
57,924,506
--------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.33%
Federated Investors, Inc. - Class B 142,700 5,003,419
--------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.88%
Harley-Davidson, Inc. 344,300 13,255,550
--------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.34%
Honeywell International 150,000 5,053,125
--------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.50%
Millipore Corp. 100,000 7,537,500
--------------------------------------------------------------------
NATURAL GAS - 0.39%
Enron Corp.(b) 90,000 5,805,000
--------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 5.63%
BJ Services Co.(a)(b) 142,300 8,893,750
--------------------------------------------------------------------
Cooper Cameron Corp.(a) 165,000 10,890,000
--------------------------------------------------------------------
ENSCO International Inc. 165,700 5,934,131
--------------------------------------------------------------------
Grant Prideco, Inc.(a) 179,000 4,475,000
--------------------------------------------------------------------
Nabors Industries, Inc.(a) 269,600 11,205,250
--------------------------------------------------------------------
R&B Falcon Corp.(a) 409,400 9,646,488
--------------------------------------------------------------------
Rowan Cos., Inc.(a) 216,200 6,567,075
--------------------------------------------------------------------
Smith International, Inc.(a) 135,400 9,858,813
--------------------------------------------------------------------
Transocean Sedco Forex Inc. 227,700 12,167,719
--------------------------------------------------------------------
Weatherford International, Inc.(a) 124,100 4,940,731
--------------------------------------------------------------------
84,578,957
--------------------------------------------------------------------
RAILROADS - 1.15%
Kansas City Southern Industries, Inc. 195,000 17,294,057
--------------------------------------------------------------------
RESTAURANTS - 0.62%
Brinker International, Inc.(a) 195,100 5,706,675
--------------------------------------------------------------------
Outback Steakhouse, Inc.(a) 124,000 3,627,000
--------------------------------------------------------------------
9,333,675
--------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.68%
Lowe's Cos., Inc. 250,000 10,265,625
--------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 1.06%
Best Buy Co., Inc.(a) 104,200 6,590,650
--------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 149,700 9,356,250
--------------------------------------------------------------------
15,946,900
--------------------------------------------------------------------
</TABLE>
40 AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES) - 1.03%
Kohl's Corp.(a) 277,600 $ 15,441,500
--------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 1.00%
Dollar Tree Stores, Inc.(a) 179,962 7,119,747
--------------------------------------------------------------------
Family Dollar Stores, Inc. 197,800 3,869,463
--------------------------------------------------------------------
Ross Stores, Inc. 236,400 4,033,575
--------------------------------------------------------------------
15,022,785
--------------------------------------------------------------------
RETAIL (SPECIALTY) - 1.58%
Bed Bath & Beyond, Inc.(a) 347,000 12,578,750
--------------------------------------------------------------------
Staples, Inc.(a) 270,080 4,152,480
--------------------------------------------------------------------
Tiffany & Co. 49,700 3,354,750
--------------------------------------------------------------------
Zale Corp.(a) 99,400 3,628,100
--------------------------------------------------------------------
23,714,080
--------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 1.56%
Gap, Inc. (The) 165,600 5,175,000
--------------------------------------------------------------------
Intimate Brands, Inc. 198,800 3,926,300
--------------------------------------------------------------------
Limited, Inc. (The) 257,800 5,574,925
--------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 150,100 3,349,106
--------------------------------------------------------------------
Talbots, Inc. (The) 99,400 5,460,788
--------------------------------------------------------------------
23,486,119
--------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.88%
Lamar Advertising Co.(a) 296,300 12,833,494
--------------------------------------------------------------------
Omnicom Group Inc. 173,500 15,452,344
--------------------------------------------------------------------
28,285,838
--------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.37%
Ariba, Inc.(a) 56,300 5,520,039
--------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.68%
CSG Systems International, Inc.(a) 66,400 3,722,550
--------------------------------------------------------------------
Fiserv, Inc.(a) 281,775 12,186,769
--------------------------------------------------------------------
Paychex, Inc.(b) 222,218 9,333,156
--------------------------------------------------------------------
25,242,475
--------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 2.58%
Crown Castle International Corp.(a) 148,800 $ 5,431,200
------------------------------------------------------------------------------
Level 3 Communications, Inc.(a) 72,500 6,380,000
------------------------------------------------------------------------------
Metromedia Fiber Network, Inc. - Class A(a) 277,600 11,017,250
------------------------------------------------------------------------------
VoiceStream Wireless Corp.(a) 62,200 7,233,666
------------------------------------------------------------------------------
Western Wireless Corp. - Class A(a) 159,700 8,703,650
------------------------------------------------------------------------------
38,765,766
------------------------------------------------------------------------------
TELEPHONE - 1.41%
Broadwing Inc.(a) 198,800 5,156,375
------------------------------------------------------------------------------
NTL Inc.(a) 99,400 5,951,575
------------------------------------------------------------------------------
Qwest Communications International Inc.(a) 203,400 10,106,438
------------------------------------------------------------------------------
21,214,388
------------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.04%
Jones Apparel Group, Inc.(a) 22,900 538,150
------------------------------------------------------------------------------
Total Common Stocks & Other Equity Interests (Cost
$847,097,651) 1,368,857,927
------------------------------------------------------------------------------
MONEY MARKET FUNDS - 7.66%
STIC Liquid Assets Portfolio(c) 57,623,628 57,623,628
------------------------------------------------------------------------------
STIC Prime Portfolio(c) 57,623,628 57,623,628
------------------------------------------------------------------------------
Total Money Market Funds
(Cost $115,247,256) 115,247,256
------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.73%
(Cost $962,344,907) 1,484,105,183
------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.27% 19,024,422
------------------------------------------------------------------------------
NET ASSETS - 100.00% $1,503,129,605
==============================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
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) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND 41
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $962,344,907) $1,484,105,183
------------------------------------------------------------------------
Receivables for:
Investments sold 22,654,382
------------------------------------------------------------------------
Fund shares sold 1,814,123
------------------------------------------------------------------------
Dividends and interest 713,991
------------------------------------------------------------------------
Investment for deferred compensation plan 35,519
------------------------------------------------------------------------
Other assets 15,276
------------------------------------------------------------------------
Total assets 1,509,338,474
------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,707,302
------------------------------------------------------------------------
Fund shares reacquired 579,043
------------------------------------------------------------------------
Options written (premiums received $1,840,730) 2,429,631
------------------------------------------------------------------------
Deferred compensation plan 35,519
------------------------------------------------------------------------
Accrued advisory fees 733,965
------------------------------------------------------------------------
Accrued administrative services fees 720,718
------------------------------------------------------------------------
Accrued trustees' fees 2,691
------------------------------------------------------------------------
Total liabilities 6,208,869
------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,503,129,605
========================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 39,031,436
========================================================================
Net asset value, offering and redemption price per share $ 38.51
========================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $19,435) $ 3,487,058
---------------------------------------------------------------------------
Interest 63,534
---------------------------------------------------------------------------
Total investment income 3,550,592
---------------------------------------------------------------------------
EXPENSES:
Advisory fees 4,022,439
---------------------------------------------------------------------------
Administrative services fee 978,279
---------------------------------------------------------------------------
Custodian fees 70,913
---------------------------------------------------------------------------
Trustees' fees 5,780
---------------------------------------------------------------------------
Other 152,901
---------------------------------------------------------------------------
Total expenses 5,230,312
---------------------------------------------------------------------------
Less: Expenses paid indirectly (6,275)
---------------------------------------------------------------------------
Net expenses 5,224,037
---------------------------------------------------------------------------
Net investment income (loss) (1,673,445)
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND OPTION CONTRACTS
Net realized gain from:
Investment securities 67,228,582
---------------------------------------------------------------------------
Option contracts written 3,379,266
---------------------------------------------------------------------------
70,607,848
---------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 30,561,858
---------------------------------------------------------------------------
Foreign currencies (23)
---------------------------------------------------------------------------
Option contracts written (145,162)
---------------------------------------------------------------------------
30,416,673
---------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
option contracts 101,024,521
---------------------------------------------------------------------------
Net increase in net assets resulting from operations $99,351,076
===========================================================================
</TABLE>
See Notes to Financial Statements.
42 AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,673,445) $ (442,132)
------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and option contracts 70,607,848 41,929,457
------------------------------------------------------------------------------
Change in net unrealized appreciation of
investment securities, foreign currencies
and option contracts 30,416,673 297,348,409
------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 99,351,076 338,835,734
------------------------------------------------------------------------------
Distributions to shareholders from net
investment income -- (738,724)
------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains -- (23,048,204)
------------------------------------------------------------------------------
Share transactions - net 272,561,069 168,920,651
------------------------------------------------------------------------------
Net increase in net assets 371,912,145 483,969,457
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,131,217,460 647,248,003
------------------------------------------------------------------------------
End of period $1,503,129,605 $1,131,217,460
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 872,548,982 $ 599,987,913
------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,721,222) (47,777)
------------------------------------------------------------------------------
Undistributed net realized gain from
investment securities, foreign currencies
and option contracts 111,130,534 40,522,686
------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 521,171,311 490,754,638
------------------------------------------------------------------------------
$1,503,129,605 $1,131,217,460
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Capital Appreciation Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is growth of
capital.
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 preparation 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 as of the close of
the customary trading session 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 as of
the close of the customary trading session 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 Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and option contracts
generally will be valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
AIM V.I. CAPITAL APPRECIATION FUND 43
<PAGE>
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. 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 NYSE. 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
customary trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
E. Covered Call Options - The Fund may write call options, 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 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $978,279 of which AIM retained $62,709 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $2,589
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $6,275 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $6,275.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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.
44 AIM V.I. CAPITAL APPRECIATION FUND
<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, 2000 was $885,157,844 and $681,519,065, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $539,985,074
---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (18,808,708)
---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $521,176,366
===========================================================================
</TABLE>
Cost of investments for tax purposes is $962,928,817.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
--------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period 145 $ 59,230
----------------------------------------------------------------------------
Written 14,489 7,253,020
----------------------------------------------------------------------------
Closed (8,696) (5,264,617)
----------------------------------------------------------------------------
Exercised (95) (18,199)
----------------------------------------------------------------------------
Expired (424) (188,704)
----------------------------------------------------------------------------
End of period 5,419 $ 1,840,730
============================================================================
</TABLE>
Open call option contracts written as of June 30, 2000 were as follows:
<TABLE>
<CAPTION>
JUNE 30,
2000 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
American Power
Conversion Corp. Jul-00 $40 1,390 $ 325,944 $ 338,812 $ (12,868)
----------------------------------------------------------------------------------------
BJ Services Co. Aug-00 75 156 61,958 28,275 33,683
----------------------------------------------------------------------------------------
Enron Corp. Aug-00 75 350 114,537 35,000 79,537
----------------------------------------------------------------------------------------
JDS Uniphase Corp. Aug-00 170 749 230,654 121,712 108,942
----------------------------------------------------------------------------------------
Paychex, Inc. Aug-00 40 1,111 232,747 451,344 (218,597)
----------------------------------------------------------------------------------------
Sanmina Corp. Jul-00 80 265 121,114 218,625 (97,511)
----------------------------------------------------------------------------------------
Scientific-Atlanta, Inc. Jul-00 60 692 298,654 1,072,600 (773,946)
----------------------------------------------------------------------------------------
Teradyne, Inc. Jul-00 85 706 455,122 163,263 291,859
----------------------------------------------------------------------------------------
5,419 $1,840,730 $2,429,631 $(588,901)
========================================================================================
</TABLE>
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Sold 9,069,657 $340,915,246 10,987,866 $ 295,821,855
-------------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 746,374 23,786,928
-------------------------------------------------------------------------------
Issued in connection with
acquisitions * -- -- 1,111,610 29,381,435
-------------------------------------------------------------------------------
Reacquired (1,831,883) (68,354,177) (6,741,717) (180,069,567)
-------------------------------------------------------------------------------
7,237,774 $272,561,069 6,104,133 $ 168,920,651
===============================================================================
</TABLE>
* As of the close of business on October 15, 1999, the Fund acquired all the
net assets GT Global Variable America Fund ("Variable America Fund")
pursuant to a plan of reorganization approved by Variable America Fund's
shareholders on August 25, 1999. The acquisition was accomplished by a tax-
free exchange of 1,111,610 shares of the Fund for 1,874,912 shares of
Variable America Fund as of the close of business on October 15, 1999.
Variable America Fund's net assets at that date were $29,381,435, including
$3,238,580 of unrealized appreciation, were combined with those of the Fund.
The net assets of the Fund immediately before the acquisition were
$757,029,224.
AIM V.I. CAPITAL APPRECIATION FUND 45
<PAGE>
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN
ENDED YEAR ENDED DECEMBER 31, MONTHS ENDED YEAR ENDED
JUNE 30, ----------------------------------------- DECEMBER 31, JANUARY 31,
2000 1999 1998 1997 1996 1995 1995
---------- ---------- -------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 35.58 $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05 $ 12.58
--------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) (0.04) (0.02) 0.02 0.03 0.02 0.04 0.05
--------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 2.97 11.17 4.12 2.58 2.89 4.46 (0.54)
--------------------------------------------------------------------------------------------------------------
Total from investment
operations 2.93 11.15 4.14 2.61 2.91 4.50 (0.49)
--------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.02) (0.04) (0.02) (0.03) -- (0.04)
--------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.75) (0.65) (0.27) -- -- --
--------------------------------------------------------------------------------------------------------------
Total distributions -- (0.77) (0.69) (0.29) (0.03) -- (0.04)
--------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 38.51 $ 35.58 $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05
==============================================================================================================
Total return(a) 8.24% 44.61% 19.30% 13.51% 17.58% 37.38% (3.91)%
==============================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $1,503,130 $1,131,217 $647,248 $522,642 $370,063 $212,152 $88,177
==============================================================================================================
Ratio of expenses to
average net assets 0.79%(b) 0.73% 0.67% 0.68% 0.73% 0.75%(c) 0.84%
==============================================================================================================
Ratio of net investment
income (loss) to
average net assets (0.25)%(b) (0.06)% 0.11% 0.18% 0.18% 0.39%(c) 0.46%
==============================================================================================================
Portfolio turnover rate 55% 65% 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 $1,325,972,731.
(c) Annualized.
46 AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Capital Appreciation Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 29,415,853 938,350 2,096,262
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 28,614,744 1,413,249 2,422,472
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 28,223,383 1,648,628 2,578,454
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 28,844,720 1,272,527 2,333,218
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 28,834,951 1,292,286 2,323,228
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 28,698,955 1,482,688 2,268,822
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 28,505,921 1,689,391 2,255,153
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 28,370,569 1,739,600 2,340,296
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 28,259,990 1,535,516 2,654,959
(5) Approval of changing the Investment
Objective and Making it Non-
Fundamental........................ 28,050,345 1,720,172 2,679,948
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 30,050,872 471,598 1,927,995
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. CAPITAL APPRECIATION FUND 47
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. CAPITAL DEVELOPMENT FUND
FUND REGISTERS ATTRACTIVE GAINS
DESPITE A VOLATILE MARKET ENVIRONMENT, THE NEAR-TERM OUTLOOK FOR STOCKS COULD | Indeed, at its June 28 meeting, the Fed
MID- AND SMALL-CAP STOCKS POSTED POSITIVE DEPEND TO A LARGE EXTENT ON THE FED'S | left interest rates unchanged. The June
RETURNS FOR THE REPORTING PERIOD. HOW DID ABILITY TO BRING THE ECONOMY TO A | rally enabled the Nasdaq, which lost 37.3%
AIM V.I. CAPITAL DEVELOPMENT FUND PERFORM? "SOFT LANDING." | of its value between March 10 and May 23,
_______________________________________| to end the reporting period down only
Although stocks dropped precipitously in 2.54%.
April and May, the fund recorded a solid While mid- and small-cap stocks posted
11.69% cumulative total return for the WHAT WERE THE KEY TRENDS IN THE STOCK gains, the Dow was down 8.44% for the six
six months ended June 30, 2000. The fund MARKET? months ended June 30. Additionally,
outperformed the Russell 2000 Index, the Markets soared, then declined before investors generally favored the stocks of
Russell Midcap Index and the Lipper staging a comeback as the reporting period companies with tangible earnings. In the
Mid-Cap Core Fund Index, which recorded drew to a close. During the first three small-cap stock universe, value stocks
gains of 3.04%, 5.12% and 10.66%, months of 2000, several key market slightly outperformed growth stocks, while
respectively, over the same period. indexes rose to new heights, with the Dow in the large- and mid-cap stock
setting a record in January and the categories, growth stocks were the better
FUND PERFORMANCE technology-dominated Nasdaq following performers.
suit in March. High-flying technology
AVERAGE ANNUAL TOTAL RETURNS stocks helped propel these advances. WAS THE FUND ABLE TO TAKE ADVANTAGE OF
As of 6/30/00 Toward the end of March, however, THESE MARKET TRENDS?
investors became concerned that tech Yes, because mid-, small- and micro-cap
----------------------------------------- stocks might be overvalued, sparking a stocks, which recorded positive gains for
Inception (5/1/98) 14.23% sharp sell-off in this sector. In April, a the reporting period, made up more than
----------------------------------------- federal court ruling against software 90% of the fund's stock portfolio.
1 year 41.43 giant Microsoft (not a fund holding) Investors gravitated to mid- and small-cap
----------------------------------------- helped perpetuate the sell-off. The stocks stocks because of their attractive
of Internet companies with no earnings valuations compared to large-cap stocks
were particularly hard hit. and the appealing earnings prospects of
GROWTH OF A $10,000 INVESTMENT Investors were also concerned that the small and mid-sized companies. We also
Federal Reserve Board (the Fed) might took advantage of the market sell-off in
5/1/98-6/30/00* continue to raise interest rates to slow the spring to buy the stocks of quality
torrid economic growth and to contain companies at reduced prices.
AIM V.I. Capital Development inflation. On May 16, the Fed, which
Fund...........................$13,336 launched a monetary tightening policy in HOW WAS THE FUND POSITIONED AS OF
Russell 2000 Index...............$11,002 June 1999, raised the key federal funds JUNE 30?
rate--the rate banks charge one another At the end of the reporting period, the
* Index performance is from 4/30/98- for overnight loans--from 6.0% to 6.5%. fund had 155 equity holdings. Technology
6/30/00. Past performance cannot Interest-rate concerns before and after stocks made up about a third of the
guarantee comparable future results. the Fed's action prompted a sell-off that portfolio. The fund's significant exposure
MARKET VOLATILITY CAN SIGNIFICANTLY affected nearly every stock-market sector to the technology sector was a result of
IMPACT SHORT-TERM PERFORMANCE. in April and May, causing markets to be our stock-selection process, which is
RESULTS OF AN INVESTMENT MADE TODAY extremely volatile. based on earnings growth prospects, not
MAY DIFFER SUBSTANTIALLY FROM THE Markets rallied in June as key economic macroeconomic predictions. We continued to
HISTORICAL PERFORMANCE SHOWN. data, such as housing starts and retail find many companies with excellent
Source: Lipper, Inc. sales, indicated that the economy might be earnings prospects in the technology
slowing, diminishing the possibility of sector. Moreover, we generally do not buy
further Fed rate hikes. the stocks of companies that have no
earnings. The fund also had relatively
substantial weightings in the financial,
consumer-cyclical, consumer-goods and
health-care sectors.
</TABLE>
48 AIM V.I. CAPITAL DEVELOPMENT FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION appear unbiased, the Fed has tended to
leave interest rates unchanged in the
As of 6/30/00, based on total net assets months immediately preceding a
presidential election. If Fed policy
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES ultimately succeeds in slowing economic
------------------------------------------ ------------------------------------------ growth to a more sustainable rate and in
1. Power-One, Inc. 1.59% 1. Computers (Software & Services) 11.67% keeping inflation at bay, it could prolong
------------------------------------------ ------------------------------------------ the current record economic expansion.
2. Varian, Inc. 1.49 2. Oil & Gas (Drilling & Equipment) 5.21 Such an environment could help sustain
------------------------------------------ ------------------------------------------ corporate earnings growth and prove
3. Scientific-Atlanta, Inc. 1.39 3. Electronics (Semiconductors) 5.09 favorable for stocks, particularly mid-
------------------------------------------ ------------------------------------------ and small-cap issues because of their
4. Microchip Technology Inc. 1.31 4. Electronics (Instrumentation) 4.52 attractive valuations.
------------------------------------------ ------------------------------------------ However, uncertainty over the Fed's
5. Tektronix, Inc. 1.21 5. Electrical Equipment 4.18 actions and other factors could perpetuate
------------------------------------------ ------------------------------------------ the volatility that has characterized
6. Rational Software Corp. 1.18 6. Consumer Finance 3.46 markets in recent months. In such an
------------------------------------------ ------------------------------------------ environment, investors would be well
7. Peregrine Systems, Inc. 1.17 7. Oil & Gas (Exploration & 3.32 advised to take a long-term perspective on
------------------------------------------ Production) their investment.
8. Alpharma Inc.-Class A 1.11 ------------------------------------------
------------------------------------------ 8. Telecommunications 3.20 ------------------------------------------
9. Applied Power Inc.-Class A 1.11 (Cellular/Wireless)
------------------------------------------ ------------------------------------------ The performance figures shown here, which
10. TeleTech Holdings, Inc. 1.05 9. Health Care 2.93 represent AIM V.I. Capital Development
------------------------------------------ (Drugs-Generic & Other) Fund, are intended to reflect actual
------------------------------------------ annuity values, and they do not reflect
10. Services (Data Processing) 2.71 charges at the separate-account level
------------------------------------------ which (if applied) would lower them.
The fund's portfolio composition is subject to change, and there is no assurance that AIM V.I. Capital Development Fund's
the fund will continue to hold any particular security. performance figures are historical, and
they reflect the reinvestment of
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.
Industries within the technology sector . Peregrine Systems distributes software Had fees and expenses not been waived,
that were prominently represented in the which aids businesses in handling returns would have been lower.
portfolio included computer software and customer computer-network concerns.
services, communications equipment and . Tektronix is the world's second-largest Investing in small and mid-sized companies
semiconductors. These industries are maker of test and measurement may involve greater risk and potential
benefiting from the steady sales of equipment. reward than investing in more established
personal computers, the proliferation of . Applied Power produces electronic companies.
new communications devices and the enclosures and systems for the
expansion of the Internet. automotive, construction and defense The unmanaged Dow Jones Industrial
industries. Average (the Dow) is a price-weighted
WHAT WERE A FEW OF THE TECH STOCKS IN THE average of 30 actively traded primarily
PORTFOLIO? WHAT OTHER STOCKS PERFORMED WELL FOR industrial stocks.
. Power-One, the fund's top holding, THE FUND?
makes power supplies that include . Kinder Morgan operates more than 30,000 The unmanaged Lipper Mid-Cap Core Fund
AC/DC converters and voltage power miles of natural gas and other Index represents an average of the
switchers used in communications, pipelines in the United States. performance of the 30 largest mid-
medical and other electronic equipment. . Alpharma makes health-care products for capitalization core funds tracked by
. Varian makes scientific instruments and both animals and humans. Lipper, Inc., an independent mutual fund
equipment, including systems used in performance monitor.
chemical analysis. WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
. Microchip Technology makes low-cost The near-term outlook for stocks could The unmanaged National Association of
embedded control products for the depend to a large extent on the Fed's Securities Dealers Automated Quotation
automotive, consumer, communications, ability to bring the economy to a "soft System Composite Index (the Nasdaq) is a
industrial and office automation landing." With increasing evidence that market-value-weighted index comprising all
markets. economic growth could be slowing, the Fed domestic and non-U.S.-based common stocks
. Scientific-Atlanta makes set-top boxes may refrain from further interest-rate listed on the Nasdaq system. It includes
for receiving cable-television increases. Moreover, a presidential more than 5,000 companies, and it is often
programming. election is looming in the fall. To considered representative of the small and
medium-sized company stock universe. While
it includes many small and mid-sized
company stocks, large-capitalization
technology companies tend to dominate the
index.
The unmanaged Russell 2000 Index
represents the performance of the stocks
of small-capitalization companies.
The unmanaged Russell Midcap Index
represents the performance of the stocks
of mid-capitalization companies.
An investment cannot be made in an index.
Unless otherwise indicated, index results
include reinvested dividends.
AIM V.I. CAPITAL DEVELOPMENT FUND 49
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY INTERESTS - 93.68%
AIRLINES - 0.19%
Ryanair Holdings PLC. - ADR (Ireland)(a) 2,000 $ 73,000
----------------------------------------------------------------------
BANKS (REGIONAL) - 1.51%
Bank United Corp. - Class A 300 10,556
----------------------------------------------------------------------
North Fork Bancorp., Inc. 16,100 243,512
----------------------------------------------------------------------
UCBH Holdings, Inc. 5,500 146,781
----------------------------------------------------------------------
Zions Bancorp. 4,000 183,563
----------------------------------------------------------------------
584,412
----------------------------------------------------------------------
BEVERAGES (ALCOHOLIC) - 0.51%
Adolph Coors Co. - Class B 500 30,250
----------------------------------------------------------------------
Canandaigua Brands, Inc. - Class A(a) 3,300 166,444
----------------------------------------------------------------------
196,694
----------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.33%
Adelphia Communications Corp. - Class A(a) 4,100 192,188
----------------------------------------------------------------------
Cox Radio, Inc. - Class A(a) 10,900 305,200
----------------------------------------------------------------------
Emmis Communications Corp. - Class A(a) 4,000 165,500
----------------------------------------------------------------------
Entercom Communications Corp.(a) 3,500 170,625
----------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 2,100 69,563
----------------------------------------------------------------------
903,076
----------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 2.58%
ADTRAN, Inc.(a) 2,400 143,700
----------------------------------------------------------------------
Gilat Satellite Networks Ltd. (Israel)(a) 2,900 201,188
----------------------------------------------------------------------
NorthEast Optic Network, Inc.(a) 1,900 117,087
----------------------------------------------------------------------
Scientific-Atlanta, Inc. 7,200 536,400
----------------------------------------------------------------------
998,375
----------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 1.18%
QLogic Corp.(a) 3,300 218,006
----------------------------------------------------------------------
SanDisk Corp.(a) 3,900 238,631
----------------------------------------------------------------------
456,637
----------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 11.67%
Affiliated Computer Services, Inc. - Class A(a) 6,000 198,375
----------------------------------------------------------------------
American Management Systems, Inc.(a) 4,700 154,292
----------------------------------------------------------------------
Cadence Design Systems, Inc.(a) 14,200 289,325
----------------------------------------------------------------------
Dendrite International, Inc.(a) 7,250 241,516
----------------------------------------------------------------------
Documentum, Inc.(a) 4,000 357,500
----------------------------------------------------------------------
Hyperion Solutions Corp.(a) 6,700 217,331
----------------------------------------------------------------------
IntraNet Solutions, Inc.(a) 4,900 188,038
----------------------------------------------------------------------
Intuit Inc.(a) 7,200 297,900
----------------------------------------------------------------------
Mercury Interactive Corp.(a) 4,100 396,675
----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES) - (CONTINUED)
Moldflow Corp.(a) 4,600 $ 74,463
--------------------------------------------------------------------
MSI Holdings, Inc.(a) 3,300 29,906
--------------------------------------------------------------------
MSI Holdings, Inc.
(Acquired 2/11/00; Cost $51,726)(a)(b) 8,621 62,502
--------------------------------------------------------------------
Nucentrix Broadband Networks, Inc.(a) 3,800 96,900
--------------------------------------------------------------------
Peregrine Systems, Inc.(a) 13,000 450,937
--------------------------------------------------------------------
Rational Software Corp.(a) 4,900 455,393
--------------------------------------------------------------------
Safeguard Scientifics, Inc.(a) 1,500 48,093
--------------------------------------------------------------------
Secure Computing Corp.(a) 15,000 282,188
--------------------------------------------------------------------
Symantec Corp.(a) 6,700 361,381
--------------------------------------------------------------------
Titan Corp. (The)(a) 7,000 313,250
--------------------------------------------------------------------
4,515,965
--------------------------------------------------------------------
CONSUMER FINANCE - 3.46%
American Capital Strategies, Ltd. 14,900 355,738
--------------------------------------------------------------------
AmeriCredit Corp.(a) 14,800 251,600
--------------------------------------------------------------------
Capital One Financial Corp. 4,800 214,200
--------------------------------------------------------------------
Providian Financial Corp. 1,400 126,000
--------------------------------------------------------------------
SLM Holding Corp. 10,400 389,350
--------------------------------------------------------------------
1,336,888
--------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 1.29%
Performance Food Group Co.(a) 3,300 105,600
--------------------------------------------------------------------
SUPERVALU INC. 20,600 392,688
--------------------------------------------------------------------
498,288
--------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 4.18%
American Power Conversion Corp.(a)(c) 7,800 318,338
--------------------------------------------------------------------
CommScope, Inc.(a) 4,800 196,800
--------------------------------------------------------------------
Cree, Inc.(a) 2,000 267,000
--------------------------------------------------------------------
Manufacturers' Services Ltd.(a) 6,400 131,600
--------------------------------------------------------------------
Sensormatic Electronics Corp.(a) 16,000 253,000
--------------------------------------------------------------------
Veeco Instruments Inc.(a) 4,200 307,650
--------------------------------------------------------------------
Viasystems Group, Inc.(a) 8,700 140,831
--------------------------------------------------------------------
1,615,219
--------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 2.36%
Avnet, Inc. 1,500 88,875
--------------------------------------------------------------------
C-COR.net Corp.(a) 7,700 207,900
--------------------------------------------------------------------
Power-One, Inc.(a) 5,400 615,262
--------------------------------------------------------------------
912,037
--------------------------------------------------------------------
ELECTRONICS (DEFENSE) - 0.77%
Aeroflex Inc.(a) 6,000 298,124
--------------------------------------------------------------------
</TABLE>
50 AIM V.I. CAPITAL DEVELOPMENT FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (INSTRUMENTATION) - 4.52%
Alpha Industries, Inc.(a) 6,900 $ 304,031
-------------------------------------------------------------------------
Methode Electronics, Inc. - Class A 10,400 401,700
-------------------------------------------------------------------------
Tektronix, Inc. 6,300 466,200
-------------------------------------------------------------------------
Varian Inc.(a) 12,500 576,563
-------------------------------------------------------------------------
1,748,494
-------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 5.09%
Amkor Technology, Inc.(a) 7,100 250,718
-------------------------------------------------------------------------
Celestica Inc. (Canada)(a) 5,900 292,787
-------------------------------------------------------------------------
Fairchild Semiconductor Corp. - Class A(a) 5,800 234,900
-------------------------------------------------------------------------
Micrel, Inc.(a) 4,100 178,094
-------------------------------------------------------------------------
Microchip Technology Inc.(a) 8,700 506,911
-------------------------------------------------------------------------
QuickLogic Corp.(a) 8,500 189,125
-------------------------------------------------------------------------
Zoran Corp.(a) 4,800 316,500
-------------------------------------------------------------------------
1,969,035
-------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 0.70%
Quanta Services, Inc.(a) 4,900 269,500
-------------------------------------------------------------------------
ENTERTAINMENT - 0.24%
ValueVision International, Inc. - Class A(a) 3,800 91,200
-------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.86%
Novellus Systems, Inc.(a) 2,800 158,375
-------------------------------------------------------------------------
Varian Semiconductor Equipment Associates, Inc.(a) 2,800 175,875
-------------------------------------------------------------------------
334,250
-------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.40%
SEI Investments Co. 3,900 155,268
-------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.48%
Harrah's Entertainment, Inc.(a) 8,800 184,250
-------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.93%
Alpharma Inc. - Class A 6,900 429,525
-------------------------------------------------------------------------
Biovail Corp. (Canada)(a) 5,600 310,450
-------------------------------------------------------------------------
Jones Pharma Inc. 9,900 395,381
-------------------------------------------------------------------------
1,135,356
-------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 1.31%
Community Health Care(a) 16,000 259,000
-------------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 11,100 246,975
-------------------------------------------------------------------------
505,975
-------------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 1.85%
First Health Group Corp.(a) 7,600 249,375
-------------------------------------------------------------------------
Oxford Health Plans, Inc.(a) 10,200 242,887
-------------------------------------------------------------------------
Trigon Healthcare, Inc.(a) 4,300 221,718
-------------------------------------------------------------------------
713,980
-------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.19%
Edwards Lifesciences Corp.(a) 18,800 347,800
-------------------------------------------------------------------------
PolyMedica Corp.(a) 2,600 112,450
-------------------------------------------------------------------------
460,250
-------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES) - 0.37%
MAXIMUS, Inc.(a) 6,500 $ 143,812
-----------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 1.24%
Annuity and Life Re (Holdings), Ltd. (Bermuda) 7,000 171,500
-----------------------------------------------------------------------
Clarica Life Insurance Co. (Canada) 9,300 190,502
-----------------------------------------------------------------------
Nationwide Financial Services, Inc. - Class A 3,600 118,350
-----------------------------------------------------------------------
480,352
-----------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.49%
Ace, Ltd. (Bermuda) 6,800 190,400
-----------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.86%
Radian Group Inc. 2,793 144,537
-----------------------------------------------------------------------
XL Capital Ltd. - Class A (Bermuda) 3,500 189,437
-----------------------------------------------------------------------
333,974
-----------------------------------------------------------------------
INSURANCE BROKERS - 0.87%
Aon Corp. 10,900 338,581
-----------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.73%
Affiliated Managers Group, Inc.(a) 6,200 282,100
-----------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.69%
Mattel, Inc. 20,200 266,388
-----------------------------------------------------------------------
MACHINERY (DIVERSIFIED) - 1.11%
Applied Power Inc. - Class A 12,800 428,800
-----------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.24%
Spartech Corp. 3,100 83,700
-----------------------------------------------------------------------
Uniroyal Technology Corp.(a) 700 7,744
-----------------------------------------------------------------------
91,444
-----------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 1.51%
Flextronics International Ltd. (Singapore)(a)(c) 4,903 336,774
-----------------------------------------------------------------------
Mettler-Toledo International Inc.(a) 6,200 248,000
-----------------------------------------------------------------------
584,774
-----------------------------------------------------------------------
NATURAL GAS - 2.01%
El Paso Energy Corp. 7,300 371,844
-----------------------------------------------------------------------
Kinder Morgan, Inc. 11,700 404,381
-----------------------------------------------------------------------
776,225
-----------------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.75%
Reynolds & Reynolds Co. (The) - Class A 15,800 288,350
-----------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 5.21%
Baker Hughes Inc. 6,000 192,000
-----------------------------------------------------------------------
BJ Services Co.(a) 5,000 312,500
-----------------------------------------------------------------------
Cooper Cameron Corp.(a) 4,600 303,600
-----------------------------------------------------------------------
Global Marine, Inc.(a) 11,200 315,700
-----------------------------------------------------------------------
Grant Prideco, Inc.(a) 8,100 202,500
-----------------------------------------------------------------------
Key Energy Services, Inc.(a) 37,300 359,012
-----------------------------------------------------------------------
Pride International, Inc.(a) 13,400 331,650
-----------------------------------------------------------------------
2,016,962
-----------------------------------------------------------------------
</TABLE>
AIM V.I. CAPITAL DEVELOPMENT FUND 51
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION & PRODUCTION) - 3.32%
Burlington Resources Inc. 7,800 $ 298,350
-----------------------------------------------------------------------
Chieftain International, Inc. (Canada)(a) 5,500 104,844
-----------------------------------------------------------------------
EOG Resources, Inc. 9,200 308,200
-----------------------------------------------------------------------
Kerr-McGee Corp. 4,100 241,644
-----------------------------------------------------------------------
Spinnaker Exploration Co.(a) 13,000 333,125
-----------------------------------------------------------------------
1,286,163
-----------------------------------------------------------------------
OIL & GAS (REFINING & MARKETING) - 0.54%
Valero Energy Corp. 6,600 209,550
-----------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 0.66%
Pinnacle Systems, Inc.(a) 11,400 256,322
-----------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 0.49%
Apartment Investment & Management Co. - Class A 4,400 190,300
-----------------------------------------------------------------------
RESTAURANTS - 0.57%
CEC Entertainment Inc.(a) 8,625 221,015
-----------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 0.31%
InterTAN, Inc. (Canada)(a) 10,325 121,319
-----------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 0.27%
Family Dollar Stores, Inc. 5,300 103,681
-----------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.93%
BJ's Wholesale Club, Inc.(a) 8,300 273,900
-----------------------------------------------------------------------
Wild Oats Markets, Inc.(a) 6,975 87,622
-----------------------------------------------------------------------
361,522
-----------------------------------------------------------------------
RETAIL (SPECIALTY) - 2.70%
Michaels Stores, Inc.(a) 6,500 297,781
-----------------------------------------------------------------------
Rent-A-Center, Inc.(a) 6,300 141,750
-----------------------------------------------------------------------
Rent-Way, Inc.(a) 7,776 226,961
-----------------------------------------------------------------------
Venator Group, Inc.(a) 14,100 144,525
-----------------------------------------------------------------------
Zale Corp.(a) 6,350 231,775
-----------------------------------------------------------------------
1,042,792
-----------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 0.46%
Too Inc.(a) 7,000 178,063
-----------------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.59%
Allied Capital Corp. 9,100 154,700
-----------------------------------------------------------------------
Local Financial Corp.(a) 8,800 73,425
-----------------------------------------------------------------------
228,125
-----------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.88%
Forrester Research, Inc.(a) 1,200 87,375
-----------------------------------------------------------------------
Lamar Advertising Co.(a) 5,350 231,722
-----------------------------------------------------------------------
TeleTech Holdings, Inc.(a) 13,100 406,918
-----------------------------------------------------------------------
726,015
-----------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 1.06%
Copart, Inc.(a) 10,800 172,800
-----------------------------------------------------------------------
Iron Mountain Inc.(a) 6,950 236,300
-----------------------------------------------------------------------
409,100
-----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMPUTER SYSTEMS) - 2.05%
Insight Enterprises, Inc.(a) 3,875 $ 229,836
---------------------------------------------------------------------
MarchFirst, Inc.(a) 8,300 151,475
---------------------------------------------------------------------
SunGard Data Systems Inc.(a) 8,400 260,400
---------------------------------------------------------------------
Sykes Enterprises, Inc.(a) 11,700 150,638
---------------------------------------------------------------------
792,349
---------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 2.71%
BISYS Group, Inc. (The)(a) 5,350 329,025
---------------------------------------------------------------------
Concord EFS, Inc.(a) 10,500 273,000
---------------------------------------------------------------------
CSG Systems International, Inc.(a) 5,600 313,950
---------------------------------------------------------------------
NOVA Corp.(a) 4,700 131,306
---------------------------------------------------------------------
1,047,281
---------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 1.67%
Heidrick & Struggles International, Inc.(a) 6,200 391,375
---------------------------------------------------------------------
Korn/Ferry International(a) 8,100 256,669
---------------------------------------------------------------------
648,044
---------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 3.20%
Arch Communications Group, Inc.(a) 43,600 283,400
---------------------------------------------------------------------
Nextel Partners, Inc. - Class A(a) 5,500 179,094
---------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 8,600 378,400
---------------------------------------------------------------------
Rural Cellular Corp. - Class A(a) 3,100 237,343
---------------------------------------------------------------------
Western Wireless Corp. - Class A(a) 2,900 158,050
---------------------------------------------------------------------
1,236,287
---------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.79%
CapRock Communications Corp.(a) 7,000 136,500
---------------------------------------------------------------------
ITC DeltaCom, Inc.(a) 7,200 160,650
---------------------------------------------------------------------
RateXchange Corp. (Acquired 3/15/00;
Cost $21,540)(a)(b) 2,066 9,439
---------------------------------------------------------------------
306,589
---------------------------------------------------------------------
TELEPHONE - 1.11%
Broadwing Inc.(a) 12,868 333,763
---------------------------------------------------------------------
Intermedia Communications Inc.(a) 3,200 95,200
---------------------------------------------------------------------
428,963
---------------------------------------------------------------------
WASTE MANAGEMENT - 0.69%
Republic Services, Inc.(a) 16,700 267,200
---------------------------------------------------------------------
Total Common Stocks & Other Equity Interests
(Cost $31,625,320) 36,239,115
---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
<S> <C> <C> <C> <C>
OPTIONS PURCHASED - 0.11%
PUTS - 0.11%
Flextronics International Ltd.
(Singapore) (Manufacturing -
Specialized)(c) (Cost $41,538) 46 $65 Jan-01 43,987
--------------------------------------------------------------------
</TABLE>
52 AIM V.I. CAPITAL DEVELOPMENT FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS - 10.16%
STIC Liquid Assets Portfolio(d) 1,964,957 $ 1,964,957
------------------------------------------------------------------
STIC Prime Portfolio(d) 1,964,957 1,964,957
------------------------------------------------------------------
Total Money Market Funds (Cost $3,929,914) 3,929,914
------------------------------------------------------------------
TOTAL INVESTMENTS - 103.95%
(COST $35,596,772) 40,213,016
------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (3.95%) (1,527,190)
------------------------------------------------------------------
NET ASSETS - 100.00% $38,685,826
==================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
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 Trustees. The
aggregate market value of these securities at 06/30/00 was $71,941 which
represented 0.19% of the Fund's net assets.
(c) All or a portion of this security is subject to call options written. See
Note 7.
(d) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND 53
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $35,596,772) $40,213,016
---------------------------------------------------------------------
Foreign currencies, at value (cost $568) 569
---------------------------------------------------------------------
Receivables for:
Investments sold 8,240
---------------------------------------------------------------------
Fund shares sold 404,374
---------------------------------------------------------------------
Dividends 30,560
---------------------------------------------------------------------
Due from advisor 6,600
---------------------------------------------------------------------
Investment for deferred compensation plan 9,903
---------------------------------------------------------------------
Total assets 40,673,262
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,885,220
---------------------------------------------------------------------
Fund shares reacquired 11,825
---------------------------------------------------------------------
Options written (premiums received $49,249) 40,012
---------------------------------------------------------------------
Deferred compensation plan 9,903
---------------------------------------------------------------------
Accrued administrative services fees 22,130
---------------------------------------------------------------------
Accrued trustees' fees 1,460
---------------------------------------------------------------------
Accrued operating expenses 16,886
---------------------------------------------------------------------
Total liabilities 1,987,436
---------------------------------------------------------------------
Net assets applicable to shares outstanding $38,685,826
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 2,914,133
=====================================================================
Net asset value, offering and redemption price per share $ 13.28
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $143) $ 126,163
-----------------------------------------------------------------------------
EXPENSES:
Advisory fees 84,202
-----------------------------------------------------------------------------
Administrative services fee 47,585
-----------------------------------------------------------------------------
Custodian fees 28,058
-----------------------------------------------------------------------------
Professional fees 15,965
-----------------------------------------------------------------------------
Trustees' fees 3,340
-----------------------------------------------------------------------------
Other 8,742
-----------------------------------------------------------------------------
Total expenses 187,892
-----------------------------------------------------------------------------
Less:Fees waived by advisor (54,180)
-----------------------------------------------------------------------------
Expenses paid indirectly (432)
-----------------------------------------------------------------------------
Net expenses 133,280
-----------------------------------------------------------------------------
Net investment income (loss) (7,117)
-----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities (792,881)
-----------------------------------------------------------------------------
Foreign currencies 195
-----------------------------------------------------------------------------
Option contracts written 3,332
-----------------------------------------------------------------------------
(789,354)
-----------------------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 2,306,588
-----------------------------------------------------------------------------
Option contracts written 9,237
-----------------------------------------------------------------------------
2,315,825
-----------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and option
contracts 1,526,471
-----------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,519,354
=============================================================================
</TABLE>
See Notes to Financial Statements.
54 AIM V.I. CAPITAL DEVELOPMENT FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (7,117) $ (15,062)
------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and option
contracts (789,354) 8,448
------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and option contracts 2,315,825 2,014,708
------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,519,354 2,008,094
------------------------------------------------------------------------------
Share transactions - net 26,131,541 5,854,369
------------------------------------------------------------------------------
Net increase in net assets 27,650,895 7,862,463
==============================================================================
NET ASSETS:
Beginning of period 11,034,931 3,172,468
------------------------------------------------------------------------------
End of period $38,685,826 $11,034,931
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $35,110,557 $ 8,979,016
------------------------------------------------------------------------------
Undistributed net investment income (loss) (15,407) (8,290)
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
option contracts (1,034,805) (245,451)
------------------------------------------------------------------------------
Unrealized appreciation of investment securities
and option contracts 4,625,481 2,309,656
------------------------------------------------------------------------------
$38,685,826 $11,034,931
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Capital Development Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is long-term
growth of capital.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 Trust's officers in a manner specifically authorized by
the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts
AIM V.I. CAPITAL DEVELOPMENT FUND 55
<PAGE>
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. 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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
The Fund has a capital loss carryforward of $287,192 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
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 the 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, 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.
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
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
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 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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, 2000, AIM waived fees of $54,180.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $47,585 of which AIM retained $24,864 for accounting
services provided.
56 AIM V.I. CAPITAL DEVELOPMENT FUND
<PAGE>
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,730
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $432 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $432.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $36,058,216 and $10,740,637, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 5,803,070
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,198,150)
--------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 4,604,920
==========================================================================
</TABLE>
Cost of investments for tax purposes is $35,608,096.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION
CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period -- $ --
------------------------------------------------------------
Written 70 52,581
------------------------------------------------------------
Expired (12) (3,332)
------------------------------------------------------------
End of period 58 $49,249
============================================================
</TABLE>
AIM V.I. CAPITAL DEVELOPMENT FUND 57
<PAGE>
Open call option contracts written as of June 30, 2000 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS JUNE 30, 2000 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
----- -------- ------ --------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
American Power
Conversion Co Jul-00 $40 12 $ 2,814 $ 2,925 $ (111)
------------------------------------------------------------------------------------
Flextronics
International Ltd.
(Singapore) Jan-01 85 46 46,435 37,087 9,348
------------------------------------------------------------------------------------
58 $49,249 $40,012 $9,237
====================================================================================
</TABLE>
NOTE 8 - CAPITAL STOCK
Changes in capital stock outstanding during the six months ended June 30, 2000
and the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- -------- ------------
<S> <C> <C> <C> <C>
Sold 2,069,062 $27,280,323 746,789 $ 7,361,857
----------------------------------------------------------------------
Reacquired (83,167) (1,148,782) (163,001) (1,507,488)
----------------------------------------------------------------------
1,985,895 $26,131,541 583,788 $ 5,854,369
======================================================================
</TABLE>
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
MAY 1, 1998
SIX MONTHS (DATE OPERATIONS
ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2000 1999(a) 1998(a)
---------- ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 11.89 $ 9.21 $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) -- (0.03) 0.03
--------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 1.39 2.71 (0.78)
--------------------------------------------------------------------------------
Total from investment operations 1.39 2.68 (0.75)
--------------------------------------------------------------------------------
Less distributions from net
investment income -- -- (0.04)
--------------------------------------------------------------------------------
Net asset value, end of period $ 13.28 $ 11.89 $ 9.21
================================================================================
Total return(b) 11.69% 29.10% (7.51)%
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $38,686 $11,035 $3,172
================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.19%(c) 1.23% 1.21%(d)
--------------------------------------------------------------------------------
Without fee waivers 1.67%(c) 3.42% 5.80%(d)
================================================================================
Ratio of net investment income
(loss) to average net assets (0.06)%(c) (0.32)% 0.62%(d)
================================================================================
Portfolio turnover rate 52% 132% 45%
================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $22,672,534.
(d) Annualized
58 AIM V.I. CAPITAL DEVELOPMENT FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Capital Development Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 943,049 24,865 68,572
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 907,821 42,651 86,014
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 908,193 48,855 79,438
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 929,932 40,462 66,092
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 928,605 41,851 66,030
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 928,968 43,574 63,944
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 921,699 50,983 63,804
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 922,396 51,857 62,233
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 925,258 47,521 63,707
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 905,893 61,449 69,144
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 1,016,294 1,563 18,629
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. CAPITAL DEVELOPMENT FUND 59
<PAGE>
<TABLE>
<CAPTION>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
<S> <C> <C>
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FUND DEBUTS IN CHALLENGING
MARKET ENVIRONMENT
HOW DID AIM V.I. DENT DEMOGRAPHIC TRENDS THE WATCHWORDS FOR THE | reporting period. Although the fund is
FUND PERFORM OVER THE SIX-MONTH FIRST SIX MONTS OF 2000 WERE | clearly tilted toward large-cap stocks at
REPORTING PERIOD? VOLATILITY AND INFLATION. | present, it also has a complementary mix
The stock market has been quite volatile ________________________________________| of small- and mid-cap stocks.
during the first half of 2000. However, The predominant sectors in the fund's
AIM V.I. Dent Demographic Trends Fund portfolio are technology, health care and
performed admirably in this difficult financials. These are the sectors we
environment. For the six months ended experienced pronounced volatility during expect will benefit from current and
June 29, 2000, the fund posted a return of the first quarter of 2000 and into the future demographic trends. At the end of
4.10%. Because the fund's shares have been second quarter as some companies' sky-high the reporting period, the fund's
offered for less than a year (since valuations came into question. The sell- weightings in these sectors were as
12/29/99), this return is the cumulative off that ensued caused many such stocks to follows: technology, 48.2%; funancials,
total return and has not been annualized. plummet in the Nasdaq shakeout in April. 15.9%; and health care, 12.7%. We believe
The fund's six-month performance beat that Added to that were rising interest that the fundamentals remain solid for
of its primary benchmark, the Russell 3000 rates and investors' concerns regarding these sectors and for the demographic
Index, which had a return of 0.95% for the potential inflation, both of which shook forces underpinning their growth.
same period. market confidence across the board. Since Within technology, we favored companies
the beginning of the year, the Federal in the communications equipment, computer
WHAT WERE MARKET CONDITIONS LIKE DURING Reserve Board (the Fed) has raised the software and services, and semiconductor
THE REPORTING PERIOD? federal funds rate three times--including industries. Semiconductors--chips used in
The watchwords for the first six months of a 0.5% increase in May, the biggest everything from home computers to handheld
2000 were volatility and inflation. Coming increase in more than five years--to 6.5% planners--continue to enjoy particularly
off remarkable returns for 1999, markets-- in an effort to cool what it feared was a robust demand as the world's thirst for
particularly the technology sector-- too-hot growth rate for the U.S. economy. technology keeps growing.
With consumers spending more and The financial and health-care sectors
------------------------------------------ companies struggling to hire enough had a mixed first half of the year.
OUR INVESTMENT PHILOSOPHY employees, the U.S. economy's record Financial stocks tend to get punished
expansion appeared poised to set off whenever inflation fears surface among
AIM V.I. Dent Demographic Trends Fund is inflation. Investors and analysts alike investors, as happened over the last six
designed to capitalize on consumer wondered how much farther the Fed would months. Health-care stocks, particularly
spending habits. The fund's management continue its tightening cycle--in progress drug companies, benefited from the
team is guided by the opinions and since June 1999--before being satisfied excitement surrounding the mapping of the
research of Harry S. Dent, Jr., a that inflation remained under control. human genome. A rough draft of the genetic
strategic consultant and best-selling Many investors chose to wait things out, makeup of the human body has been
author. According to Dent's analysis: evidenced in the general decline of completed, which may lead to new
. The major force driving the stock market trading volumes late in the reporting blockbuster drugs for the treatment of
historically has been consumer spending on period. disease.
major purchases such as housing,
furnishings, appliances and cars. HOW WAS THE FUND'S PORTFOLIO POSITIONED WHAT TECH-RELATED COMPANIES DID
. Historically, the market has done well DURING THE REPORTING PERIOD? YOU FAVOR?
when a generation's spending peaks at Because the fund is a flex-cap fund that The fund's technology holdings are
about age 46 1/2. can invest in small, medium and large earnings-momentum stocks with solid
. As more baby boomers reach their peak companies, we were able to participate in company fundamentals. For example, VERITAS
spending age, they may propel the stock the rotation from large- to mid- and Software is a market leader in the
market for the next decade. small-cap stocks that happened during the
The fund focuses on companies in market
sectors that are expected to benefit from
this spending wave.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
60
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
<S> <C> <C>
PORTFOLIO COMPOSITION WHAT IS YOUR NEAR-TERM OUTLOOK?
As of 6/30/00, based on total net assets While there are signs that the economy may
at last be slowing to a sustainable growth
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES level, the Fed deems it too early to say
------------------------------------------ ------------------------------------------ with finality that its rate hikes have
1. Pfizer Inc. 4.41% 1. Communications Equipment 13.93% indeed halted inflation. The fact that the
------------------------------------------ ------------------------------------------ Fed did not raise interest rates at its
2. Morgan Stanley Dean Witter & Co. 2.97 2. Computers (Software & Services) 10.37 June meeting may indicate that its
------------------------------------------ ------------------------------------------ tightening cycle is winding down.
3. Cox Communications, Inc.-Class A 2.79 3. Electronics (Semiconductors) 8.47 However, uncertainty over the Fed's
------------------------------------------ ------------------------------------------ actions and other factors could
4. VERITAS Software Corp. 2.77 4. Investment Banking/Brokerage 7.16 perpetuate the volatility that has
------------------------------------------ ------------------------------------------ characterized markets in recent months.
5. Intel Corp. 2.60 5. Broadcasting (Television, Radio 5.60 Although we believe that the environment
------------------------------------------ & Cable) for equities and for the demographic
6. Nextel Communications, Inc.- ------------------------------------------ trends we follow remains largely
Class A 2.59 6. Health Care (Diversified) 5.36 favorable, investors would be well advised
------------------------------------------ ------------------------------------------ to maintain a long-term perspective on
7. Nortel Networks Corp. (Canada) 2.54 7. Computers (Peripherals) 5.26 their investment.
------------------------------------------ ------------------------------------------
8. Brocade Communications 2.40 8. Telecommunications 4.43 ---------------------
Systems, Inc. (Cellular/Wireless)
------------------------------------------ ------------------------------------------ Past performance cannot guarantee
9. Nokia Oyj-ADR (Finland) 2.36 9. Computers (Hardware) 4.23 comparable future results. The performance
------------------------------------------ ------------------------------------------ figures in this report, which represent
10. Oracle Corp. 2.15 10. Financial (Diversified) 3.71 AIM V.I. Dent Demographic Trends Fund, are
------------------------------------------ ------------------------------------------ not intended to reflect actual annuity
values, and they do not reflect charges at
The fund's portfolio composition is subject to change, and there is no assurance that the separate-account level which (if
the fund will continue to hold any particular security. applied) would lower them. 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, the fund's returns would
have been lower.
Harry S. Dent's stock-market scenario
for the coming decade, which is based on
historical data, represents his opinion.
Unforeseen events such as rising
inflation, declining productivity,
irregular spending and savings patterns,
and other social, political and economic
uncertainty could affect corporate
earnings and the stock market, negatively
altering Mr. Dent's view.
Investing in micro-, small and mid-
storage-management software business. Its WHAT OTHER HOLDINGS BENEFITED sized companies may involve risks not
products are embedded in most of the THE FUND? associated with more established
leading server systems being sold to large Pharmaceutical giant Pfizer, the fund's companies. Also, micro and small companies
corporations and telecommunications top holding, recently merged with Warner- may have business risk, significant stock-
service providers, as spending on Internet Lambert to become one of the world's price fluctuations and illiquidity.
infrastructure increases. largest and fastest-growing drug The unmanaged National Association of
Fund holdings Nextel Communications and companies. The acquisition allows Pfizer Securities Dealers Automated Quotation
Nortel Networks are both involved in to add Lipitor, a leading cholesterol- System Composite Index (the Nasdaq) is a
communications. Nextel's mobile phones lowering drug, to its stable of successful market-value-weighted index comprising all
provide users with wireless-phone service, medications, which includes Celebrex (for domestic and non-U.S.-based common stocks
two-way radio dispatch, text messaging and arthritis), Norvasc (for heart disease) listed on the Nasdaq system. It includes
wireless Internet access all on one and Zoloft (an antidepressant). more than 5,000 companies, and it is often
handset. Nortel's products include Many established banks and brokerage considered representative of the small and
switching, wireless and broadband network firms have profited from companies having medium-sized company stock universe. While
systems, and it is a leader in fiber-optic initial public offerings. One such it includes many small and mid-sized
systems for high-capacity data and voice financial company is Morgan Stanley Dean company stocks, large-capitalization
networks. Witter, an investment-banking and retail- technology companies tend to dominate the
brokerage powerhouse that is a top fund index.
holding. Of particular benefit to the The unmanaged Russell 3000 Index
firm's revenue has been its underwriting represents the performance of the broad
of tech-related companies. market. An investment cannot be made in an
index. Unless otherwise indicated, index
results include reinvested dividends and
they do not include sales charges.
</TABLE>
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND 61
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY INTERESTS - 95.26%
BANKS (MONEY CENTER) - 1.79%
Chase Manhattan Corp. (The) 7,000 $ 322,437
-------------------------------------------------------------------------
BANKS (REGIONAL) - 0.57%
Dah Sing Financial Group (Hong Kong) 25,600 103,116
-------------------------------------------------------------------------
BIOTECHNOLOGY - 0.78%
Amgen Inc.(a) 2,000 140,500
-------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 5.60%
AT&T Corp. - Liberty Media Group - Class A(a) 8,300 201,275
-------------------------------------------------------------------------
Comcast Corp. - Class A(a) 7,500 303,750
-------------------------------------------------------------------------
Cox Communications, Inc. - Class A(a) 11,000 501,187
-------------------------------------------------------------------------
1,006,212
-------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 13.93%
Comverse Technology, Inc.(a) 3,800 353,400
-------------------------------------------------------------------------
JDS Uniphase Corp.(a) 2,350 281,706
-------------------------------------------------------------------------
Juniper Networks, Inc.(a) 900 131,006
-------------------------------------------------------------------------
Nokia Oyj - ADR (Finland) 8,500 424,469
-------------------------------------------------------------------------
Nortel Networks Corp. (Canada) 6,700 457,275
-------------------------------------------------------------------------
QUALCOMM Inc.(a) 2,500 150,000
-------------------------------------------------------------------------
Redback Networks Inc.(a) 1,200 213,600
-------------------------------------------------------------------------
Sycamore Networks, Inc.(a) 2,000 220,750
-------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson A.B. - ADR (Sweden) 13,500 270,000
-------------------------------------------------------------------------
2,502,206
-------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 4.23%
Apple Computer, Inc.(a) 4,700 246,162
-------------------------------------------------------------------------
Dell Computer Corp.(a) 5,800 286,012
-------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,500 227,344
-------------------------------------------------------------------------
759,518
-------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 1.70%
Cisco Systems, Inc.(a) 4,800 305,100
-------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 5.26%
Brocade Communications Systems, Inc.(a) 2,350 431,188
-------------------------------------------------------------------------
EMC Corp.(a) 2,900 223,119
-------------------------------------------------------------------------
Seagate Techonolgy, Inc.(a) 5,300 291,500
-------------------------------------------------------------------------
945,807
-------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES) - 10.37%
BEA Systems, Inc.(a) 1,900 $ 93,931
------------------------------------------------------------------
Gemstar International Group Ltd.(a) 2,000 122,906
------------------------------------------------------------------
Oracle Corp.(a) 4,600 386,687
------------------------------------------------------------------
Rational Software Corp.(a) 2,000 185,875
------------------------------------------------------------------
Siebel Systems, Inc.(a) 1,500 245,344
------------------------------------------------------------------
VERITAS Software Corp.(a) 4,400 497,269
------------------------------------------------------------------
Vitria Technology, Inc.(a) 3,000 183,375
------------------------------------------------------------------
Yahoo! Inc.(a) 1,200 148,650
------------------------------------------------------------------
1,864,037
------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.60%
C-COR.net Corp.(a) 4,000 108,000
------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.90%
Waters Corp.(a) 1,300 162,256
------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 8.47%
Broadcom Corp. - Class A(a) 600 131,363
------------------------------------------------------------------
Celestica Inc. (Canada)(a) 3,500 173,688
------------------------------------------------------------------
Intel Corp. 3,500 467,906
------------------------------------------------------------------
Intersil Holding Corp.(a) 2,300 124,344
------------------------------------------------------------------
PMC-Sierra, Inc. (Canada)(a) 700 124,381
------------------------------------------------------------------
SDL, Inc.(a) 1,200 342,225
------------------------------------------------------------------
Texas Instruments Inc. 2,300 157,981
------------------------------------------------------------------
1,521,888
------------------------------------------------------------------
ENTERTAINMENT - 1.60%
Time Warner Inc. 2,500 190,000
------------------------------------------------------------------
Walt Disney Co. (The) 2,500 97,031
------------------------------------------------------------------
287,031
------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 2.72%
Applied Materials, Inc.(a) 1,700 154,063
------------------------------------------------------------------
Credence Systems Corp.(a) 4,000 220,750
------------------------------------------------------------------
Teradyne, Inc.(a) 1,550 113,925
------------------------------------------------------------------
488,738
------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 3.71%
American Express Co. 5,400 281,475
------------------------------------------------------------------
Citigroup Inc. 6,400 385,600
------------------------------------------------------------------
667,075
------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 5.36%
Allergan, Inc. 2,300 171,350
------------------------------------------------------------------
Pfizer Inc. 16,500 792,000
------------------------------------------------------------------
963,350
------------------------------------------------------------------
</TABLE>
62 AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER) - 1.95%
Genentech, Inc.(a) 1,400 $ 240,800
-------------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC - ADR (United Kingdom)(a) 2,100 108,938
-------------------------------------------------------------------------------
349,738
-------------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.67%
Health Management Associates, Inc. - Class A(a) 9,200 120,175
-------------------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.67%
UnitedHealth Group Inc. 1,400 120,050
-------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.22%
Guidant Corp.(a) 2,400 118,800
-------------------------------------------------------------------------------
Medtronic, Inc. 2,800 139,475
-------------------------------------------------------------------------------
Novoste Corp.(a) 2,000 122,000
-------------------------------------------------------------------------------
PE Corp-PE Biosystems Group 3,000 197,625
-------------------------------------------------------------------------------
577,900
-------------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 2.09%
American International Group, Inc. 3,200 376,000
-------------------------------------------------------------------------------
INSURANCE BROKERS - 0.58%
Marsh & McLennan Cos., Inc. 1,000 104,438
-------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 7.16%
Goldman Sachs Group, Inc. (The) 1,200 113,850
-------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 2,400 276,000
-------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 6,400 532,800
-------------------------------------------------------------------------------
Paine Webber Group Inc. 1,700 77,350
-------------------------------------------------------------------------------
Schwab (Charles) Corp. (The) 8,500 285,813
-------------------------------------------------------------------------------
1,285,813
-------------------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.51%
Harley-Davidson, Inc. 2,400 92,400
-------------------------------------------------------------------------------
RAILROADS - 1.14%
Kansas City Southern Industries, Inc. 2,300 203,980
-------------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.81%
Home Depot, Inc. (The) 2,900 144,819
-------------------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 3.17%
Best Buy Co., Inc.(a) 5,200 328,900
-------------------------------------------------------------------------------
Circuit City Stores-Circuit City Group 4,500 149,344
-------------------------------------------------------------------------------
Tweeter Home Entertainment Group, Inc.(a) 3,000 91,125
-------------------------------------------------------------------------------
569,369
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL MERCHANDISE) - 0.97%
Target Corp. 3,000 $ 174,000
---------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.30%
Amazon.com, Inc.(a) 1,500 54,469
---------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 4.43%
China Telecom Ltd. - ADR (Hong Kong)(a) 550 97,797
---------------------------------------------------------------------
Nextel Communications, Inc. - Class A(a) 7,600 465,025
---------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 5,300 233,200
---------------------------------------------------------------------
796,022
---------------------------------------------------------------------
Total Common Stocks & Other Equity Interests
(Cost $15,758,806) 17,116,444
---------------------------------------------------------------------
MONEY MARKET FUNDS - 9.02%
STIC Liquid Assets Portfolio(b) 810,322 810,322
---------------------------------------------------------------------
STIC Prime Portfolio(b) 810,322 810,322
---------------------------------------------------------------------
Total Money Market Funds (Cost $1,620,644) 1,620,644
---------------------------------------------------------------------
TOTAL INVESTMENTS - 104.28%
(Cost $17,379,450) 18,737,088
---------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (4.28%) (768,949)
---------------------------------------------------------------------
NET ASSETS - 100.00% $17,968,139
=====================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND 63
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $17,379,450) $18,737,088
---------------------------------------------------------------------
Receivables for:
Investments sold 61,739
---------------------------------------------------------------------
Fund shares sold 99,273
---------------------------------------------------------------------
Dividends 6,306
---------------------------------------------------------------------
Investment for deferred compensation plan 1,383
---------------------------------------------------------------------
Total assets 18,905,789
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 907,496
---------------------------------------------------------------------
Fund shares reacquired 83
---------------------------------------------------------------------
Deferred compensation plan 1,383
---------------------------------------------------------------------
Accrued advisory fees 2,384
---------------------------------------------------------------------
Accrued administrative services fees 5,215
---------------------------------------------------------------------
Accrued trustees' fees 1,453
---------------------------------------------------------------------
Accrued operating expenses 19,636
---------------------------------------------------------------------
Total liabilities 937,650
---------------------------------------------------------------------
Net assets applicable to shares outstanding $17,968,139
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 1,725,867
=====================================================================
Net asset value, offering and redemption price per share $ 10.41
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $254) $ 33,654
------------------------------------------------------------------
Interest 1,470
------------------------------------------------------------------
Total investment income 35,124
------------------------------------------------------------------
EXPENSES:
Advisory fees 38,121
------------------------------------------------------------------
Administrative services fees 25,981
------------------------------------------------------------------
Custodian fees 20,164
------------------------------------------------------------------
Transfer agent fees 459
------------------------------------------------------------------
Trustees' fees 3,281
------------------------------------------------------------------
Printing 23,893
------------------------------------------------------------------
Professional fees 16,875
------------------------------------------------------------------
Other 148
------------------------------------------------------------------
Total expenses 128,922
------------------------------------------------------------------
Less: Fees waived and reimbursed by Advisor (66,199)
------------------------------------------------------------------
Expenses paid indirectly (81)
------------------------------------------------------------------
Net expenses 62,642
------------------------------------------------------------------
Net investment income (loss) (27,518)
------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,062,333)
------------------------------------------------------------------
Foreign currencies (86)
------------------------------------------------------------------
Futures contracts (11,576)
------------------------------------------------------------------
(1,073,995)
------------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 1,357,634
------------------------------------------------------------------
Futures contracts 578
------------------------------------------------------------------
1,358,212
------------------------------------------------------------------
Net gain on investment securities,
foreign currencies and futures contracts 284,217
------------------------------------------------------------------
Net increase in net assets resulting from operations $ 256,699
==================================================================
</TABLE>
See Notes to Financial Statements.
64 AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (27,518) $ 163
-------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts (1,073,995) --
-------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation)
of investment securities, foreign currencies and
futures contracts 1,358,212 (574)
-------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 256,699 (411)
-------------------------------------------------------------------------------
Share transactions-net 16,711,841 1,000,010
-------------------------------------------------------------------------------
Net increase in net assets 16,968,540 999,599
-------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 999,599 --
-------------------------------------------------------------------------------
End of period $17,968,139 $ 999,599
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $17,711,829 $ 999,988
-------------------------------------------------------------------------------
Undistributed net investment income (loss) (27,333) 185
-------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
futures contracts (1,073,995) --
-------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures
contracts 1,357,638 (574)
-------------------------------------------------------------------------------
$17,968,139 $ 999,599
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Dent Demographic Trends Fund (the "Fund") is a series portfolio of
AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve long-term growth of capital.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 Trust's officers in a manner specifically authorized by
the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND 65
<PAGE>
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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
E. Futures Contracts - The Fund may purchase or sell 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 that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
F. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. 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.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). H.S. Dent Advisors, Inc. ("H.S. Dent") is the Fund's
subadvisor. Under the terms of the master investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $2
billion of the Fund's average daily net assets, plus 0.80% of the Fund's
average daily net assets in excess of $2 billion. Under the terms of a
subadvisory agreement between AIM and H.S. Dent, AIM pays H.S. Dent at the
annual rate of 0.13% of the first $1 billion of the Fund's average daily net
assets, plus 0.10% of the next $1 billion of the Fund's average daily net
assets, plus 0.07% of the Fund's average daily net assets exceeding $2
billion. During the six months ended June 30, 2000, AIM waived fees of $38,121
and reimbursed expenses of $28,078.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $25,981 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,726
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $81 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $81.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $19,778,827 and $2,957,734, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $1,691,718
-------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (334,080)
-------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,357,638
=========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
66 AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
<PAGE>
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
period December 29, 1999 (date operations commenced) through December 31, 1999
were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
---------------------- ------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Sold 1,641,058 $16,865,069 100,001 $1,000,010
----------------------------------------------------------------------
Reacquired (15,192) (153,228) -- --
----------------------------------------------------------------------
1,625,866 $16,711,841 100,001 $1,000,010
======================================================================
</TABLE>
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
DECEMBER 29,
1999 (DATE
SIX MONTHS OPERATIONS
ENDED COMMENCED) TO
JUNE 30, DECEMBER 31,
2000 1999
---------- -------------
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $10.00
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02) --
------------------------------------------------------------------------------
Net gains on securities (both realized and
unrealized) 0.43 --
------------------------------------------------------------------------------
Total from investment operations 0.41 --
------------------------------------------------------------------------------
Net asset value, end of period $ 10.41 $10.00
==============================================================================
Total return(a) 4.10% --
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $17,968 $1,000
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.39%(b) 1.40%(c)
------------------------------------------------------------------------------
Without fee waivers and/or expense
reimbursements 2.85%(b) 12.58%(c)
==============================================================================
Ratio of net investment income (loss) to average
net assets (0.61)%(b) 2.96%(c)
==============================================================================
Portfolio turnover rate 34% --
==============================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $9,090,234.
(c) Annualized.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND 67
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Dent Demographic Trends Fund
(the "Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the
"Company"), reorganized as AIM Variable Insurance Funds, a Delaware business
trust (the "Trust"), was held on April 10, 2000. The meeting was held for the
following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 165,185 N/A 35,737
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 185,158 N/A 15,764
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 173,033 N/A 27,889
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 173,033 N/A 27,889
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 173,033 N/A 27,889
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 173,033 N/A 27,889
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 173,033 N/A 27,889
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 173,033 N/A 27,889
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 173,033 N/A 27,889
(5) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 173,033 N/A 27,889
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
68 AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. DIVERSIFIED INCOME FUND
RISING INTEREST RATES, MARKET GYRATIONS
CHALLENGE BOND MARKETS
STOCK-MARKET VOLATILITY AND HIGHER IF SUBSEQUENT ECONOMIC DATA | As the Treasury rally slowed near the
INTEREST RATES CHALLENGED MANY BOND CONTINUES TO POINT TO A | end of the reporting period, credit
SECTORS THIS YEAR. HOW DID AIM V.I. FED-ORCHESTRATED "SOFT LANDING," | sectors began to pick up steam. With less-
DIVERSIFIED INCOME FUND PERFORM IN THIS IT COULD PROVIDE AN IDEAL BACKGROUND | risky government securities offering a
ENVIRONMENT? FOR A RECOVERY IN THE BOND MARKET. | better return at the beginning of the
Interest-rate hikes, wild stock-market _________________________________________| year, corporate bonds were a tough sell.
swings and little demand for fixed-income But a shot in the arm came after several
securities weighed heavily on credit economic reports suggested that the
markets. AIM V.I. Diversified Income Fund economy was heading for a "soft landing"
was not immune to this trend. For the six quarters of this year. The Fed hiked and that additional interest-rate
months ended June 30, 2000, the fund interest rates twice in the first quarter increases may not be needed. In June, the
posted a return of -0.99%. While the for a total increase of 50 basis points corporate sector recorded one of the best
earlier part of the year proved difficult (a basis point is one one-hundredth of a bond returns of any fixed-income sector,
for bonds with credit exposure, the fund's percentage point) and raised rates another up slightly more than 2% for the month.
six-month return belies an upturn in the 50 basis points again in May. The May
corporate market in June. The fund's increase was the sixth since last summer HOW DID CORPORATE BONDS FARE IN THIS
return for the month of June was 2.15%. and the largest in more than five years. DIFFICULT MARKET?
Market observers, however, blew a Like their investment-grade corporate
WHAT CONDITIONS INFLUENCED FIXED-INCOME collective sigh of relief when the Fed, brethren, high-yield corporate bonds have
MARKETS FOR THE FIRST HALF OF 2000? believing that the economy had started to had a tough new year, but both sectors
In an effort to slow a rapidly growing slow, decided not to raise interest rates appear to be turning around. Until nearly
economy--the United States had an again in June. June, corporate bond markets suffered from
annualized growth rate above 7% for the what could be considered a difficult
fourth quarter of 1999 and above 5% for WHAT WERE THE MAJOR TRENDS IN THE DOMESTIC technical situation--poor liquidity and
the first quarter of 2000--the Federal INVESTMENT-GRADE BOND MARKET? more cash outflows than inflows. In fact,
Reserve Board (the Fed) raised interest In a reversal of fortune from last year, cash outflows from high-yield mutual funds
rates three times in the first two U.S. Treasury issues outperformed most for the first five months of the year were
other bond sectors on a total-return basis higher than all cash inflows into high-
FUND PERFORMANCE for the first quarter of the year and for yield funds for all of 1999. Fortunately,
the six-month reporting period. Beyond a reversal of this trend began in June,
AVERAGE ANNUAL TOTAL RETURNS investor flight from a volatile stock as cash inflows averaged $145 million per
market, the government bond market was week.
As of 6/30/00 buoyed by a unique situation. In January, When a market experiences more sellers
the Treasury announced its intention to than buyers, prices on securities
------------------------------------------ buy back $30 billion in Treasury generally go down. In the corporate
Inception (5/5/93) 5.36% securities and perhaps to cease issuing market, for instance, to get new issues
------------------------------------------ 30-year Treasury bonds in the not-too- into the market, they must be priced
5 years 5.36 distant future. This (among other factors) attractively. This effectively reprices
------------------------------------------ literally turned the Treasury market the rest of the market, sending existing
1 year (0.90) upside down, or in bond parlance, inverted bond prices down and pushing their yields
------------------------------------------ the Treasury yield curve. The yield up.
curve--a graph of Treasury security yields And yields on corporate bonds were at
Past performance cannot guarantee from three months to 30 years--under some of their highest levels in years. In
comparable future results. MARKET normal conditions slopes upward, with fact, high-yield bonds were yielding over
VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT- short-term yields lower than longer-term 13% in May. One has to go back to the
TERM PERFORMANCE. RESULTS OF AN INVESTMENT yields. With an inverted curve, however, 1990-91 period to find higher yields.
MADE TODAY MAY DIFFER SUBSTANTIALLY FROM short-term Treasuries actually yield more Spreads (the difference between yields on
THE HISTORICAL PERFORMANCE SHOWN. than longer-term ones.
AIM V.I. Diversified Income Fund 69
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
TOP 5 BOND HOLDINGS HOLDINGS BY TYPE
% NET
COUPON MATURITY ASSETS
--------------------------------------------------------- Other 4.06%-------------------------
1. U.S. Treasury Note 7.25% 8/04 5.09%
--------------------------------------------------------- Foreign bonds 11.38%---------------- [PIE GRAPH]
2. Niagara Mohawk Holdings, Inc. 8.50 7/10 1.67
--------------------------------------------------------- High-yield bonds 22.57%-------------
3. Time Warner Inc. 9.13 1/13 1.66
---------------------------------------------------------
4. News America Holdings, Inc. 9.25 2/13 1.17 Investment-grade
--------------------------------------------------------- bonds 61.99%
5. Lenfest Communications, Inc. 8.38 11/05 1.11
---------------------------------------------------------
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any particular
security.
high-yield bonds and comparable maturity of the high-yield sector initially Also, a string of recent statistical
Treasuries) were also wide at well over diminished fund performance, we view this releases suggest that the pace of economic
600 basis points. That's probably not due segment of the market as undervalued, and activity is indeed slowing. If subsequent
to credit-quality concerns so much as to we used it as a buying opportunity. economic data continues to point to a Fed-
comparatively rich prices in the Treasury At the beginning of the year, our non- orchestrated "soft landing," it could
market and rather low demand for corporate dollar exposure hurt the fund's provide an ideal background for a recovery
bonds. But as investors have returned to performance as the euro continued to in the bond market.
the corporate market, those spreads have weaken against the dollar. Later, we
narrowed a bit. reallocated a portion of fund assets out ---------------------------------------------
of foreign bonds and into U.S. dollar
HOW DID FOREIGN BONDS FARE? bonds. We feel that has improved our yield The performance figures shown here, which
Most unhedged foreign bonds returned and reduced our exposure to the euro. represent AIM V.I. Diversified Income
losses for the reporting period, as the Fund, are not intended to reflect actual
U.S. dollar was stronger than nearly every WHAT IS YOUR OUTLOOK FOR THE annuity values, and they do not reflect
foreign currency. As U.S. bond yields rose BOND MARKET? charges at the separate-account level
relative to most foreign bond yields, we For the fixed-income investor, June which (if applied) would lower them.
favored U.S. bonds over foreign bonds. provided a reversal of sorts. Attractive AIM V.I. Diversified Income Fund's
yields enticed investors back to credit performance figures are historical, and
HOW DID YOU MANAGE THE FUND? sectors, while many new investment-grade they reflect the reinvestment of
As corporate bonds lagged government bonds corporate deals are on the horizon. distributions and changes in net asset
for much of the reporting period, our Both domestic and foreign bond value. The fund's investment return and
heavy weighting in corporate issues investors will undoubtedly keep a watchful principal value will fluctuate, so an
negatively affected the fund. And within eye on the U.S. economy, hopeful that the investor's shares, when redeemed, may be
the corporate-bond spectrum, we moved the Fed indeed has slowed U.S. growth enough worth more or less than their original
fund to its maximum weighting in the high- not to raise interest rates again in cost.
yield sector. While the underperformance August.
This fund invests in higher-yielding,
lower-rated corporate bonds, commonly
known as junk bonds. These bonds have a
greater risk of price fluctuation and loss
of principal than do U.S. government
securities (such as U.S. Treasury bills,
notes and bonds) for which the government
guarantees the repayment of principal and
interest if held to maturity.
Government securities (such as U.S.
Treasury bills, notes and bonds) offer a
high degree of safety, and they guarantee
the timely payment of principal and
interest if held to maturity. Fund shares
are not insured, and their value will vary
with market conditions.
An investment cannot be made in an index.
Unless otherwise indicated, index results
include reinvested dividends.
70 AIM V.I. Diversified Income Fund
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS & NOTES - 73.59%
AIR FREIGHT - 0.70%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 $ 620,000 $ 638,600
-----------------------------------------------------------------------------
AIRLINES - 3.26%
Air 2 US - Series C, Equipment Trust Ctfs., 10.13%,
10/01/20 (Acquired 10/28/99; Cost $550,000)(a) 550,000 571,736
-----------------------------------------------------------------------------
Airplanes Pass Through Trust-Series D,
Gtd. Sub. Bonds, 10.88%, 03/15/19 296,310 240,904
-----------------------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 625,000 601,937
-----------------------------------------------------------------------------
10.38%, 12/15/22 600,000 643,056
-----------------------------------------------------------------------------
Dunlop Standard Aerospace Holdings PLC
(United Kingdom), Sr. Unsec. Yankee Sub. Notes,
11.88%, 05/15/09 460,000 453,100
-----------------------------------------------------------------------------
United Air Lines, Inc. - Series 95A2, Pass Through
Ctfs., 9.56%, 10/19/18 425,000 469,021
-----------------------------------------------------------------------------
2,979,754
-----------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.67%
Advance Stores Co., Inc. - Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 04/15/08 335,000 273,025
-----------------------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%, 04/15/05 380,000 342,000
-----------------------------------------------------------------------------
615,025
-----------------------------------------------------------------------------
AUTOMOBILES - 1.34%
DaimlerChrysler N.A. Holding Corp.,
Gtd. Notes, 8.00%, 06/15/10 350,000 356,195
-----------------------------------------------------------------------------
Notes, 7.40%, 01/20/05 870,000 866,259
-----------------------------------------------------------------------------
1,222,454
-----------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 2.20%
BB&T Corp., Putable Sub. Notes, 6.38%, 06/30/05 145,000 135,669
-----------------------------------------------------------------------------
Crestar Financial Corp., Sub. Notes, 8.75%, 11/15/04 90,000 93,362
-----------------------------------------------------------------------------
Midland Bank PLC (United Kingdom), Yankee Sub. Notes,
7.65%, 05/01/25 245,000 244,243
-----------------------------------------------------------------------------
Regions Financial Corp., Putable Sub. Notes,
7.75%, 09/15/24 500,000 502,420
-----------------------------------------------------------------------------
Republic New York Corp.,
Sub. Deb., 9.50%, 04/15/14 350,000 387,418
-----------------------------------------------------------------------------
Sub. Notes, 9.70%, 02/01/09 440,000 481,496
-----------------------------------------------------------------------------
Union Planters Bank N.A., Unsec. Sub. Notes,
6.50%, 03/15/08 190,000 166,368
-----------------------------------------------------------------------------
2,010,976
-----------------------------------------------------------------------------
BANKS (MONEY CENTER) - 1.56%
First Union Corp., Putable Sub. Deb.,
6.55%, 10/15/35 100,000 94,361
-----------------------------------------------------------------------------
7.50%, 04/15/35 800,000 789,064
-----------------------------------------------------------------------------
NCNB Corp., Sub. Notes, 9.38%, 09/15/09 500,000 545,790
-----------------------------------------------------------------------------
1,429,215
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
BANKS (REGIONAL) - 1.89%
Banponce Trust I - Series A, Gtd. Notes,
8.33%, 02/01/27 $ 440,000 $ 390,245
------------------------------------------------------------------------------
Mercantile Bancorp., Inc., Unsec. Sub. Notes,
7.30%, 06/15/07 500,000 482,810
------------------------------------------------------------------------------
NBD Bank N.A. Michigan, Putable Sub. Deb.,
8.25%, 11/01/24 435,000 448,328
------------------------------------------------------------------------------
Riggs Capital Trust II - Series C, Gtd. Sec. Bonds,
8.88%, 03/15/27 500,000 410,745
------------------------------------------------------------------------------
1,732,128
------------------------------------------------------------------------------
BEVERAGES (ALCOHOLIC) - 0.68%
J Seagram & Sons, Gtd. Deb., 9.65%, 08/15/18 550,000 624,926
------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 7.60%
AT&T Corp. - Liberty Media Group,
Bonds, 7.88%, 07/15/09 190,000 183,354
------------------------------------------------------------------------------
Sr. Unsec. Deb., 8.25%, 02/01/30 525,000 484,969
------------------------------------------------------------------------------
British Sky Broadcasting Group PLC (United Kingdom),
Sr. Unsec. Gtd. Yankee Notes,
8.20%, 07/15/09 795,000 749,979
------------------------------------------------------------------------------
Comcast Cable Communications, Sr. Unsec. Notes, 8.50%,
05/01/27 500,000 524,180
------------------------------------------------------------------------------
Cox Enterprises, Inc., Notes, 8.00%, 02/15/07
(Acquired 02/16/00; Cost $496,265)(a) 500,000 497,555
------------------------------------------------------------------------------
CSC Holdings Inc.,
Sr. Unsec. Deb., 7.83%, 02/15/18 500,000 461,470
------------------------------------------------------------------------------
Sr. Unsec. Notes, 7.88%, 12/15/07 1,050,000 1,018,006
------------------------------------------------------------------------------
Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes,
10.25%, 11/01/07(b) 840,000 525,000
------------------------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc. Notes,
11.88%, 10/15/07(b) 1,000,000 542,500
------------------------------------------------------------------------------
Lenfest Communications, Inc.,
Sr. Unsec. Notes, 8.38%, 11/01/05 1,000,000 1,018,470
------------------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 8.25%, 02/15/08 950,000 941,136
------------------------------------------------------------------------------
6,946,619
------------------------------------------------------------------------------
BUILDING MATERIALS - 0.36%
Blount Inc., Sr. Unsec. Gtd. Sub. Notes,
13.00%, 08/01/09 100,000 102,500
------------------------------------------------------------------------------
Dayton Superior Corp., Sr. Sub. Notes,
13.00%, 06/15/09 (Acquired 06/09/00; Cost
$224,107)(a)(c) 230,000 228,275
------------------------------------------------------------------------------
330,775
------------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.49%
Lattice Semiconductor Corp., Conv. Notes, 4.75%,
11/01/06 (Acquired 12/03/99; Cost $345,000)(a) 250,000 452,188
------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND 71
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
COMPUTERS (NETWORKING) - 0.41%
Exodus Communications, Inc., Sr. Unsec. Notes, 11.25%,
07/01/08 $ 375,000 $ 373,125
------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.34%
Equinix Inc., Sr. Notes, 13.00%, 12/01/07(c)(d) 300,000 309,750
------------------------------------------------------------------------------
CONSUMER FINANCE - 2.21%
Capital One Financial Corp., Unsec. Notes,
7.25%, 05/01/06 530,000 488,904
------------------------------------------------------------------------------
Countrywide Home Loans, Inc. - Series H, Unsec. Gtd.
Medium Term Sub Notes, 6.25%, 04/15/09 250,000 218,393
------------------------------------------------------------------------------
General Motors Acceptance Corp., Notes,
5.75%, 11/10/03 400,000 381,776
------------------------------------------------------------------------------
Household Finance Corp., Sr. Unsec. Notes,
8.00%, 05/09/05 285,000 287,180
------------------------------------------------------------------------------
MBNA Capital I - Series A, Gtd. Bonds,
8.28%, 12/01/26 770,000 645,460
------------------------------------------------------------------------------
2,021,713
------------------------------------------------------------------------------
ELECTRIC COMPANIES - 4.52%
Cleveland Electric Illuminating Co. (The) - Series D,
Sr. Sec. Notes, 7.88%, 11/01/17 500,000 478,802
------------------------------------------------------------------------------
El Paso Electric Co.,
Series D, Sec. First Mortgage Bonds,
8.90%, 02/01/06 500,000 520,550
------------------------------------------------------------------------------
Series E, Sec. First Mortgage Bonds,
9.40%, 05/01/11 150,000 158,178
------------------------------------------------------------------------------
Niagara Mohawk Holdings Inc. - Series H, Sr. Unsec.
Disc. Notes, 8.50%, 07/01/10(b) 2,000,000 1,529,860
------------------------------------------------------------------------------
Public Service Company of New Mexico - Series A, Sr.
Unsec. Notes, 7.10%, 08/01/05 140,000 136,081
------------------------------------------------------------------------------
Southern Energy, Inc., Sr. Notes, 7.90%, 07/15/09
(Acquired 12/03/99; Cost $980,670)(a) 1,000,000 925,220
------------------------------------------------------------------------------
Texas-New Mexico Power Co., Sr. Sec. Notes,
6.25%, 01/15/09 450,000 386,258
------------------------------------------------------------------------------
4,134,949
------------------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 1.01%
Cherokee International LCC - Series B, Sr. Unsec. Sub.
Notes, 10.50%, 05/01/09 500,000 432,500
------------------------------------------------------------------------------
Israel Electric Corp. Ltd. (Israel)
Yankee Deb., 7.75%, 12/15/27 (Acquired 06/09/00; Cost
$175,596)(a) 200,000 175,212
------------------------------------------------------------------------------
Sr. Sec. Medium Term Yankee Notes, 7.75%, 03/01/09
(Acquired 04/13/00;
Cost $320,720)(a) 330,000 318,780
------------------------------------------------------------------------------
926,492
------------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 0.38%
Morrison Knudsen Corp., Sr. Notes, 11.00%, 07/01/10
(Acquired 06/28/00; Cost $347,417)(a) 350,000 349,125
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
ENTERTAINMENT - 2.58%
Callahan Nordrhein Westfalen (Denmark), Sr. Yankee
Notes, 14.00%, 07/15/10 (Acquired 06/29/00; Cost
$180,000)(a) $ 180,000 $ 180,225
-------------------------------------------------------------------------------
Time Warner Inc., Deb.,
9.13%, 01/15/13 1,400,000 1,521,772
-------------------------------------------------------------------------------
9.15%, 02/01/23 600,000 658,488
-------------------------------------------------------------------------------
2,360,485
-------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 3.84%
Associates Corp. of North America, Sr. Deb.,
6.95%, 11/01/18 150,000 132,657
-------------------------------------------------------------------------------
Beaver Valley Funding Corp., Sec. Lease Obligations
Deb., 9.00%, 06/01/17 250,000 247,278
-------------------------------------------------------------------------------
Citicorp Lease - Class A2, Series 1999-1, Pass Through
Ctfs., 8.04%, 12/15/19 (Acquired 06/01/00; Cost
$296,301)(a) 300,000 299,124
-------------------------------------------------------------------------------
General Electric Capital Corp. - Series A, Medium Term
Notes, 7.38%, 01/19/10 900,000 908,046
-------------------------------------------------------------------------------
Heller Financial, Inc., Sr. Unsec. Notes,
7.38%, 11/01/09 200,000 188,288
-------------------------------------------------------------------------------
8.00%, 06/15/05 350,000 349,241
-------------------------------------------------------------------------------
Hutchison Delta Finance Ltd. - Series REGS
(Cayman Islands), Conv. Unsec. Euro Notes, 7.00%,
11/08/02 500,000 587,500
-------------------------------------------------------------------------------
Source One Mortgage Services Corp., Deb.,
9.00%, 06/01/12 180,000 191,250
-------------------------------------------------------------------------------
Sumitomo Bank International Finance N.V. (Japan), Gtd.
Sub. Yankee Notes, 8.50%, 06/15/09 600,000 607,902
-------------------------------------------------------------------------------
3,511,286
-------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.89%
Hollywood Casino Corp., Sr. Sec. Gtd. Sub. Notes,
11.25%, 05/01/07 125,000 128,438
-------------------------------------------------------------------------------
Venetian Casino Resort LLC, Sec. Gtd. Mortgage Notes,
12.25%, 11/15/04 675,000 685,125
-------------------------------------------------------------------------------
813,563
-------------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.56%
Warner Chilcott, Inc., Sr. Unsec. Gtd. Notes,
12.63%, 02/15/08(d) 500,000 512,500
-------------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.11%
Triad Hospitals, Inc. - Series B, Sr. Unsec. Gtd. Sub.
Notes, 11.00%, 05/15/09 95,000 97,850
-------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.41%
Procter & Gamble Co. (The), Putable Deb.,
8.00%, 09/01/24 350,000 370,458
-------------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.99%
American General Finance Corp., Sr. Notes,
8.45%, 10/15/09 300,000 308,496
-------------------------------------------------------------------------------
Americo Life, Inc., Sr. Sub. Notes, 9.25%, 06/01/05 75,000 70,875
-------------------------------------------------------------------------------
John Hancock Global Funding II, Sec. Medium Term Notes,
7.90%, 07/02/10 (Acquired 06/23/00; Cost $349,164)(a) 350,000 352,415
-------------------------------------------------------------------------------
Torchmark Corp., Notes, 7.88%, 05/15/23 200,000 170,214
-------------------------------------------------------------------------------
902,000
-------------------------------------------------------------------------------
</TABLE>
72 AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE) - 0.39%
AIG SunAmerica Global Financing II, Sr. Sec. Notes,
7.60%, 06/15/05 (Acquired 06/08/00; Cost $350,000)(a) $ 350,000 $ 352,524
------------------------------------------------------------------------------
INSURANCE (PROPERTY & CASUALTY) - 0.49%
GE Global Insurance Holdings Corp., Notes,
7.75%, 06/15/30 450,000 446,261
------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 1.56%
Lehman Brothers Holdings Inc.,
Notes, 8.50%, 08/01/15 660,000 650,694
------------------------------------------------------------------------------
Sr. Sub. Notes, 7.38%, 01/15/07 470,000 446,143
------------------------------------------------------------------------------
Series E, Medium Term Notes, 9.09%, 02/10/28(e) 1,300,000 101,543
------------------------------------------------------------------------------
Putable Sr. Notes, 8.80%, 03/01/15 230,000 232,443
------------------------------------------------------------------------------
1,430,823
------------------------------------------------------------------------------
IRON & STEEL - 0.18%
Acme Metals Inc., Sr. Unsec. Gtd. Notes,
10.88%, 12/15/07(f) 633,000 98,115
------------------------------------------------------------------------------
GS Technologies Operating Co., Inc., Sr. Gtd. Notes,
12.00%, 09/01/04 275,000 70,125
------------------------------------------------------------------------------
168,240
------------------------------------------------------------------------------
LODGING - HOTELS - 0.53%
John Q. Hammons Hotels, Inc., Sec. First Mortgage
Notes, 9.75%, 10/01/05 550,000 484,000
------------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.05%
Glenoit Corp., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 04/15/07(f) 340,000 49,300
------------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.61%
MMI Products, Inc. - Series B, Sr. Unsec. Sub. Notes,
11.25%, 04/15/07 380,000 374,300
------------------------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes, 12.75%, 06/15/10
(Acquired 06/15/00; Cost $182,466)(a) 185,000 185,463
------------------------------------------------------------------------------
559,763
------------------------------------------------------------------------------
METALS MINING - 0.87%
Centaur Mining and Exploration Ltd. (Australia), Sr.
Gtd. Yankee Notes, 11.00%, 12/01/07 550,000 442,750
------------------------------------------------------------------------------
Rio Algom Ltd. (Canada), Unsec. Yankee Deb., 7.05%,
11/01/05 370,000 351,530
------------------------------------------------------------------------------
794,280
------------------------------------------------------------------------------
NATURAL GAS - 2.46%
Dynegy Inc., Sr. Unsec. Deb., 7.13%, 05/15/18 600,000 527,622
------------------------------------------------------------------------------
Enron Corp. - Series A, Medium Term Notes,
8.38%, 05/23/05 280,000 287,552
------------------------------------------------------------------------------
KN Capital Trust III, Gtd. Sub. Bonds,
7.63%, 04/15/28 375,000 322,571
------------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee Deb.,
8.50%, 12/15/12 500,000 522,405
------------------------------------------------------------------------------
Sonat Inc., Unsec. Notes, 7.63%, 07/15/11 600,000 588,216
------------------------------------------------------------------------------
2,248,366
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT) - 0.63%
NRG Energy, Inc., Sr. Unsec. Notes, 7.50%, 06/01/09 $ 500,000 $ 471,080
-------------------------------------------------------------------------------
Pride International, Inc., Sr. Unsec. Notes,
10.00%, 06/01/09 100,000 102,500
-------------------------------------------------------------------------------
573,580
-------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 1.91%
ONEOK, Inc., Unsec. Notes, 7.75%, 08/15/06 400,000 398,976
-------------------------------------------------------------------------------
Queen Sand Resources, Inc., Sr. Unsec. Gtd. Sub. Notes,
12.50%, 07/01/08 240,000 117,600
-------------------------------------------------------------------------------
Den Norske Stats Oljeselskap (Norway), Yankee Deb.,
7.38%, 05/01/16 (Acquired 06/01/00; Cost $281,547)(a) 300,000 283,890
-------------------------------------------------------------------------------
Talisman Energy Inc. (Canada), Yankee Deb.,
7.13%, 06/01/07 500,000 477,645
-------------------------------------------------------------------------------
Union Pacific Resources Group Inc., Unsec. Deb., 7.50%,
10/15/26 500,000 469,935
-------------------------------------------------------------------------------
1,748,046
-------------------------------------------------------------------------------
OIL & GAS (REFINING & MARKETING) - 0.79%
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes,
11.13%, 07/01/06 330,000 282,150
-------------------------------------------------------------------------------
Tosco Corp., Unsec. Deb., 7.80%, 01/01/27 450,000 435,695
-------------------------------------------------------------------------------
717,845
-------------------------------------------------------------------------------
OIL (DOMESTIC INTEGRATED) - 1.30%
Amerada Hess Corp., Bonds, 7.88%, 10/01/29 480,000 469,315
-------------------------------------------------------------------------------
Occidental Petroleum Corp., Sr. Deb.,
9.25%, 08/01/19 660,000 720,020
-------------------------------------------------------------------------------
1,189,335
-------------------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 0.61%
YPF Sociedad Anonima (Argentina), Yankee Bonds, 9.13%,
02/24/09 550,000 559,378
-------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.68%
Domtar, Inc. (Canada), Unsec. Yankee Deb.,
9.50%, 08/01/16 600,000 626,250
-------------------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 0.28%
Polaroid Corp., Sr. Unsec. Notes, 11.50%, 02/15/06 240,000 251,700
-------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.16%
AES Corp. (The), Sr. Notes, 8.00%, 12/31/08 165,000 142,725
-------------------------------------------------------------------------------
PUBLISHING (NEWSPAPERS) - 2.57%
News America Holdings, Inc.,
Putable Notes, 8.45%, 08/01/34 700,000 712,131
-------------------------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 1,000,000 1,070,700
-------------------------------------------------------------------------------
Sr. Unsec. Gtd. Putable Bonds, 7.43%, 10/01/26 500,000 480,770
-------------------------------------------------------------------------------
Tribune Co., Unsec. PHONES, 2.00%, 05/15/29 700 82,425
-------------------------------------------------------------------------------
2,346,026
-------------------------------------------------------------------------------
RAILROADS - 1.06%
CSX Corp., Sr. Unsec. Putable Deb., 7.25%, 05/01/27 1,000,000 971,810
-------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND 73
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REAL ESTATE INVESTMENT TRUSTS - 0.75%
ERP Operating L.P., Unsec. Notes, 7.13%, 10/15/17 $ 400,000 $ 331,312
-------------------------------------------------------------------------------
Spieker Properties, Inc., Unsec. Deb.,
7.35%, 12/01/17 400,000 350,316
-------------------------------------------------------------------------------
681,628
-------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 1.01%
Amazon.com, Inc., Conv. Deb., 4.75%, 02/01/09 (Acquired
01/29/99; Cost $501,875)(a) 500,000 316,875
-------------------------------------------------------------------------------
CSK Auto Inc. - Series A, Sr. Gtd. Sub. Deb,
11.00%, 11/01/06 260,000 240,500
-------------------------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub. Notes,
10.25%, 06/01/08 330,000 206,250
-------------------------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 08/15/08 160,000 156,000
-------------------------------------------------------------------------------
919,625
-------------------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 0.51%
Big 5 Corp. - Series B, Sr. Unsec. Notes,
10.88%, 11/15/07 500,000 465,000
-------------------------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 2.08%
Dime Capital Trust I - Series A, Gtd. Bonds,
9.33%, 05/06/27 400,000 365,820
-------------------------------------------------------------------------------
Sovereign Bancorp, Inc., Medium Term Sub. Notes, 8.00%,
03/15/03 800,000 758,800
-------------------------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec. Notes,
7.13%, 02/15/04 245,000 236,236
-------------------------------------------------------------------------------
Washington Mutual Cap I,
Sec. Gtd. Bonds, 8.38%, 06/01/27 190,000 170,396
-------------------------------------------------------------------------------
Sub. Notes, 8.25%, 04/01/10 375,000 372,735
-------------------------------------------------------------------------------
1,903,987
-------------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.32%
MDC Corp. Inc. (Canada), Sr. Unsec. Sub. Yankee Notes,
10.50%, 12/01/06 300,000 289,500
-------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.34%
Avis Group Holdings, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/01/09 300,000 314,250
-------------------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.39%
MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.38%, 01/15/08 380,000 361,000
-------------------------------------------------------------------------------
SOVEREIGN DEBT - 1.59%
Newfoundland (Province of) (Canada), Unsec. Yankee
Deb., 9.00%, 06/01/19 600,000 676,662
-------------------------------------------------------------------------------
Quebec (Province of) - Series A (Canada), Medium Term
Putable Yankee Notes, 6.29%, 03/06/26(g) 800,000 780,728
-------------------------------------------------------------------------------
1,457,390
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS - 0.46%
Williams Communications Group, Inc., Sr. Unsec. Notes,
10.70%, 10/01/07 $ 425,000 $ 422,875
------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.17%
Crown Castle International Corp., Sr. Notes,
10.75%, 08/01/11 150,000 153,000
------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 4.88%
360networks Inc. (Canada), Sr. Unsec. Yankee Notes,
Sr. Unsec. Yankee Notes, 12.00%, 08/01/09 300,000 286,500
------------------------------------------------------------------------------
Sr. Yankee Notes, 12.50%, 12/15/05 210,000 216,300
------------------------------------------------------------------------------
Call-Net Enterprises, Inc. (Canada), Sr. Unsec. Disc.
Yankee Notes, 8.94%, 08/15/08(b) 290,000 114,309
------------------------------------------------------------------------------
Destia Communications, Inc., Sr. Unsec. Notes, 13.50%,
07/15/07 750,000 671,250
------------------------------------------------------------------------------
Esprit Telecom Group PLC (United Kingdom), Sr. Unsec.
Yankee Notes, 11.50%, 12/15/07 350,000 274,750
------------------------------------------------------------------------------
Primus Telecommunications Group, Inc., Sr. Unsec.
Notes,
11.25%, 01/15/09 750,000 588,750
------------------------------------------------------------------------------
12.75%, 10/15/09 400,000 322,000
------------------------------------------------------------------------------
RSL Communications PLC (United Kingdom), Sr. Unsec.
Gtd. Yankee Notes, 12.88%, 03/01/10 (Acquired
03/23/00; Cost $485,000)(a) 500,000 372,500
------------------------------------------------------------------------------
Sprint Corp., Putable Deb., 9.00%, 10/15/19 320,000 363,667
------------------------------------------------------------------------------
Tele1 Europe B.V. (Netherlands), Sr. Unsec. Yankee
Notes, 13.00%, 05/15/09 400,000 404,000
------------------------------------------------------------------------------
Versatel Telecom International N.V. (Netherlands), Sr.
Yankee Notes, 13.25%, 05/15/08 250,000 256,250
------------------------------------------------------------------------------
WorldCom, Inc., Notes, 8.00%, 05/15/06 585,000 593,582
------------------------------------------------------------------------------
4,463,858
------------------------------------------------------------------------------
TELEPHONE - 2.01%
AT&T Canada Inc. (Canada), Sr. Unsec. Yankee Notes,
7.65%, 09/15/06 330,000 327,167
------------------------------------------------------------------------------
Bell Atlantic Financial Services, Inc. - Series REGS,
Conv. Bonds, 4.25%, 09/15/05 500,000 605,274
------------------------------------------------------------------------------
Deutsche Telekom International Finance B.V.
(Netherlands), Unsec. Unsub. Yankee Bonds, 8.00%,
06/15/10 420,000 424,649
------------------------------------------------------------------------------
Qwest Communications International Inc., Sr. Unsec.
Notes, 7.50%, 11/01/08 500,000 483,125
------------------------------------------------------------------------------
1,840,215
------------------------------------------------------------------------------
TRUCKERS - 0.44%
Travelcenters of America, Inc., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 04/01/07 400,000 405,000
------------------------------------------------------------------------------
</TABLE>
74 AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
WASTE MANAGEMENT - 2.51%
Allied Waste North America Inc. - Series B, Sr. Unsec.
Gtd. Sub. Notes, 10.00%, 08/01/09(d) $ 345,000 $ 289,800
------------------------------------------------------------------------------
Browning-Ferris Industries, Inc., Deb.,
7.40%, 09/15/35 300,000 187,500
------------------------------------------------------------------------------
9.25%, 05/01/21 350,000 281,750
------------------------------------------------------------------------------
Waste Management, Inc., Sr. Unsec. Notes,
7.13%, 10/01/07 485,000 443,862
------------------------------------------------------------------------------
7.13%, 12/15/17 175,000 144,674
------------------------------------------------------------------------------
Unsec. Putable Notes, 7.10%, 08/01/26 1,000,000 951,720
------------------------------------------------------------------------------
2,299,306
------------------------------------------------------------------------------
Total U.S. Dollar Denominated Bonds & Notes (Cost
$71,310,809) 67,302,842
------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT(h)
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED BONDS & NOTES - 10.82%
AUSTRALIA - 0.28%
State Bank New South Wales - Series E (Banks-Major
Regional), Sr. Unsec. Gtd. Medium Term Notes, 8.63%,
08/20/01 AUD 425,000 259,820
------------------------------------------------------------------------------
CANADA - 5.60%
AT&T Canada Inc. (Telephone), Sr. Unsec. Notes, 7.15%,
09/23/04 CAD 700,000 478,392
------------------------------------------------------------------------------
Bell Mobility Cellular Inc. (Telecommunications-
(Cellular/Wireless), Deb., 6.55%, 06/02/08 CAD 750,000 497,032
------------------------------------------------------------------------------
Canadian Oil Debco Inc. (Oil & Gas-Exploration &
Production), Deb., 11.00%, 10/31/00 CAD 450,000 308,782
------------------------------------------------------------------------------
Canadian Pacific Ltd. - Series D (Manufacturing-
Diversified), Unsec. Medium Term Notes, 5.85%,
03/30/09 (Acquired 03/24/99; Cost $330,654)(a) CAD 500,000 313,436
------------------------------------------------------------------------------
Clearnet Communications Inc. (Telecommunications-
Cellular/Wireless), Sr. Disc. Notes,
10.40%, 05/15/08(b) CAD 1,600,000 657,112
------------------------------------------------------------------------------
11.75%, 08/13/07(b) CAD 1,500,000 704,773
------------------------------------------------------------------------------
Export Development Corp. (Sovereign Debt), Sr. Unsec.
Unsub. Notes, 6.50%, 12/21/04 NZD 270,000 120,610
------------------------------------------------------------------------------
Microcell Telecommunications Inc. (Telecommunications-
Cellular/Wireless), Sr. Disc. Notes, 11.13%,
10/15/07(b) CAD 1,000,000 447,877
------------------------------------------------------------------------------
Ontario (Province of) (Sovereign Debt), Unsec. Unsub.
Notes, 6.25%, 12/03/08 NZD 1,000,000 417,906
------------------------------------------------------------------------------
Rogers Cablesystems (Broadcasting - Television, Radio
& Cable), Sr. Sec. Second Priority Deb., 9.65%,
01/15/14 CAD 600,000 426,920
------------------------------------------------------------------------------
TransCanada Pipelines - Series Q (Natural Gas), Deb.,
10.63%, 10/20/09 CAD 500,000 416,594
------------------------------------------------------------------------------
Westcoast Energy Inc. - Series V (Natural Gas), Unsec.
Deb., 6.45%, 12/18/06 (Acquired 12/03/96; Cost
$369,585)(a) CAD 500,000 335,036
------------------------------------------------------------------------------
5,124,470
------------------------------------------------------------------------------
CAYMAN ISLANDS - 0.77%
Sutton Bridge Financial Ltd. (Power Producers-
Independent), Gtd. Euro Bonds, 8.63%, 06/30/22(d) GBP 450,000 698,927
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(h) VALUE
<S> <C> <C>
FRANCE - 0.50%
Vivendi Environment (Waste Management), Conv. Bonds,
1.50%, 01/01/05 EUR 150,000 $ 456,287
--------------------------------------------------------------------------------
NETHERLANDS - 1.35%
Grapes Communications N.V. (Telecommunications-
Cellular/Wireless), Units, 13.50%, 05/15/10 (Acquired
05/03/00; Cost $544,080)(c)(a) EUR 600,000 534,549
--------------------------------------------------------------------------------
Tecnost International N.V. - Series E (Telephone), Gtd.
Medium Term Notes, 6.13%, 07/30/09 EUR 270,000 230,992
--------------------------------------------------------------------------------
Tele1 Europe B.V. (Telecommunications-Long Distance),
Sr. Notes, 11.88%, 12/01/09 (Acquired 12/08/99; Cost
$511,300)(a) EUR 500,000 469,279
--------------------------------------------------------------------------------
1,234,820
--------------------------------------------------------------------------------
NEW ZEALAND - 0.48%
Inter-American Development Bank (Banks-Money Center),
Unsec. Bonds, 5.75%, 04/15/04 NZD 1,000,000 439,311
--------------------------------------------------------------------------------
NORWAY - 0.39%
Enitel ASA (Telecommunications), Sr. Notes,
12.50%, 04/15/10 (Acquired 03/30/00; Cost
$361,817)(a)(c) EUR 380,000 354,841
--------------------------------------------------------------------------------
UNITED KINGDOM - 1.45%
British Sky Broadcasting Group PLC (Broadcasting-
Television, Radio & Cable), Sr. Gtd. Unsec. Unsub.
Notes, 7.75%, 07/09/09 GBP 270,000 393,778
--------------------------------------------------------------------------------
Energis PLC (Telephone), Sr. Notes, 9.13%, 03/15/10
(Acquired 02/07/00; Cost $730,986)(a) GBP 460,000 661,795
--------------------------------------------------------------------------------
Jazztel PLC (Telephone), Sr. Unsec. Notes,
13.25%, 12/15/09 EUR 310,000 267,322
--------------------------------------------------------------------------------
1,322,895
--------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost
$11,056,822) 9,891,371
--------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
STOCKS & OTHER EQUITY INTERESTS - 2.62%
BANKS (MAJOR REGIONAL) - 0.57%
Societe Generale (France) 8,600 516,254
--------------------------------------------------------------------------------
BANKS (REGIONAL) - 1.30%
First Republic Capital Corp. - Series A-Pfd. (Acquired
05/26/99; Cost $750,000)(a) 750 660,375
--------------------------------------------------------------------------------
Westpac Banking Corp., STRYPES Trust - $3.14
Conv. Pfd. 16,000 528,000
--------------------------------------------------------------------------------
1,188,375
--------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.00%
Knology Inc. - Wts., expiring 10/22/07 (Acquired
03/12/98; Cost $0)(a)(b) 1,000 2,500
--------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.00%
Equinix Inc. - Wts., expiring 12/01/07 (Acquired
05/30/00; Cost $0)(a)(i) 300 0
--------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.00%
Electronic Retailing Systems International, Inc. - Wts.,
expiring 02/01/04(i) 590 590
--------------------------------------------------------------------------------
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc. - Wts., expiring 04/15/03(i) 230 0
--------------------------------------------------------------------------------
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND 75
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.39%
Clearnet Communications Inc. - Class A - ADR
(Canada)(j) 891 $ 24,739
-----------------------------------------------------------------------------
Loral Space & Communications Ltd.(j) 351 2,435
-----------------------------------------------------------------------------
WebLink Wireless, Inc.(j) 25,125 332,902
-----------------------------------------------------------------------------
360,076
-----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.25%
Tele1 Europe Holding A.B. - ADR (Netherlands)(j) 7,045 84,981
-----------------------------------------------------------------------------
Versatel Telecom International N.V. - ADR
(Netherlands)(j) 3,223 138,997
-----------------------------------------------------------------------------
223,978
-----------------------------------------------------------------------------
TELEPHONE - 0.11%
Esat Telecom Group PLC (Ireland) - Wts., expiring
02/01/07(i) 470 102,225
-----------------------------------------------------------------------------
Total Stocks & Other Equity Interests (Cost
$2,252,350) 2,393,998
-----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
ASSET-BACKED SECURITIES - 0.72%
REAL ESTATE INVESTMENT TRUSTS - 0.18%
Contimortgage Home Equity Loan Trust, Sub. Series
1999-2 - Class B, Notes, 8.50%, 04/25/29 $ 200,000 164,837
-----------------------------------------------------------------------------
RETAIL (HOME SHOPPING) - 0.54%
Fingerhut Master Trust, Sub. Series 1998-2 - Class C,
Floating Rate Note, 7.08%, 02/15/07 500,000 490,562
-----------------------------------------------------------------------------
Total Asset-Backed Securities (Cost $674,081) 655,399
-----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES - 1.00%
FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC") - 0.03%
Medium Term Notes,
8.50%, 03/01/10 24,299 24,808
-----------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") - 0.97%
Pass through ctfs.
7.50%, 04/01/29 to 10/01/29 898,200 886,518
-----------------------------------------------------------------------------
Total U.S. Government Agency Securities (Cost
$922,302) 911,326
-----------------------------------------------------------------------------
U.S. TREASURY NOTES - 8.68%
6.63%, 05/31/02 700,000 703,101
-----------------------------------------------------------------------------
7.25%, 08/15/04 4,500,000 4,653,585
-----------------------------------------------------------------------------
5.88%, 11/15/04 1,000,000 986,010
-----------------------------------------------------------------------------
6.75%, 05/15/05 700,000 716,737
-----------------------------------------------------------------------------
6.88%, 05/15/06 250,000 257,438
-----------------------------------------------------------------------------
6.50%, 02/15/10 600,000 620,628
-----------------------------------------------------------------------------
Total U.S. Treasury Notes (Cost $7,931,634) 7,937,499
-----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS - 1.68%
STIC Liquid Assets Portfolio(k) 770,289 $ 770,289
---------------------------------------------------------------------
STIC Prime Portfolio(k) 770,289 770,289
---------------------------------------------------------------------
Total Money Market Funds (Cost $1,540,578) 1,540,578
---------------------------------------------------------------------
TOTAL INVESTMENTS - 99.11% (Cost $95,688,576) 90,633,013
---------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.89% 817,991
---------------------------------------------------------------------
NET ASSETS - 100.00% $91,451,004
=====================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
AUD - Australian Dollar
CAD - Canadian Dollar
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
EUR - Euro
GBP - British Pound Sterling
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PHONES - Participation Hybrid Option Notes
Rts. - Rights
Sec. - Secured
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
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 Trustees. The
aggregate market value of these securities at 06/30/00 was $10,722,781
which represented 11.73% of the Fund's net assets.
(b) Discounted bond at purchase. The interest rate 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 security listed, each unit contains warrants that
enable the holder to purchase shares of the issuer at a predetermined
price.
(d) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(e) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(f) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(g) Step-up bond. The interest rate represents the coupon rate at which the
bond will accrue at a specified future date.
(h) Foreign denominated security. Par value is denominated in currency
indicated.
(i) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(j) Non-income producing security.
(k) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
76 AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $95,688,576) $90,633,013
---------------------------------------------------------------------
Foreign currencies, at value (cost $30,034) 30,363
---------------------------------------------------------------------
Receivables for:
Foreign currency contracts closed 44
---------------------------------------------------------------------
Investments sold 4,087
---------------------------------------------------------------------
Fund shares sold 9,226
---------------------------------------------------------------------
Dividends and interest 1,910,180
---------------------------------------------------------------------
Foreign currency contracts outstanding 2,182
---------------------------------------------------------------------
Investment for deferred compensation plan 29,723
---------------------------------------------------------------------
Other assets 59
---------------------------------------------------------------------
Total assets 92,618,877
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 945,976
---------------------------------------------------------------------
Fund shares reacquired 34,521
---------------------------------------------------------------------
Foreign currency contracts outstanding 21,682
---------------------------------------------------------------------
Deferred compensation plan 29,723
---------------------------------------------------------------------
Accrued advisory fees 45,044
---------------------------------------------------------------------
Accrued administrative services fees 60,764
---------------------------------------------------------------------
Accrued trustees' fees 1,533
---------------------------------------------------------------------
Accrued operating expenses 28,630
---------------------------------------------------------------------
Total liabilities 1,167,873
---------------------------------------------------------------------
Net assets applicable to shares outstanding $91,451,004
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 9,177,440
=====================================================================
Net asset value, offering and redemption price per share $ 9.96
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest 3,822,431
-----------------------------------------------------------------------------
Dividends (net of foreign withholding tax $2,817) 207,164
-----------------------------------------------------------------------------
Total investment income 4,029,595
-----------------------------------------------------------------------------
EXPENSES:
Advisory fees 281,926
-----------------------------------------------------------------------------
Administrative services fee 76,278
-----------------------------------------------------------------------------
Custodian fees 13,810
-----------------------------------------------------------------------------
Trustees' fees 3,525
-----------------------------------------------------------------------------
Other 31,153
-----------------------------------------------------------------------------
Total expenses 406,692
-----------------------------------------------------------------------------
Less: Expenses paid indirectly (233)
-----------------------------------------------------------------------------
Net expenses 406,459
-----------------------------------------------------------------------------
Net investment income 3,623,136
-----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FOREIGN CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (4,467,997)
-----------------------------------------------------------------------------
Foreign currencies (99,726)
-----------------------------------------------------------------------------
Foreign currency contracts 468,500
-----------------------------------------------------------------------------
(4,099,223)
-----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (298,389)
-----------------------------------------------------------------------------
Foreign currencies (1,927)
-----------------------------------------------------------------------------
Foreign currency contracts (67,328)
-----------------------------------------------------------------------------
(367,644)
-----------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign currencies and
foreign currency contracts (4,466,867)
-----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (843,731)
=============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND 77
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,623,136 $ 6,675,286
------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and foreign
currency contracts (4,099,223) (4,741,644)
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities, foreign
currencies and foreign currency contracts (367,644) (3,460,128)
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (843,731) (1,526,486)
------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (6,334,513)
------------------------------------------------------------------------------
Share transactions-net (7,213,843) 10,924,224
------------------------------------------------------------------------------
Net increase (decrease) in net assets (8,057,574) 3,063,225
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 99,508,578 96,445,353
------------------------------------------------------------------------------
End of period $ 91,451,004 $ 99,508,578
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 98,757,174 $105,971,017
------------------------------------------------------------------------------
Undistributed net investment income 8,882,265 5,259,129
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
foreign currency contracts (11,108,521) (7,009,298)
------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities, foreign currencies and
foreign currency contracts (5,079,914) (4,712,270)
------------------------------------------------------------------------------
$ 91,451,004 $ 99,503,578
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Diversified Income Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 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.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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
78 AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
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 Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of the customary trading session of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. 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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
The Fund has a capital loss carryforward of $5,553,324 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
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 the 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.
Outstanding foreign currency contracts at June 30, 2000 were as follows:
<TABLE>
<CAPTION>
CONTRACT TO UNREALIZED
SETTLEMENT -------------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- --------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
07/26/00 EUR 1,100,000 $1,036,530 $1,049,994 $(13,464)
08/04/00 CAD 3,500,000 2,360,081 2,368,299 (8,218)
09/29/00 NZD 500,000 236,699 234,517 2,182
-------------------------------------------------------------------
5,100,000 $3,633,310 $3,652,810 $(19,500)
===================================================================
</TABLE>
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the annual rate of 0.60% of
the first $250 million of the Fund's average daily net assets, plus 0.55% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $76,278 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,760
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $233 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $233.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
AIM V.I. DIVERSIFIED INCOME FUND 79
<PAGE>
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $39,300,436 and $40,432,754, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 1,239,696
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (6,295,259)
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(5,055,563)
==========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 750,933 $ 7,501,544 2,074,968 $ 22,313,329
------------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 626,559 6,334,513
------------------------------------------------------------------------------
Issued in connection with
acquisitions* -- -- 1,744,335 18,512,585
------------------------------------------------------------------------------
Reacquired (1,465,816) (14,715,387) (3,372,508) (36,236,203)
------------------------------------------------------------------------------
(714,883) $ (7,213,843) 1,073,354 $ 10,924,224
==============================================================================
</TABLE>
* As of the close of business on October 15, 1999, the Fund acquired all the
net assets of GT Global Variable Strategic Income Fund ("Variable Strategic
Income Fund") and GT Global Variable Global Government Income Fund
("Variable Global Government Income Fund") pursuant to a plan of
reorganization approved by Variable Strategic Income Fund's shareholders and
Variable Global Government Income Fund's shareholders on August 25, 1999.
The acquistions were accomplished by a tax-free exchange of 1,744,335 shares
of the Fund for 1,088,436 shares of Variable Strategic Income Fund and
587,315 shares of Variable Global Government Income Fund outstanding as of
the close of business on October 15, 1999. Variable Strategic Income Fund's
net assets at that date were $12,226,436, including ($992,073) of unrealized
depreciation, and Variable Global Government Income Fund's net assets at
that date were $6,286,149, including ($488,448) of unrealized depreciation,
were combined with those of the Fund. The net assets of the Fund immediately
before the acquisition were $85,340,921.
80 AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED YEAR ENDED
JUNE 30, ----------------------------------- DECEMBER 31, JANUARY 31,
2000 1999 1998 1997 1996 1995 1995
---------- ------- ------- ------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.06 $ 10.94 $ 11.29 $ 10.33 $ 10.00 $ 9.12 $ 10.46
--------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.44 0.64 0.75 0.73 0.73 0.69 0.76
--------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.54) (0.85) (0.35) 0.24 0.28 0.94 (1.42)
--------------------------------------------------------------------------------------------------------
Total from investment
operations (0.10) (0.21) 0.40 0.97 1.01 1.63 (0.66)
--------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.67) (0.57) (0.01) (0.68) (0.75) (0.68)
--------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- -- (0.18) -- -- -- --
--------------------------------------------------------------------------------------------------------
Total distributions -- (0.67) (0.75) (0.01) (0.68) (0.75) (0.68)
--------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 9.96 $ 10.06 $ 10.94 $ 11.29 $ 10.33 $ 10.00 $ 9.12
========================================================================================================
Total return(a) (0.99)% (1.92)% 3.58% 9.39% 10.19% 18.11% (6.35)%
========================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $91,451 $99,509 $96,445 $89,319 $63,624 $44,630 $25,271
========================================================================================================
Ratio of expenses to
average net assets 0.87%(b) 0.83% 0.77% 0.80% 0.86% 0.88%(c) 0.91%(d)
========================================================================================================
Ratio of net investment
income to average net
assets 7.74%(b) 7.20% 6.99% 6.90% 7.09% 7.65%(c) 8.07%(d)
========================================================================================================
Portfolio turnover rate 44% 83% 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 94,190,245.
(c) Annualized.
(d) After fee waivers and /or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/ or expense reimbursements was
1.03%.
AIM V.I. DIVERSIFIED INCOME FUND 81
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Diversified Income Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund so that it is
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 8,895,848 132,764 762,967
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 8,495,698 335,403 960,478
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 8,503,717 269,930 1,017,932
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 8,550,013 197,710 1,043,856
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 8,479,124 306,255 1,006,200
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 8,537,993 311,943 941,643
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 8,539,563 353,005 899,011
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 8,567,188 312,050 912,341
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 8,411,249 282,957 1,097,373
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 8,335,284 328,754 1,127,541
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants........................ 9,073,451 119,584 598,544
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
82 AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. GLOBAL GROWTH AND INCOME FUND
FUND SHIFTS TO EQUITIES IN VOLATILE MARKET
HOW DID AIM V.I. GLOBAL GROWTH Fed has increased interest rates six times On the fixed-income side, we focused
AND INCOME FUND PERFORM DURING THE for a total of 1.75%. At its June 2000 on U.S. government bonds, based on the
SIX-MONTH REPORTING PERIOD? meeting, the Fed chose to leave rates strength of U.S. Treasuries, and
The fund weathered a difficult market, unchanged, but it may raise rates again at eliminated our holdings in corporate and
reporting a 0.37% return for the period its August meeting. foreign bonds.
ended June 30, 2000. During the same time Rising interest rates created a
frame, the fund's benchmark indexes, the difficult environment for bond markets as WHAT OTHER CHANGES DID YOU MAKE TO
MSCI World Index and the J.P. Morgan well. U.S. Treasury issues handily THE PORTFOLIO?
Global Government Bond Index, returned outpaced corporate issues on a total- Over the six-month reporting period, we
-2.56% and 0.41%, respectively. return basis for the six months of the increased our equity holdings to 82.46% of
reporting period. the portfolio, with 60.11% U.S. common
THE UNITED STATES WAS BY FAR YOUR Beyond investor flight from a volatile stocks and 18.00% international. We pared
LARGEST COUNTRY ALLOCATION. WHAT stock market, the government bond market our fixed-income component substantially
WERE U.S. MARKETS LIKE DURING THE LAST was buoyed by a unique situation. In to 4.87%.
SIX MONTHS? January, the Treasury announced its We also reduced our international
After a huge rally at the beginning of intention to buy back $30 billion in allocation to focus on leading technology
2000, U.S. equities fell near the end of Treasury securities and perhaps to cease and oil-company stocks in Canada, the
March, with technology stocks particularly issuing 30-year Treasury bonds in the not- Netherlands, Sweden and Finland.
hard-hit. Investors sold off not only too-distant future. This among other In terms of industries, we decreased
speculative stocks, but quality companies factors literally turned the Treasury our holdings in electrical equipment,
as well. We considered this a major buying market upside down, or in bond parlance, publishing, beverages and foods.
opportunity for the fund, increasing our inverted the Treasury yield curve. The Meanwhile, we increased our investments
U.S. allocation from 38.73% to 69.33% over yield curve--a graph of Treasury security in health care, oil, communications
the six-month reporting period. yields from three months to 30 years-- equipment and banks, all areas that showed
Interest-rate concerns were another under normal conditions slopes upward, strong earnings-growth potential.
major reason for stock-market volatility. with short-term yields lower than longer-
The U.S. Federal Reserve Board (the Fed) term yields. With an inverted curve, WHAT WERE YOUR TOP HOLDINGS?
continued to raise interest rates in an however, short-term Treasuries actually . Marsh & McLennan is the world's largest
effort to slow the economy and to prevent yield more than longer-term ones. insurance-brokerage company.
inflation. In May, the Fed raised the It also owns Putnam Investments, one of
federal funds rate to 6.50%, its highest HOW DID YOU MANAGE THE FUND IN THIS the biggest money managers in the United
level in nine years. Since June 1999, the MARKET ENVIRONMENT? States, and Mercer Consulting Group, a
On the equity side, we maintained our human resources and management
FUND PERFORMANCE focus in blue-chip companies, investing consulting firm.
in established world leaders. Our . American Home Products is a major
AVERAGE ANNUAL TOTAL RETURNS investment discipline holds that we do not consumer health products and
try to time the market by moving in and pharmaceutical maker that sells its
As of 6/30/00 out of stocks that go in and out of favor products throughout the world. Its
------------------------------------------ for various reasons. Instead, we look at subsidiary Wyeth-Ayerst Laboratories makes
Inception (2/10/93) 10.86% companies in terms of their earnings--we the estrogen-replacement drug Premarin,
------------------------------------------ focus on companies in growth industries or vaccines, and treatments for
5 Years 12.17 sectors, and we strive to understand cardiovascular, musculoskeletal and
------------------------------------------ what's behind the numbers, what factors neurological conditions. Another
1 Year 3.48 drive a company's earnings and if those subsidiary, Whitehall-Robins Healthcare,
------------------------------------------ factors are sustainable. This allows us to makes over-the-counter medicines like
make buy and sell decisions based on Advil and Robitussin.
Past performance cannot guarantee concrete research rather than market
comparable future results. Market sentiment.
volatility can significantly impact short-
term performance. Results of an investment
today may differ substantially from the
historical performance shown.
AIM V.I. GLOBAL GROWTH AND INCOME FUND 83
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
TOP 10 HOLDINGS TOP 10 INDUSTRIES TOP COUNTRIES
1. Marsh & McLennan Cos., Inc. 6.02% 1. Health Care (Diversified) 10.84% 1. United States 69.33%
2. American Home Products Corp. 5.76 2. Oil (International Integrated) 9.12 2. Bermuda 5.47
3. Exxon Mobil Corp. 5.74 3. Communications Equipment 7.62 3. Canada 4.15
4. Tyco International Ltd. (Bermuda)5.47 4. Banks (Money Center) 7.22 4. Netherlands 3.38
5. Chase Manhattan Corp. (The) 5.31 5. Insurance Brokers 6.02 5. Sweden 3.08
6. Pfizer Inc. 5.08 6. Telephone 5.84 6. Finland 1.92
7. Monsanto Co.-Pfd. 4.35 7. Electronics (Semiconductors) 5.64
8. Intel Corp. 4.11 8. Manufacturing (Diversified) 5.47
9. Time Warner Inc. 3.62 9. Chemicals (Diversified) 4.35
10. Royal Dutch Petroleum Co. 3.38 10. Entertainment 3.62
(Netherlands)
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any
particular security.
PORTFOLIO ALLOCATION Pfizer to add Lipitor, a leading under control, it could prolong the
cholesterol-lowering drug, to its stable current record economic expansion.
As of 6/30/00 of successful medications, which includes Such an environment could prove
Celebrex (for arthritis), Norvasc (for favorable for stocks.
[GRAPH APPEARS HERE] heart disease) and Zoloft (an However, uncertainty over the Fed's
antidepressant). actions and other factors could perpetuate
U.S. Common Stocks..............60.11% Fund holding Tyco continues to show the volatility that has characterized
International Stocks............18.00% earnings growth and price appreciation. markets in recent months. In such an
U.S. Government Notes and Bonds. 4.87% After the end of the reporting period, environment, investors would be well
Other...........................17.02% its stock price jumped on news that the advised to take a long-term perspective on
Securities and Exchange Commission had their investment.
. Exxon Mobil, the world's leading dropped its inquiry into Tyco's accounting ------------------------------------------
integrated oil company, is involved in practices, essentially vindicating the The performance figures shown, which
oil and gas exploration, production, company. The diversified corporation has represent AIM V.I. Global Growth and
supply, transportation and marketing. The interests in electronics, plastics, Income Fund, are not intended to reflect
company operates about 45,000 service valves, pipes and fire and security actual annuity values, and they do not
stations in 118 countries. products. reflect charges at the separate-account
level which (if applied) would lower them.
WHAT OTHER HOLDINGS BENEFITED WHAT'S YOUR OUTLOOK FOR THE REST The fund's performance figures are
THE FUND? OF THE YEAR? historical, and they reflect the
One of the fund's top holdings, The near-term outlook for the markets reinvestment of distributions and changes
pharmaceutical giant Pfizer, recently could depend to a large extent on the in net asset value. The fund's investment
merged with Warner-Lambert to become one Fed's ability to bring the economy to a return and principal value will fluctuate,
of the world's largest and fastest-growing "soft landing." There are signs that the so fund shares, when redeemed, may be
drug companies. The acquisition allows economy could be slowing. Consequently, worth more or less than their original
the Fed may wind down its tightening cost.
cycle, although the central bank could The J.P. Morgan Global Government Bond
approve one or two more rate hikes in the Index is a market-value-weighted average
months ahead. If the Fed succeeds in of government bonds from 13 major
slowing economic growth to a more developed bond markets. It is measured in
sustainable rate and in keeping inflation U.S. dollars, and it includes the effect
of reinvested coupons.
The unmanaged MSCI World Index is a
group of global securities listed on
major world stock exchanges tracked by
Morgan Stanley Capital International.
An investment cannot be made in an
index. Unless otherwise indicated, index
results include reinvested dividends and
do not reflect sales charges.
84 AIM V.I. GLOBAL GROWTH AND INCOME FUND
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC STOCKS & OTHER EQUITY INTERESTS - 64.46%
BANKS (MONEY CENTER) - 7.22%
Bank of America Corp. 11,500 $ 494,500
--------------------------------------------------------------------------
Chase Manhattan Corp. (The) 30,000 1,381,875
--------------------------------------------------------------------------
1,876,375
--------------------------------------------------------------------------
BEVERAGES (ALCOHOLIC) - 3.30%
Anheuser-Busch Cos., Inc. 11,500 858,906
--------------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 4.35%
Monsanto Co.-$2.60 Conv. Pfd. ACES 25,000 1,131,250
--------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 3.32%
Dell Computer Corp.(a) 17,500 862,969
--------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 1.96%
Cisco Systems, Inc.(a) 8,000 508,500
--------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 3.26%
VERITAS Software Corp.(a) 7,500 847,617
--------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.65%
General Electric Co. 13,000 689,000
--------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 4.11%
Intel Corp. 8,000 1,069,500
--------------------------------------------------------------------------
ENTERTAINMENT - 3.62%
Time Warner Inc. 12,396 942,096
--------------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 10.84%
American Home Products Corp. 25,500 1,498,125
--------------------------------------------------------------------------
Pfizer Inc. 27,500 1,320,000
--------------------------------------------------------------------------
2,818,125
--------------------------------------------------------------------------
INSURANCE BROKERS - 6.02%
Marsh & McLennan Cos., Inc. 15,000 1,566,562
--------------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 5.74%
Exxon Mobil Corp. 19,000 1,491,500
--------------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 2.23%
Target Corp. 10,000 580,000
--------------------------------------------------------------------------
TELEPHONE - 5.84%
Bell Atlantic Corp. 13,000 660,563
--------------------------------------------------------------------------
US WEST, Inc. 10,000 857,500
--------------------------------------------------------------------------
1,518,063
--------------------------------------------------------------------------
Total Domestic Stocks & Other Equity Interests (Cost
$15,676,203) 16,760,463
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS - 18.00%
BERMUDA - 5.47%
Tyco International Ltd. (Manufacturing-Diversified) 30,000 $ 1,421,250
--------------------------------------------------------------------------
CANADA - 4.15%
Celestica Inc. (Electronics-Semiconductors)(a) 8,000 397,000
--------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 10,000 682,500
--------------------------------------------------------------------------
1,079,500
--------------------------------------------------------------------------
FINLAND - 1.92%
Nokia Oyj - ADR (Communications Equipment) 10,000 499,375
--------------------------------------------------------------------------
NETHERLANDS - 3.38%
Royal Dutch Petroleum Co.
(Oil-International Integrated) 14,160 878,352
--------------------------------------------------------------------------
SWEDEN - 3.08%
Telefonaktiebolaget LM Ericsson A.B. - ADR
(Communications Equipment) 40,000 800,000
--------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $4,034,292) 4,678,477
--------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY SECURITIES - 4.87%
U.S. TREASURY BONDS - 1.65%
6.50%, 11/15/26 $ 410,000 427,921
--------------------------------------------------------------------------
U.S. TREASURY NOTES - 3.22%
5.63%, 02/28/01 395,000 393,136
--------------------------------------------------------------------------
5.50%, 02/15/08 465,000 445,447
--------------------------------------------------------------------------
838,583
--------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $1,275,666) 1,266,504
--------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS - 12.23%
STIT Government & Agency Portfolio
(Cost $3,180,221)(b) 3,180,221 3,180,221
--------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.56%
(Cost $24,166,382) 25,885,665
--------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.44% 115,350
--------------------------------------------------------------------------
NET ASSETS - 100.00% $26,001,015
==========================================================================
</TABLE>
Investment Abbreviations:
ACES - Adjustable Conversion-Rate Equity Security
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
AIM V.I. GLOBAL GROWTH AND INCOME FUND 85
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $24,166,382) $25,885,665
---------------------------------------------------------------------
Cash 59,195
---------------------------------------------------------------------
Receivables for:
Fund shares sold 38,019
---------------------------------------------------------------------
Dividends and interest 70,718
---------------------------------------------------------------------
Investment for deferred compensation plan 2,774
---------------------------------------------------------------------
Other assets 168
---------------------------------------------------------------------
Total assets 26,056,539
---------------------------------------------------------------------
LIABILITIES:
Payable for deferred compensation plan 2,774
---------------------------------------------------------------------
Accrued advisory fees 22,011
---------------------------------------------------------------------
Accrued administrative services fees 21,033
---------------------------------------------------------------------
Accrued trustees' fees 1,565
---------------------------------------------------------------------
Accrued operating expenses 8,141
---------------------------------------------------------------------
Total liabilities 55,524
---------------------------------------------------------------------
Net assets applicable to shares outstanding $26,001,015
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 1,914,939
=====================================================================
Net asset value, offering and redemption price per share $ 13.58
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $6,028) $ 269,333
----------------------------------------------------------------------------
Interest 71,981
----------------------------------------------------------------------------
Total investment income 341,314
----------------------------------------------------------------------------
EXPENSES:
Advisory fees 139,201
----------------------------------------------------------------------------
Administrative services fee 58,050
----------------------------------------------------------------------------
Custodian fees 21,949
----------------------------------------------------------------------------
Printing 26,628
----------------------------------------------------------------------------
Professional fees 27,725
----------------------------------------------------------------------------
Trustees' fees 3,456
----------------------------------------------------------------------------
Other 2,141
----------------------------------------------------------------------------
Total expenses 279,150
----------------------------------------------------------------------------
Less: Fees waived and reimbursed by advisor (64,026)
----------------------------------------------------------------------------
Expenses paid indirectly (196)
----------------------------------------------------------------------------
Net expenses 214,928
----------------------------------------------------------------------------
Net investment income 126,386
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FOREIGN CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities 3,820,649
----------------------------------------------------------------------------
Foreign currencies (18,969)
----------------------------------------------------------------------------
Foreign currency contracts (43,257)
----------------------------------------------------------------------------
3,758,423
----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (3,813,411)
----------------------------------------------------------------------------
Foreign currencies 2,075
----------------------------------------------------------------------------
Foreign currency contracts (19,199)
----------------------------------------------------------------------------
(3,830,535)
----------------------------------------------------------------------------
Net gain (loss) on investment securities,
foreign currencies and foreign currency contracts (72,112)
----------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 54,274
============================================================================
</TABLE>
See Notes to Financial Statements.
86 AIM V.I. GLOBAL GROWTH AND INCOME FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 126,386 $ 1,014,898
------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and foreign currency
contracts 3,758,423 4,241,183
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities, foreign
currencies and foreign currency contracts (3,830,535) (6,193,520)
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 54,274 (937,439)
------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (1,196,434)
------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (11,580,778)
------------------------------------------------------------------------------
Share transactions - net (4,809,385) (11,109,484)
------------------------------------------------------------------------------
Net increase (decrease) in net assets (4,755,111) (24,824,135)
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 30,756,126 55,580,261
------------------------------------------------------------------------------
End of period $26,001,015 $ 30,756,126
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $19,898,416 $ 24,707,801
------------------------------------------------------------------------------
Undistributed net investment income 61,757 (64,629)
------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and foreign
currency contracts 4,324,466 566,043
------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and foreign currency
contracts 1,716,376 5,546,911
------------------------------------------------------------------------------
$26,001,015 $ 30,756,126
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Global Growth and Income Fund (the "Fund"), (formerly named the GT
Global Variable Growth & Income Fund), is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve long-term growth of capital with current income.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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
AIM V.I. GLOBAL GROWTH AND INCOME FUND 87
<PAGE>
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 Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of the customary trading session of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. 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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the annual rate of 1.00% of
the Fund's average daily net assets. Under the terms of a sub-advisory
agreement between AIM and INVESCO Asset Management Limited ("INVESCO"), AIM
pays INVESCO 40% of the amount paid by the Fund to AIM. During the six months
ended June 30, 2000, AIM waived fees of $22,011 and reimbursed expenses of
$42,015.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $58,050 of which AIM retained $25,138 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,735
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $196 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $196.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended
June 30, 2000 was $25,383,763 and $32,217,731, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,620,672
-------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (910,463)
-------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,710,209
=========================================================================
</TABLE>
Cost of investments for tax purposes is $24,175,456.
88 AIM V.I. GLOBAL GROWTH AND INCOME FUND
<PAGE>
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold 156,210 $ 2,089,182 5,390,132 $ 89,281,583
----------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 1,014,762 12,777,212
----------------------------------------------------------------------------
Reacquired (515,055) (6,898,567) (6,715,236) (113,168,279)
----------------------------------------------------------------------------
(358,845) $(4,809,385) (310,342) $(11,109,484)
============================================================================
</TABLE>
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED JUNE 30, --------------------------------------------
2000 1999 1998 1997 1996 1995
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 13.53 $ 21.51 $ 18.60 $ 16.51 $ 14.57 $ 12.99
---------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.06 0.57 0.53 0.41 0.53 0.52
---------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.01) (1.29) 3.08 2.23 1.81 1.46
---------------------------------------------------------------------------------------
Total from investment
operations 0.05 (0.72) 3.61 2.64 2.34 1.98
---------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.61) (0.44) (0.51) (0.35) (0.40)
---------------------------------------------------------------------------------------
Distributions from net
realized gains -- (6.65) (0.26) (0.04) (0.05) --
=======================================================================================
Total distributions -- (7.26) (0.70) (0.55) (0.40) (0.40)
---------------------------------------------------------------------------------------
Net asset value, end of
period $ 13.58 $ 13.53 $ 21.51 $ 18.60 $ 16.51 $ 14.57
=======================================================================================
Total return(a) 0.37% (0.13)% 19.60% 16.22% 16.33% 15.49%
=======================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $26,001 $30,756 $55,580 $50,356 $36,433 $30,565
=======================================================================================
Ratio of expenses to
average net assets
(including interest
expense):
With fee waivers
and/or expense
reimbursements 1.55%(b) 1.34% 1.26% 1.13% 1.20% 1.23%
---------------------------------------------------------------------------------------
Without fee waivers
and/or expense
reimbursements 2.01%(b) 1.37% 1.26% 1.27% 1.30% 1.44%
=======================================================================================
Ratio of expenses to
average net assets
(excluding interest
expense):
With fee waivers
and/or expense
reimbursements 1.55%(b) 1.33% 1.22% 1.13% 1.20% 1.23%
---------------------------------------------------------------------------------------
Without fee waivers
and/or expense
reimbursements 2.01%(b) 1.36% 1.22% 1.27% 1.30% 1.44%
=======================================================================================
Ratio of net investment
income to average net
assets 0.91%(b) 2.32% 2.53% 2.86% 3.58% 3.87%
---------------------------------------------------------------------------------------
Ratio of interest
expense to average net
assets -- 0.01% 0.04% -- -- --
=======================================================================================
Portfolio turnover rate 98% 91% 72% 60% 57% 73%
=======================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $27,887,776.
NOTE 9 - SUBSEQUENT EVENT
The Board of Trustees of AIM Variable Insurance Funds unanimously approved on
June 13, 2000, an Agreement and Plan of Reorganization (the "Reorganization")
pursuant to which the Fund would transfer substantially all of its assets to
AIM V.I. Growth and Income Fund. The Reorganization has been structured as a
tax-free transaction. The Reorganization will be submitted to shareholders for
approval in a Special Meeting on September 1, 2000.
AIM V.I. GLOBAL GROWTH AND INCOME FUND 89
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Global Growth and Income Fund
(the "Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the
"Company"), reorganized as AIM Variable Insurance Funds, a Delaware business
trust (the "Trust"), was held on April 10, 2000. The meeting was held for the
following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 1,890,575 56,263 298,269
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 1,873,072 57,471 314,564
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 1,911,557 74,761 258,789
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 1,890,527 75,536 279,044
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 1,861,442 69,823 313,842
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 1,860,528 83,758 300,821
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 1,830,268 121,847 292,992
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 1,867,204 101,504 276,399
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 1,849,671 62,562 332,874
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 1,837,323 87,397 320,387
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 1,976,543 28,143 240,421
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
90 AIM V.I. GLOBAL GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. GLOBAL UTILITIES FUND
FUND STANDS UP TO ROCKY TECH MARKET
HOW DID THE FUND PERFORM?
Since today's utilities are highly FUND PERFORMANCE and while some of them experienced drops
technological, the fund's holdings were in price at the time, they have already
affected by the technology sector's AVERAGE ANNUAL TOTAL RETURNS begun to recover their value.
extreme volatility during the six-month
period ended June 30, 2000. While the As of 6/30/00 HOW DID THE FUND DEAL WITH THE
turbulence hurt fund performance, the fund UNSETTLED CONDITIONS?
still brought in returns far ahead of its ------------------------------------------ We broadened our holdings in traditional
peers. Its cumulative total return for the Inception (5/2/94) 17.77% electric companies. At the end of
period was 5.00%. This performance far ------------------------------------------ the period, they accounted for close to a
outstripped the results of comparable 5 years 20.40 third of the portfolio. Electricity prices
funds in the Lipper Utility Fund Index, ------------------------------------------ are near all-time highs in some parts of
which produced a total return of 1.64%, 1 year 31.03 the country, and our electrics performed
and the broad stock market, as represented ------------------------------------------ very well.
by the S&P 500, which produced a return of Past performance cannot guarantee Most of the stocks in the fund's
-0.43% during the same time frame. comparable future results. MARKET portfolio had earnings growth and solid
VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT- company fundamentals, making them good
WHAT MAJOR TRENDS SHAPED THE MARKET TERM PERFORMANCE. RESULTS OF AN INVESTMENT long-term investments, in our view. Many
DURING THE PERIOD? MADE TODAY MAY DIFFER SUBSTANTIALLY FROM of our major holdings are in the
Equity markets reached record highs near THE HISTORICAL PERFORMANCE SHOWN. telephone, long-distance
the beginning of 2000 in a rally dominated telecommunications and communications-
by technology, media and telecommunica- equipment industries, which are
tions stocks, commony dubbed TMTs. their valuations, especially for companies flourishing with the continuing expansion
This rally lasted until March, when with big ambitions but no earnings, and a of wireless communications and the
a sharp sell-off in TMT stocks occurred. small sell-off snowballed. As in most Internet.
In mid-April, the tech-heavy Nasdaq market downturns, sound stocks were The fund has sought to capitalize on
plunged, and other major markets followed abandoned along with the shaky ones as consolidation, which has been a major
suit. The rest of the period was marked by investors fled the whole arena. theme in the utilities industry in the
intense day-to-day volatility. Though affected, the fund avoided the United States and Europe (see sidebar).
Electric-utility stocks were one of worst of the damage, as it was not heavily Fund holding JDS Uniphase completed a $15
the best performers during the first half involved with the parts of the technology billion acquisition of E-Tek Dynamics on
of the year. The dismantling of former sector that bore the brunt of the impact. June 30. On July 11, after the reporting
regulatory structures continues to reshape The fund's technology holdings had been period closed, JDS bid $41 billion for
the industry both on the domestic front selected on the basis of good earnings,
and abroad. Overseas, there is a
continuing trend to privatize utilities -----------------------------------------------------------------------------------------
that were previously government-run. As UTILITIES ARE NO LONGER LOCAL Europe. It is also the world's largest
both trends feed increasing competition, wireless service, with more than 40
emerging technologies are snapped up and Utilities are expanding across national million subscribers in 25 countries.
put to work as quickly as possible to boundaries at an increasing pace. The
create any potential competitive dollar volume of European merger deals has Acquisitions extend beyond Europe as well.
advantage. quintupled, from $200 billion annually in The U.K.'s Scottish Power (a fund holding)
the early 1990s to almost $1 trillion in has acquired PacifiCorp, which provides
WHAT MADE TECHNOLOGY STOCKS SO VOLATILE? 1999. In addition, 40% of all global deals power to two million customers in the
A number of factors combined to shake announced this year involve an European United States and Australia. Scottish
investor confidence and contribute to company as an acquirer. Power is a multi-utility providing gas,
market volatility. In the stock market, electricity, water, and telecom services
a serious correction occurred in March One of the largest cross-border in Scotland, Wales and southern England,
and April. Technology stocks reached a acquisitions was Vodafone AirTouch's and is also one of the United Kingdom's
point at which investors reconsidered hostile takeover of Germany's Mannesmann. largest Internet service providers.
This acquisition made Britain's Vodafone
(a fund holding) the largest company in
AIM V.I. GLOBAL UTILITIES FUND 91
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
------------------------------------------ ------------------------------------------ ------------------------------------------
1. Redback Networks Inc. 3.63% 1. Telephone 21.55% 1. United States 63.37%
------------------------------------------ ------------------------------------------ ------------------------------------------
2. SBC Communications Inc. 3.13 2. Electric Companies 18.16 2. United Kingdom 4.76
------------------------------------------ ------------------------------------------ ------------------------------------------
3. Williams Companies Inc. (The) 2.09 3. Communications Equipment 11.19 3. Canada 3.10
------------------------------------------ ------------------------------------------ ------------------------------------------
4. Broadwing Inc. 1.93 4. Telecommunications 8.59 4. Netherlands 2.70
------------------------------------------ (Long Distance) ------------------------------------------
5. WorldCom, Inc. 1.71 ------------------------------------------ 5. Spain 2.47
------------------------------------------ 5. Natural Gas 6.83 ------------------------------------------
6. Qwest Communications 1.65 ------------------------------------------ 6. France 2.32
International Inc. 6. Telecommunications 5.20 ------------------------------------------
------------------------------------------ (Cellular/Wireless) 7. Finland 2.14
7. SDL, Inc. 1.62 ------------------------------------------ ------------------------------------------
------------------------------------------ 7. Power Producers (Independent) 2.43 8. Italy 2.07
8. Nokia Oyj-ADR 1.59 ------------------------------------------ ------------------------------------------
------------------------------------------ 8. Water Utilities 2.18 9. Belgium 1.14
9. Telefonica S.A. (Spain) 1.51 ------------------------------------------ ------------------------------------------
------------------------------------------ 9. Broadcasting (Television, 2.18 10. Japan 1.12
10. VersaTel Telecom International 1.44 Radio & Cable) ------------------------------------------
N.V. (Netherlands) ------------------------------------------
------------------------------------------ 10. Electronics (Semiconductors) 1.96
------------------------------------------
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any
particular security.
fiber-optics firm SDL (also a fund that offers telecom providers voice, data --------------------------------------------
holding). We believe that this aggressive and video-transmission services. The performance figures shown here, which
acquisition strategy will continue to make represent AIM V.I. Global Utilities Fund,
JDS a leader in fiber optics. WHAT IS YOUR OUTLOOK FOR THE COMING are not intended to reflect actual
SIX MONTHS? annuity values, and they do not reflect
WHAT HOLDINGS HAVE DONE NOTABLY WELL? The prospects for the utilities sector are changes at the separate-account level
FPL Group produces more than 18,000 very positive, both in the short and the which (if applied) would lower them.
megawatts of electricity, principally long term. The world's need for electrical AIM V.I. Global Utilities Fund's
from oil, gas and nuclear power. In power and natural gas shows no signs of performance figures are historical, and
addition to distributing electricity to slackening, and demand for computer and they reflect the reinvestment of
customers from Maine to California, the communications equipment and services of distributions and changes in net asset
company wholesales electric power, oil all kinds continues to skyrocket. Now value. The fund's investment return and
and natural gas, and sells fiber-optic that the market correction in technology- principal value will fluctuate, so an
capacity to telecommunications, cable oriented stocks has taken place, we investor's shares, when redeemed, may be
and Internet providers. Its earnings rose believe that this continued brisk growth worth more or less than their original
165% in the second quarter. is likely to translate into vigorous stock cost.
Another of our stalwarts is SBC performance.
Communications, which started out in local Markets could be volatile for the near The fund participates in the initial
telephone service and has expanded into term because of interest-rate concerns. public offering (IPO) market, and a
seemingly every aspect of communication But while Fed rate hikes could put significant portion of its returns may be
touched by a telephone: long distance, pressure on more traditional sectors of attributable to its investment in IPOs,
wireless, Internet access (through a the economy, the moderate debt load of which have a magnified impact due to the
partnership with Prodigy), cable TV, many technology and telecommunications fund's relatively small asset base. As the
directories, paging and security companies makes them less sensitive to fund's assets grow, it is probable that
monitoring. the effects of rising interest rates. the effect of its investment in IPOs on
The Williams Companies has expanded far Historically, weak markets are the ideal its total return will decline, which may
beyond operating natural-gas pipelines, time to invest and prepare for the next reduce the fund's total return.
and even beyond the related gas move up as companies innovate and grow in
exploration, production, refining and new areas. The fund will maintain its Investing in a single-sector or single-
marketing businesses. It now also focus on investing in sound companies with region mutual fund may involve greater
operates a national fiber-optic network strong prospects for earnings growth. risk and potential reward than investing
in a more diversified fund.
International investing presents
certain risks not associated with
investing solely in the United
States. These include risks
relating to fluctuations in the value of
the U.S. dollar relative to the value of
other currencies, the custody arrangements
made for the fund's foreign holdings,
differences in accounting procedures,
political risks and the lesser degree of
public information required to be provided
by non-U.S. companies.
The Lipper Utility Fund Index is an
average of the 30 largest utility funds
tracked by Lipper, Inc., an independent
mutual fund performance monitor.
The unmanaged National Association of
Securities Dealers Automated Quotation
System Composite Index (the Nasdaq) is a
market-value-weighted index comprising all
domestic and non-U.S.-based common stocks
listed on the Nasdaq system. It includes
more than 5,000 companies, and it is often
considered representative of the small and
medium-sized company universe. While it
includes many small and mid-sized company
stocks, large-capitalization technology
companies tend to dominate the index.
The unmanaged Standard & Poor's Composite
of 500 Stocks (the S&P 500) represents the
performance of the stock market.
An investment cannot be made in an index.
Unless otherwise indicated, index results
include reinvested dividends.
</TABLE>
92 AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 54.46%
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.18%
Comcast Corp. - Class A(a) 6,700 $ 271,350
------------------------------------------------------------------
UnitedGlobalCom Inc. - Class A(a) 9,300 434,775
------------------------------------------------------------------
Univision Communications, Inc. - Class A(a) 3,200 331,200
------------------------------------------------------------------
1,037,325
------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 9.06%
Aether Systems, Inc.(a) 1,900 389,500
------------------------------------------------------------------
Copper Mountain Networks, Inc.(a) 4,500 396,562
------------------------------------------------------------------
Corning Inc. 800 215,900
------------------------------------------------------------------
Efficient Networks, Inc.(a) 3,300 242,756
------------------------------------------------------------------
JDS Uniphase Corp.(a) 1,600 191,800
------------------------------------------------------------------
Juniper Networks, Inc.(a) 2,200 320,237
------------------------------------------------------------------
Lucent Technologies Inc. 9,000 533,250
------------------------------------------------------------------
Redback Networks Inc.(a) 9,700 1,726,600
------------------------------------------------------------------
Sycamore Networks, Inc.(a) 2,700 298,012
------------------------------------------------------------------
4,314,617
------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.92%
Cisco Systems, Inc.(a) 5,300 336,881
------------------------------------------------------------------
Foundry Networks, Inc.(a) 900 99,450
------------------------------------------------------------------
436,331
------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.43%
Net2000 Communications, Inc.(a) 12,400 203,050
------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 0.21%
Caminus Corp.(a) 4,000 98,000
------------------------------------------------------------------
ELECTRIC COMPANIES - 12.01%
Allegheny Energy, Inc. 21,800 596,775
------------------------------------------------------------------
Constellation Energy Group 17,700 576,356
------------------------------------------------------------------
Duke Power Co. 10,300 580,662
------------------------------------------------------------------
Energy East Corp. 27,200 518,500
------------------------------------------------------------------
FPL Group, Inc. 12,600 623,700
------------------------------------------------------------------
Montana Power Co. (The) 10,000 353,125
------------------------------------------------------------------
Niagara Mohawk Holdings Inc.(a) 47,700 664,819
------------------------------------------------------------------
NiSource, Inc. 35,300 657,462
------------------------------------------------------------------
Peco Energy Co. 11,800 475,688
------------------------------------------------------------------
Pinnacle West Capital Corp. 19,800 670,725
------------------------------------------------------------------
5,717,812
------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.51%
Capstone Turbine Corp.(a) 5,400 243,338
------------------------------------------------------------------
ELECTRONICS (DEFENSE) - 0.37%
General Motors Corp. - Class H(a) 2,000 175,500
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS) - 1.96%
SDL, Inc.(a) 2,700 $ 770,006
---------------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 2,200 161,838
---------------------------------------------------------------------
931,844
---------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 1.33%
Quanta Services, Inc.(a) 11,500 632,500
---------------------------------------------------------------------
NATURAL GAS - 4.48%
Dynegy Inc. - Class A 9,300 635,306
---------------------------------------------------------------------
Enron Corp. 7,800 503,100
---------------------------------------------------------------------
Williams Cos., Inc. (The) 23,900 996,331
---------------------------------------------------------------------
2,134,737
---------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.01%
AES Corp. (The)(a) 10,600 483,625
---------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.71%
Convergys Corp.(a) 6,500 337,188
---------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 0.55%
Clarent Corp.(a) 3,700 264,550
---------------------------------------------------------------------
TELECOMMUNICATIONS - 0.47%
Williams Communications Group, Inc.(a) 6,800 225,675
---------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 2.41%
Level 3 Communications, Inc.(a) 1,500 132,000
---------------------------------------------------------------------
Phone.com, Inc.(a) 6,400 416,800
---------------------------------------------------------------------
TeleCorp PCS, Inc.(a) 4,100 165,281
---------------------------------------------------------------------
Tritel, Inc.(a) 7,100 210,781
---------------------------------------------------------------------
Western Wireless Corp. - Class A(a) 4,100 223,450
---------------------------------------------------------------------
1,148,312
---------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 2.02%
Universal Access, Inc.(a) 5,800 142,100
---------------------------------------------------------------------
Winstar Communications, Inc.(a) 239 8,096
---------------------------------------------------------------------
WorldCom, Inc.(a) 17,730 813,364
---------------------------------------------------------------------
963,560
---------------------------------------------------------------------
TELEPHONE - 13.83%
Bell Atlantic Corp. 12,700 645,319
---------------------------------------------------------------------
BellSouth Corp. 6,900 294,113
---------------------------------------------------------------------
Broadwing Inc.(a) 35,424 918,810
---------------------------------------------------------------------
CenturyTel, Inc. 15,100 434,125
---------------------------------------------------------------------
GTE Corp. 6,300 392,175
---------------------------------------------------------------------
McLeodUSA, Inc. - Class A(a) 29,700 614,419
---------------------------------------------------------------------
NEXTLINK Communications, Inc. - Class A(a) 8,600 326,263
---------------------------------------------------------------------
Qwest Communications International Inc.(a) 15,800 785,063
---------------------------------------------------------------------
SBC Communications Inc. 34,497 1,491,995
---------------------------------------------------------------------
Time Warner Telecom, Inc. - Class A(a) 10,600 682,375
---------------------------------------------------------------------
6,584,657
---------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $14,804,764) 25,932,621
---------------------------------------------------------------------
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND 93
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 23.59%
AUSTRALIA - 0.53%
Telstra Corp. Ltd. (Telephone) 58,880 $ 238,446
-------------------------------------------------------------------------------
Telstra Corp. Ltd. - Installment Receipts (Telephone) 7,200 16,342
-------------------------------------------------------------------------------
254,788
-------------------------------------------------------------------------------
BELGIUM - 1.14%
Electrabel S.A. (Electric Companies) 2,200 542,724
-------------------------------------------------------------------------------
BERMUDA - 0.19%
Global Crossing Ltd. (Telecommunications - Long
Distance)(a) 3,385 89,068
-------------------------------------------------------------------------------
CANADA - 2.35%
360networks Inc. (Telecommunications - Long Distance)(a) 12,400 189,100
-------------------------------------------------------------------------------
AT&T Canada Inc. (Telephone)(a) 9,000 298,687
-------------------------------------------------------------------------------
BCT.Telus Communications, Inc. (Telephone) 4,955 132,316
-------------------------------------------------------------------------------
BCT.Telus Communications, Inc. - Class A (Telephone) 1,651 44,032
-------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 3,700 252,525
-------------------------------------------------------------------------------
Rogers Cantel Mobile Communications Inc. - Class B
(Telecommunications - Cellular/Wireless)(a) 3,500 116,533
-------------------------------------------------------------------------------
Westcoast Energy, Inc. (Natural Gas) 5,500 85,250
-------------------------------------------------------------------------------
1,118,443
-------------------------------------------------------------------------------
DENMARK - 0.48%
Tele Danmark A.S. - ADR (Telephone) 6,700 227,800
-------------------------------------------------------------------------------
FINLAND - 2.14%
Nokia Oyj - ADR (Communications Equipment) 15,200 759,050
-------------------------------------------------------------------------------
Sonera Oyj (Telecommunications - Cellular/Wireless) 5,700 259,342
-------------------------------------------------------------------------------
1,018,392
-------------------------------------------------------------------------------
FRANCE - 1.97%
France Telecom S.A. - ADR (Telephone) 4,000 570,000
-------------------------------------------------------------------------------
Suez Lyonnaise des Eaux S.A. (Manufacturing -
Diversified) 2,100 367,181
-------------------------------------------------------------------------------
937,181
-------------------------------------------------------------------------------
GERMANY - 0.55%
E.On A.G. (Manufacturing - Diversified)(a) 5,320 260,555
-------------------------------------------------------------------------------
HUNGARY - 0.32%
Magyar Tavkozlesi Rt - ADR (Telecommunications - Long
Distance) 4,400 151,525
-------------------------------------------------------------------------------
IRELAND - 0.87%
eircom PLC (Telecommunications - Long Distance) 155,300 414,337
-------------------------------------------------------------------------------
ITALY - 2.07%
ACEA S.p.A. (Water Utilities) 40,000 636,123
-------------------------------------------------------------------------------
AEM S.p.A. (Electric Companies) 55,000 217,488
-------------------------------------------------------------------------------
Enel S.p.A. (Electric Companies) 29,900 132,195
-------------------------------------------------------------------------------
985,806
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN - 1.12%
Nippon Telegraph & Telephone Corp. (Telecommunications -
Long Distance) 12 $ 159,375
-------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. - ADR
(Telecommunications - Long Distance) 3,100 211,962
-------------------------------------------------------------------------------
NTT DoCoMo, Inc. (Telecommunications -Cellular/Wireless) 6 162,200
-------------------------------------------------------------------------------
533,537
-------------------------------------------------------------------------------
MEXICO - 0.17%
Grupo Iusacell S.A. - ADR (Telecommunications -
Cellular/Wireless)(a) 5,300 82,812
-------------------------------------------------------------------------------
NETHERLANDS - 2.70%
Completel Europe N.V. (Telecommunications -
Long Distance)(a) 12,400 153,599
-------------------------------------------------------------------------------
KPNQwest N.V. (Telecommunications - Long Distance)(a) 6,700 263,025
-------------------------------------------------------------------------------
Libertel N.V. (Telecommunications -
Cellular/Wireless)(a) 11,900 180,856
-------------------------------------------------------------------------------
Versatel Telecom International N.V.
(Telecommunications - Long Distance)(a) 16,400 687,577
-------------------------------------------------------------------------------
1,285,057
-------------------------------------------------------------------------------
SOUTH KOREA - 0.79%
Korea Telecom Corp. - ADR (Telephone) 7,812 377,905
-------------------------------------------------------------------------------
SPAIN - 2.47%
Endesa S.A. (Electric Companies) 23,600 456,267
-------------------------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 33,564 719,583
-------------------------------------------------------------------------------
1,175,850
-------------------------------------------------------------------------------
SWEDEN - 0.38%
Telia A.B. (Telephone)(a) 19,300 181,399
-------------------------------------------------------------------------------
UNITED KINGDOM - 3.35%
COLT Telecom Group PLC (Telephone)(a) 5,500 183,061
-------------------------------------------------------------------------------
Kelda Group PLC (Water Utilities) 52,174 254,957
-------------------------------------------------------------------------------
National Grid Group PLC (Electric Companies) 13,113 103,359
-------------------------------------------------------------------------------
Scottish Power PLC (Electric Companies) 72,350 612,967
-------------------------------------------------------------------------------
United Utilities PLC (Water Utilities) 15,000 148,415
-------------------------------------------------------------------------------
Vodafone AirTouch PLC (Telecommunications -
Cellular/Wireless) 71,996 290,824
-------------------------------------------------------------------------------
1,593,583
-------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $8,715,841) 11,230,762
-------------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 4.47%
COMPUTERS (SOFTWARE & SERVICES) - 0.62%
PSINet, Inc. - Series C, $3.38 Conv. Pfd. 6,000 293,250
-------------------------------------------------------------------------------
NATURAL GAS - 0.91%
El Paso Energy Cap Trust, Inc. - $2.38 Conv. Pfd. 6,700 431,313
-------------------------------------------------------------------------------
</TABLE>
94 AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
POWER PRODUCERS (INDEPENDENT) - 1.17%
Calpine Capital Trust - $2.88 Conv. Pfd. 4,700 $ 555,775
-------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.25%
MediaOne Group, Inc. - $3.04 Conv. Pfd. 3,000 121,500
-------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.22%
Viatel, Inc., $3.88 Conv. Pfd. (Acquired 04/07/00;
Cost $425,000)(b) 8,500 325,125
-------------------------------------------------------------------------------
Winstar Communications, Inc. - Series F,
$72.50 Conv. Pfd. 260 257,270
-------------------------------------------------------------------------------
582,395
-------------------------------------------------------------------------------
TELEPHONE - 0.30%
Broadwing Inc. - Series B, $3.38 Conv. Pfd. 820 38,540
-------------------------------------------------------------------------------
NEXTLINK Communications - $3.25 Conv. Pfd. (Acquired
03/26/98; Cost $30,000)(b) 600 105,900
-------------------------------------------------------------------------------
144,440
-------------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks (Cost
$1,873,282) 2,128,673
-------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS & NOTES - 4.44%
COMPUTERS (HARDWARE) - 0.69%
Candescent Technology Corp., Sr. Conv. Sub. Deb., 8.00%,
05/01/03 (Acquired 04/17/98-07/12/99; Cost $426,925)(b) $ 452,000 327,700
-------------------------------------------------------------------------------
ELECTRIC COMPANIES - 0.67%
Arizona Public Service Co., Deb., 8.00%, 12/30/15 75,000 71,800
-------------------------------------------------------------------------------
Indiana Michigan Power Co. - Series F, Sec. Lease
Obligation Bonds, 9.82%, 12/07/22 93,396 101,042
-------------------------------------------------------------------------------
Western Resources, Inc., Sr. Unsec. Notes,
6.25%, 08/15/03 75,000 65,605
-------------------------------------------------------------------------------
7.13%, 08/01/09 100,000 81,924
-------------------------------------------------------------------------------
320,371
-------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.95%
Limestone Electron Trust, Sr. Notes, 8.63%, 03/15/03
(Acquired 03/15/00; Cost $450,000)(b) 450,000 454,257
-------------------------------------------------------------------------------
NATURAL GAS - 1.04%
Dynegy Inc., Sr. Unsec. Deb., 7.13%, 05/15/18 100,000 87,937
-------------------------------------------------------------------------------
Enron Corp., Sr. Sub. Deb., 8.25%, 09/15/12 400,000 408,280
-------------------------------------------------------------------------------
496,217
-------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.25%
AES Corp. (The),
Sr. Notes, 8.00%, 12/31/08 20,000 17,300
-------------------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 10.25%, 07/15/06 100,000 100,250
-------------------------------------------------------------------------------
117,550
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE) - 0.32%
AT&T Corp., Sr. Notes, 7.75%, 03/01/07 $ 150,000 $ 152,751
------------------------------------------------------------------------------
TELEPHONE - 0.52%
NTL Inc., Conv. Sub. Notes, 5.75%, 12/15/09 (Acquired
12/17/99-03/01/00; Cost $313,162)(b) 310,000 247,613
------------------------------------------------------------------------------
Total U.S. Dollar Denominated Bonds & Notes
(Cost $2,375,574) 2,116,459
------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT(c)
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED BONDS & NOTES - 2.51%
CANADA - 0.75%
Canadian Oil Debco Inc. (Oil & Gas - Exploration &
Production), Deb., 11.00%, 10/31/00 CAD 100,000 68,618
------------------------------------------------------------------------------
Clearnet Communications Inc. (Telecommunications -
Cellular/Wireless), Sr. Unsec. Disc. Notes, 10.75%,
02/15/09(a)(d) CAD 300,000 113,575
------------------------------------------------------------------------------
Teleglobe Canada Inc. (Telecommunications - Long
Distance), Unsec. Deb., 8.35%, 06/20/03 CAD 100,000 69,511
------------------------------------------------------------------------------
TransCanada Pipelines - Series Q (Natural Gas), Deb.,
10.63%, 10/20/09 CAD 125,000 104,148
------------------------------------------------------------------------------
355,852
------------------------------------------------------------------------------
FRANCE - 0.35%
France Telecom (Telephone), Conv. Bonds,
2.00%, 01/01/04 FRF 603,520 164,439
------------------------------------------------------------------------------
UNITED KINGDOM - 1.41%
COLT Telecom Group PLC (Telephone), Conv. Bonds, 2.00%,
12/16/06 (Acquired 12/09/99; Cost $153,930)(b) EUR 150,000 128,278
------------------------------------------------------------------------------
National Grid Co. PLC (Electric Companies),
Conv. Bonds, 4.25%, 02/17/08
(Acquired 02/05/98; Cost $397,800)(b) GBP 240,000 480,648
------------------------------------------------------------------------------
Series RG, Conv. Bonds, 4.25%, 02/17/08 GBP 32,000 64,510
------------------------------------------------------------------------------
673,436
------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost
$1,114,233) 1,193,727
------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS - 9.96%
STIC Liquid Assets Portfolio(e) 2,370,499 2,370,499
------------------------------------------------------------------------------
STIC Prime Portfolio(e) 2,370,499 2,370,499
------------------------------------------------------------------------------
Total Money Market Funds (Cost $4,740,998) 4,740,998
------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.43%
(Cost $33,624,692) 47,343,240
------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.57% 270,359
------------------------------------------------------------------------------
NET ASSETS - 100.00% $47,613,599
==============================================================================
</TABLE>
AIM V.I. GLOBAL UTILITIES FUND 95
<PAGE>
INVESTMENT ABBREVIATIONS:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
Disc. - Discounted
EUR - Euro
FRF - French Franc
GBP - British Pound Sterling
Gtd. - Guaranteed
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
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 Trustees. The
aggregate market value of these securities at 06/30/00 was $2,069,521 which
represented 4.35% of the Fund's net assets.
(c) Foreign denominated security. Par value is denominated in currency
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) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
96 AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $33,624,692) $47,343,240
---------------------------------------------------------------------
Foreign currencies, at value (cost $109,643) 109,873
---------------------------------------------------------------------
Receivables for:
Investments sold 346,241
---------------------------------------------------------------------
Fund shares sold 80,504
---------------------------------------------------------------------
Dividends and interest 114,425
---------------------------------------------------------------------
Investment for deferred compensation plan 25,703
---------------------------------------------------------------------
Total assets 48,019,986
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 236,748
---------------------------------------------------------------------
Fund shares reacquired 47,657
---------------------------------------------------------------------
Deferred compensation plan 25,703
---------------------------------------------------------------------
Accrued advisory fees 25,246
---------------------------------------------------------------------
Accrued administrative services fees 40,781
---------------------------------------------------------------------
Accrued trustees' fees 1,719
---------------------------------------------------------------------
Accrued operating expenses 28,533
---------------------------------------------------------------------
Total liabilities 406,387
---------------------------------------------------------------------
Net assets applicable to shares outstanding $47,613,599
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 1,988,861
=====================================================================
Net asset value, offering and redemption price per share $ 23.94
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $14,540) $ 382,335
---------------------------------------------------------------------------
Interest 113,040
---------------------------------------------------------------------------
Total investment income 495,375
---------------------------------------------------------------------------
EXPENSES:
Advisory fees 147,260
---------------------------------------------------------------------------
Administrative services fee 54,929
---------------------------------------------------------------------------
Custodian fees 21,426
---------------------------------------------------------------------------
Trustee's fees 3,632
---------------------------------------------------------------------------
Other 24,518
---------------------------------------------------------------------------
Total expenses 251,765
---------------------------------------------------------------------------
Less:Expenses paid indirectly (91)
---------------------------------------------------------------------------
Net expenses 251,674
---------------------------------------------------------------------------
Net investment income 243,701
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities 3,126,998
---------------------------------------------------------------------------
Foreign currencies (4,466)
---------------------------------------------------------------------------
3,122,532
---------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (1,552,394)
---------------------------------------------------------------------------
Foreign currencies 2,852
---------------------------------------------------------------------------
(1,549,542)
---------------------------------------------------------------------------
Net gain on investment securities and foreign currencies 1,572,990
---------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,816,691
===========================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND 97
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 243,701 $ 534,482
--------------------------------------------------------------------------------
Net realized gain from investment securities and
foreign currencies 3,122,532 1,996,896
--------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation)
of investment securities and foreign currencies (1,549,542) 7,366,001
--------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,816,691 9,897,379
--------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (618,958)
--------------------------------------------------------------------------------
Share transactions - net 6,024,642 2,360,217
--------------------------------------------------------------------------------
Net increase in net assets 7,841,333 11,638,638
--------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 39,772,266 28,133,628
--------------------------------------------------------------------------------
End of period $47,613,599 $39,772,266
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $28,083,552 $22,058,910
--------------------------------------------------------------------------------
Undistributed net investment income 721,830 478,129
--------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities and foreign currencies 5,089,510 1,966,978
--------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 13,718,707 15,268,249
--------------------------------------------------------------------------------
$47,613,599 $39,772,266
================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Global Utilities Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve a high total return.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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
98 AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
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 Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and option contracts generally will be valued 15 minutes after
the close of the customary trading session of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. 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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $54,929 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,740
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $91 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $91.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 99
<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, 2000 was $15,371,458 and $11,296,449, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $15,155,022
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,438,028)
--------------------------------------------------------------------------
Net unrealized appreciation of investment securities $13,716,994
==========================================================================
</TABLE>
Cost of investments for tax purposes is $33,626,246.
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Sold 375,941 $9,267,097 482,016 $8,991,351
--------------------------------------------------------------------------
Issued as reinvestment
of dividends -- -- 28,722 618,958
--------------------------------------------------------------------------
Reacquired (131,346) (3,242,455) (386,649) (7,250,092)
--------------------------------------------------------------------------
244,595 $6,024,642 124,089 $2,360,217
==========================================================================
</TABLE>
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
MAY 2, 1994
(DATE OPERATIONS
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, ELEVEN MONTHS ENDED COMMENCED) TO
JUNE 30, ---------------------------------- DECEMBER 31, JANUARY 31,
2000 1999(a) 1998 1997 1996 1995 1995
---------------- ------- ------- ------- ------- ------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 22.80 $ 17.36 $ 15.26 $ 12.55 $ 11.64 $ 9.69 $10.00
------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.09 0.32 0.35 0.32 0.40 0.29 0.27
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 1.05 5.49 2.15 2.40 0.99 1.98 (0.33)
------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 1.14 5.81 2.50 2.72 1.39 2.27 (0.06)
------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.37) (0.28) -- (0.41) (0.31) (0.25)
------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- -- (0.12) (0.01) (0.07) (0.01) --
------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.37) (0.40) (0.01) (0.48) (0.32) (0.25)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 23.94 $ 22.80 $ 17.36 $ 15.26 $ 12.55 $11.64 $ 9.69
========================================================================================================================
Total return(b) 5.00% 33.56% 16.49% 21.63% 12.07% 23.73% (0.56)%
========================================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $47,614 $39,772 $28,134 $22,079 $13,576 $8,394 $2,958
========================================================================================================================
Ratio of expenses to
average net assets 1.11%(c) 1.14% 1.11% 1.28% 1.40%(d) 1.47%(d)(e) 1.31%(e)(f)
========================================================================================================================
Ratio of net investment
income to average net
assets 1.08%(c) 1.72% 2.46% 2.81% 3.56%(d) 3.76%(d)(e) 4.39%(e)(f)
========================================================================================================================
Portfolio turnover rate 27% 45% 32% 28% 47% 58% 69%
========================================================================================================================
</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 $45,487,714.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.55% and 2.44% (annualized) for 1996 and 1995, respectively.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.80% (annualized).
100 AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Global Utilities Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 1,616,257 41,748 91,074
(4)(a) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 1,585,348 45,865 117,866
(4)(b) Change to Fundamental Restriction
on Underwriting Securities......... 1,552,617 69,264 127,198
(4)(c) Change to Fundamental Restriction
on Industry Concentration.......... 1,569,812 56,824 122,443
(4)(d) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 1,545,657 76,609 126,813
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 1,564,161 60,622 124,296
(4)(f) Change to Fundamental Restriction
on Making Loans.................... 1,569,005 65,613 114,461
(4)(g) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 1,522,904 105,546 120,629
(5) Approval of changing the Investment
Objective and Making it Non-
Fundamental........................ 1,487,750 71,285 190,044
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 1,655,959 26,128 66,992
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. GLOBAL UTILITIES FUND 101
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. GOVERNMENT SECURITIES FUND
FUND PROVIDES INCOME, SAFE HAVEN FROM
VOLATILE MARKET CONDITIONS
THUS FAR, 2000 HAS BEEN A CHALLENGING U.S. TREASURY ISSUES HANDILY OUT- | term yields. With an inverted curve,
AND VOLATILE YEAR IN THE MARKETS. HOW PACED CREDIT ISSUES, PARTICULARLY | however, short-term Treasuries actually
DID AIM V.I. GOVERNMENT SECURITIES FUND HIGH-YIELD BONDS, ON A TOTAL-RETURN | yield more than longer-term ones.
PERFORM IN THESE CONDITIONS? BASIS FOR THE FIRST QUARTER OF | In this atypical inversion of the
Rising interest rates, coupled with some- THE YEAR AND FOR THE SIX-MONTH | curve, long-maturity bonds significantly
times extreme day-to-day stock-market REPORTING PERIOD. | outperformed shorter- and intermediate-
volatility, increased investor interest in _________________________________________| maturity issues during the first quarter.
government bonds. For the six months ended For instance, during the first quarter,
June 30, 2000, AIM V.I. Government (a basis point is one one-hundredth of a the yield on the 30-year Treasury bond
Securities Fund posted an impressive percentage point) and raised rates again fell 64 basis points, whereas the yield in
return of 3.48%, tracking that of its in May another 50 basis points. The May the intermediate section of the curve fell
benchmark, the Lehman Intermediate increase was the sixth since last summer only 20 to 30 basis points.
Government Bond Index, which returned and the largest in more than five years. Through the first half of the second
3.49%. By contrast, equity securities as Market observers, however, blew a quarter, Treasury yields started to
represented by the S&P 500 Index returned collective sigh of relief when the Fed, increase and yield spreads between
-0.43% for the same period--evidence, once seeing some signs that the economy had mortgages and Treasuries narrowed. In
again, that a well-diversified portfolio started to slow, decided not to raise June, with signs that the economy might
is important. interest rates again in June. be slowing and the possibility that the
Fed wouldn't increase rates again at its
WHAT WERE THE MAJOR FACTORS INFLUENCING HOW DID GOVERNMENT MARKETS FARE DURING end-of-June meeting, Treasury yields fell
FIXED-INCOME SECURITIES DURING THE THE PERIOD? across most maturity spectrums. The most
REPORTING PERIOD? U.S. Treasury issues handily outpaced dramatic drops were in shorter to
In an effort to prevent inflation in a credit issues, particularly high-yield intermediate maturities.
rapidly growing economy, the Federal bonds, on a total-return basis for the Falling yields, of course, mean higher
Reserve Board (the Fed) raised interest first quarter of the year and for the bond prices. Obviously, this environment
rates three times in the first two six-month reporting period. The 30-year was very beneficial for the fund. And as a
quarters of this year. The Fed hiked Treasury bond in particular had a double bonus, yields on agency bonds fell
interest rates twice in the first quarter stellar first quarter, providing one of even more than those on comparable
for a total increase of 50 basis points the strongest total returns of any Treasuries. (Agencies generally carry a
security. higher coupon than Treasuries.)
Beyond investor flight from a volatile
FUND PERFORMANCE stock market, the government bond market WHAT OTHER EVENTS INFLUENCED
was buoyed by a unique situation. In GOVERNMENT MARKETS?
AVERAGE ANNUAL TOTAL RETURNS January, the Treasury announced its Government-Sponsored Enterprises (GSEs),
intention to buy back $30 billion in organizations like the Federal National
As of 6/30/00 Treasury securities and perhaps to cease Mortgage Association (Fannie Mae) and the
issuing 30-year Treasury bonds in the not- Federal Home Loan Mortgage Corporation
------------------------------------------ too-distant future. This (among other (Freddie Mac), made headlines this spring.
Inception (5/5/93) 4.84% factors) literally turned the Treasury Despite being shareholder-owned, Freddie
------------------------------------------ market upside down, or in bond parlance, and Fannie operate under federal charters
5 years 5.10 inverted the Treasury yield curve. The that exempt them from state and local
------------------------------------------ yield curve--a graph of Treasury security corporate income taxes and give them a
1 year 4.26 yields from three months to 30 years-- $2.25 billion line of credit with the
under normal conditions slopes upward, Treasury. This "implied government
with short-term yields lower than longer- guarantee" has been called into question
Past performance cannot guarantee
comparable future results. MARKET
VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-
TERM PERFORMANCE. RESULTS OF AN INVESTMENT
MADE TODAY MAY DIFFER SUBSTANTIALLY FROM
THE HISTORICAL PERFORMANCE SHOWN.
</TABLE>
102 AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION course, drove down prices, leading to
some attractive agency-bond buying
As of 6/30/00, based on total net assets opportunities for the fund in the second
quarter.
Cash Equivalents 8%
--------------------| WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
| As we begin the second half of the year,
the outlook for fixed-income markets
U.S. AGENCY MORTGAGE depends largely on what the economy does
OBLIGATIONS OBLIGATIONS in the coming months. Has the Fed with
28% 52% its string of rate hikes orchestrated the
proverbial "soft landing"--a gradual
[PIE CHART] slowing of the economy, which would
prevent inflation and avoid economic
U.S. Treasury distress? A string of recent statistical
Obligations 12% releases suggests that the pace of
____________________ economic activity is indeed slowing.
Beyond interest-rate speculation,
The fund's portfolio composition is subject to change, and there is no assurance government-security weighted funds will
that the fund will continue to hold any particular security. have to wait and see if legislative
changes might affect the regulatory
treatment of government-sponsored
and has had an effect on the agency WHILE WE CERTAINLY WOULD NOT | agencies.
market. This resulted in considerable SUGGEST THAT GOVERNMENT BONDS | Thus far, Y2K has proven to be very
yield-spread volatility between agency and COULD CONTINUE TO OUTPERFORM MAJOR | favorable for government markets. While we
Treasury debt. MARKET INDEXES LIKE THE S&P 500, | certainly would not suggest that
After the Treasury's buyback IT DOES REINFORCE THE | government bonds could continue to
announcment in January, investors sought ARGUMENT THAT BONDS BELONG IN A | outperform major market indexes like the
high-quality liquid alternatives to WELL-DIVERSIFIED PORTFOLIO. | S&P 500, it does reinforce the argument
Treasuries and bought agencies. So in late _________________________________________| that bonds belong in a well-diversified
January and February, the spread between portfolio. Going forward, we believe the
agencies and comparable-maturity obligations, mortgage-backed securities fund is positioned to provide shareholders
Treasuries narrowed. For instance, the and cash equivalents. with the stability and income they have
10-year agency note traded at only 53 As the year began, the fund increased come to expect.
basis points to Treasuries. In March, its allocation in mortgage bonds. Once
however, the Treasury announced that it falling Treasury yields were reflected in ------------------------------------------
may limit backing of GSEs--this sent the market, the yield spread widened The performance figures shown here, which
spreads the other direction to near between Treasuries and mortgages. We represent AIM V.I. Government Securities
historic wides. In early April, 10-year viewed this widening as an opportunity to Fund, are not intended to reflect actual
agency notes were trading at more than move assets into higher-yielding issues annuity values, and they do not reflect
124 basis points to their Treasury that would also provide relative changes at the separate-account level
counterparts. By June, however, agency stability. This proved quite positive for which (if applied) would lower them.
debenture yields started to decline, the fund as mortgage-backed securities AIM V.I. Government Securities Fund's
narrowing somewhat their spread over were one of the best-performing sectors performance figures are historical, and
Treasuries. during the reporting period. they reflect the reinvestment of
Also, as the GSE issue became news, distributions and changes in net asset
WHAT IS THE FUND'S STRATEGY AND PRESENT yields in the agency market increased value. The fund's investment return and
ASSET ALLOCATION? dramatically. This yield increase, of principal value will fluctuate, so an
Our objective is to provide price investor's shares, when redeemed, may be
stability and income through a combination worth more or less than their original
of Treasuries, government agency cost.
Government securities (such as U.S.
Treasury bills, notes and bonds) offer a
high degree of safety, and they guarantee
the timely payment of principal and
interest if held to maturity. Fund shares
are not insured, and their value will vary
with market conditions.
The unmanaged Lehman Intermediate
Government Bond Index, which represents
the performance of intermediate-and long-
term U.S. Treasury and U.S. government
agency securities, is compiled by Lehman
Brothers, a well-known global investment
bank.
The unmanaged Standard & Poor's
Composite Index of 500 Stocks (the S&P
500) represents the performance of the
stock market.
An investment cannot be made in an
index. Unless otherwise indicated, index
results include reinvested dividends.
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND 103
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 78.61%
FEDERAL FARM CREDIT BANK - 2.91%
Medium term notes,
5.96%, 07/14/03 $ 200,000 $ 194,366
----------------------------------------------------------------
5.80%, 06/17/05 1,000,000 945,620
----------------------------------------------------------------
6.22%, 06/17/08 1,000,000 937,750
----------------------------------------------------------------
2,077,736
----------------------------------------------------------------
FEDERAL HOME LOAN BANK - 11.29%
Debentures,
5.97%, 12/11/00 1,000,000 997,910
----------------------------------------------------------------
7.31%, 07/06/01 500,000 500,895
----------------------------------------------------------------
7.13%, 11/15/01 1,500,000 1,499,685
----------------------------------------------------------------
8.17%, 12/16/04 400,000 416,224
----------------------------------------------------------------
8.00%, 05/24/05 1,860,000 1,879,177
----------------------------------------------------------------
8.10%, 05/24/05 2,720,000 2,754,136
----------------------------------------------------------------
8,048,027
----------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC") - 18.06%
Pass through certificates,
6.00%, 11/01/08 to 09/01/13 983,829 942,166
----------------------------------------------------------------
6.50%, 12/01/08 to 08/01/28 3,877,571 3,693,115
----------------------------------------------------------------
7.00%, 11/01/10 to 01/01/26 888,430 873,074
----------------------------------------------------------------
10.50%, 08/01/19 92,000 99,273
----------------------------------------------------------------
8.50%, 09/01/20 to 12/01/26 1,846,319 1,899,697
----------------------------------------------------------------
8.00%, 11/01/29 to 02/01/30 5,329,785 5,364,555
----------------------------------------------------------------
12,871,880
----------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
("FNMA") - 30.74%
Debentures,
8.25%, 12/18/00 500,000 503,980
----------------------------------------------------------------
7.50%, 02/11/02 1,350,000 1,360,368
----------------------------------------------------------------
7.55%, 04/22/02 400,000 403,732
----------------------------------------------------------------
6.80%, 01/10/03 1,605,000 1,600,779
----------------------------------------------------------------
Medium term notes,
6.69%, 08/07/01 500,000 497,705
----------------------------------------------------------------
7.57%, 04/06/04 1,000,000 1,000,020
----------------------------------------------------------------
7.38%, 03/28/05 300,000 302,976
----------------------------------------------------------------
Pass through certificates,
7.00%, 03/01/04 to 01/01/28 3,468,210 3,390,994
----------------------------------------------------------------
7.50%, 11/01/09 to 07/01/27 1,524,502 1,516,180
----------------------------------------------------------------
6.50%, 10/01/10 to 09/01/27 1,422,000 1,376,239
----------------------------------------------------------------
8.00%, 10/01/14 to 03/01/30 8,557,545 8,614,929
----------------------------------------------------------------
8.50%, 09/01/24 to 02/01/25 858,883 883,066
----------------------------------------------------------------
</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 $ 462,114
---------------------------------------------------------------------------
21,913,082
---------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") -
11.69%
Pass through certificates,
9.50%, 08/15/03 to 09/15/16 45,267 47,520
---------------------------------------------------------------------------
7.50%, 03/15/08 to 08/15/28 1,931,761 1,924,537
---------------------------------------------------------------------------
9.00%, 09/15/08 to 10/15/16 74,483 77,483
---------------------------------------------------------------------------
11.00%, 10/15/15 25,294 27,681
---------------------------------------------------------------------------
10.50%, 09/15/17 to 11/15/19 20,045 21,818
---------------------------------------------------------------------------
10.00%, 06/15/19 554,173 592,095
---------------------------------------------------------------------------
6.50%, 12/15/23 356,914 342,637
---------------------------------------------------------------------------
8.00%, 07/15/24 to 07/15/26 2,241,712 2,278,451
---------------------------------------------------------------------------
7.00%, 04/15/28 to 06/15/28 3,090,228 3,017,277
---------------------------------------------------------------------------
8,329,499
---------------------------------------------------------------------------
PRIVATE EXPORT FUNDING COMPANY - 0.42%
Debentures
7.30%, 01/31/02 300,000 302,685
---------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION - 0.21%
Debentures
6.50%, 08/01/02 150,000 148,467
---------------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY - 3.29%
Debentures
6.38%, 06/15/05 2,400,000 2,343,792
---------------------------------------------------------------------------
Total U.S. Government Agency Securities
(Cost $56,873,664) 56,035,168
---------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 11.90%
U.S. TREASURY NOTES - 5.83%
6.00%, 08/15/04 3,000,000 2,973,570
---------------------------------------------------------------------------
7.88%, 11/15/07 1,150,000 1,182,062
---------------------------------------------------------------------------
4,155,632
---------------------------------------------------------------------------
U.S. TREASURY BONDS - 4.77%
9.25%, 02/15/16 550,000 712,569
---------------------------------------------------------------------------
7.63%, 02/15/25 550,000 649,033
---------------------------------------------------------------------------
6.88%, 08/15/25 500,000 543,665
---------------------------------------------------------------------------
6.13%, 11/15/27 1,500,000 1,496,190
---------------------------------------------------------------------------
3,401,457
---------------------------------------------------------------------------
U.S. TREASURY STRIPS - 1.30%(a)
5.38%, 05/15/06 750,000 524,580
---------------------------------------------------------------------------
6.80%, 11/15/18 1,250,000 401,138
---------------------------------------------------------------------------
925,718
---------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $8,613,675) 8,482,807
---------------------------------------------------------------------------
</TABLE>
104 AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS & NOTES - 0.86%
CONSUMER FINANCE - 0.86%
Asian Development Bank (Multi-National), Yankee
Deb., 8.00%, 04/30/01 $ 200,000 $ 201,404
---------------------------------------------------------------------------
Financial Assistance Corp., Bonds, 9.38%, 07/21/03 75,000 79,892
---------------------------------------------------------------------------
International Bank for Reconstruction & Development
(Multi-National), Unsub. Unsec. Notes,
5.25%, 09/16/03 350,000 332,668
---------------------------------------------------------------------------
Total Corporate Bonds & Notes
(Cost $615,673) 613,964
---------------------------------------------------------------------------
REPURCHASE AGREEMENT - 8.06%(B)
UBS Warburg, 6.85%, 07/03/00
(Cost $5,742,914)(c) 5,742,914 5,742,914
---------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.43%
(Cost $71,845,926) 70,874,853
---------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.57% 404,236
---------------------------------------------------------------------------
NET ASSETS - 100.00% $71,279,089
===========================================================================
</TABLE>
Investment Abbreviations:
Deb. - Debentures
STRIPS - Separately Traded Registered Interest and Principal Security
Unsec. - Unsecured
Unsub. - Unsubordinated
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 06/30/00 with maturing value of
$250,142,708 and collateralized by U.S. Government obligations.
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND 105
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $71,845,926) $70,874,853
---------------------------------------------------------------------
Receivables for:
Fund shares sold 26,194
---------------------------------------------------------------------
Interest 626,344
---------------------------------------------------------------------
Principal paydowns 597
---------------------------------------------------------------------
Investment for deferred compensation plan 29,200
---------------------------------------------------------------------
Other assets 382
---------------------------------------------------------------------
Total assets 71,557,570
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 158,778
---------------------------------------------------------------------
Deferred compensation plan 29,200
---------------------------------------------------------------------
Accrued advisory fees 29,223
---------------------------------------------------------------------
Accrued administrative services fees 49,847
---------------------------------------------------------------------
Accrued trustees' fees 1,492
---------------------------------------------------------------------
Accrued operating expenses 9,941
---------------------------------------------------------------------
Total liabilities 278,481
---------------------------------------------------------------------
Net assets applicable to shares outstanding $71,279,089
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 6,481,597
=====================================================================
Net asset value, offering and redemption price per share $ 11.00
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,174,096
---------------------------------------------------------------------------
Dividends 239,515
---------------------------------------------------------------------------
Total investment income 2,413,611
---------------------------------------------------------------------------
EXPENSES:
Advisory fees 173,997
---------------------------------------------------------------------------
Administrative services fee 65,724
---------------------------------------------------------------------------
Custodian fees 11,867
---------------------------------------------------------------------------
Interest 37,222
---------------------------------------------------------------------------
Trustees' fees 3,436
---------------------------------------------------------------------------
Other 25,720
---------------------------------------------------------------------------
Total expenses 317,966
---------------------------------------------------------------------------
Net investment income 2,095,645
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (858,623)
---------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities 1,160,616
---------------------------------------------------------------------------
Net gain on investment securities 301,993
---------------------------------------------------------------------------
Net increase in net assets resulting from operations $2,397,638
===========================================================================
</TABLE>
See Notes to Financial Statements.
106 AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,095,645 $ 3,628,296
------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (858,623) (1,304,878)
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities 1,160,616 (3,043,863)
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 2,397,638 (720,445)
------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (2,511,433)
------------------------------------------------------------------------------
Share transactions-net (1,879,771) 15,808,419
------------------------------------------------------------------------------
Net increase in net assets 517,867 12,576,541
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 70,761,222 58,184,681
------------------------------------------------------------------------------
End of period $71,279,089 $70,761,222
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $68,984,989 $70,864,760
------------------------------------------------------------------------------
Undistributed net investment income 5,698,047 3,602,402
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (2,432,874) (1,574,251)
------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (971,073) (2,131,689)
------------------------------------------------------------------------------
$71,279,089 $70,761,222
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Government Securities Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve a high level of current income consistent with reasonable concern for
safety of principal.
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 preparation of its financial statements.
A. Security Valuations - Debt obligations that are issued or guaranteed by the
U.S. Treasury are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate, maturity and seasoning
differential. Securities for which market prices are not provided by the
above method are valued based upon quotes furnished by independent sources
and are valued at 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 Trust's officers in a manner specifically
authorized by the Board of Trustees. Short-term obligations having 60 days
or less to maturity are valued at amortized cost which approximates market
value.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. The Fund may engage in dollar roll
transactions with respect to mortgage backed securities issued by GNMA,
FNMA and FHLMC. In a dollar roll transaction, the Fund sells a mortgage
backed security held in the Fund to a financial institution such as a bank
or broker-dealer, and simultaneously agrees to repurchase a substantially
similar security (same type, coupon and maturity) from the institution at a
later date at an agreed upon price. The mortgage backed securities that are
repurchased will bear the same interest rate as those sold, but generally
will be collateralized by different pools of mortgages with varying
prepayment histories. During the period between the sale
AIM V.I. GOVERNMENT SECURITIES FUND 107
<PAGE>
and repurchase, the Fund will not be entitled to receive interest and
principal payments on securities sold. Proceeds of the sale will be invested
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.
Realized gains or losses on sales are computed on the basis of specific
identification of the securities sold. Interest income is recorded on the
accrual basis from settlement date. Dividend income is recorded on the ex-
dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
The Fund has a capital loss carryforward of $1,524,195 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2007.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the annual rate of 0.50% on
the first $200 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $65,724 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,750
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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. The Fund will use the proceeds of a reverse repurchase
agreement (which are considered to be borrowings under the 1940 Act) to
purchase other permitted securities either maturing, or under an agreement to
resell, at a date simultaneous with or prior to the expiration of the reverse
repurchase agreement. The Fund will enter into a reverse repurchase agreement
only when the interest income to be earned from the investment of proceeds of
the transaction is greater than the interest expense of the transaction. 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, 2000 was $13,737,500 while borrowings averaged
$1,402,396 per day with a weighted average interest rate of 5.26%.
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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, 2000 was $29,521,027 and $24,025,233, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 198,103
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,205,427)
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(1,007,324)
==========================================================================
</TABLE>
Cost of investments for tax purposes is $71,882,177.
108 AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 841,768 $ 9,058,422 3,277,124 $ 36,037,021
------------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 235,153 2,511,433
------------------------------------------------------------------------------
Issued in connection with
acquisitions* -- -- 465,003 5,110,012
------------------------------------------------------------------------------
Reacquired (1,019,984) (10,938,193) (2,523,037) (27,850,047)
------------------------------------------------------------------------------
(178,216) $ (1,879,771) 1,454,243 $ 15,808,419
==============================================================================
</TABLE>
* As of the close of business on October 15, 1999, the Fund acquired all the
net assets of GT Global Variable U.S. Government Income Fund (Variable U.S.
Government Income Fund) pursuant to a plan of reorganization approved by
variable U.S. Government Income Fund's shareholders on August 25, 1999. The
acquisition was accomplished by a tax-free exchange of 465,003 shares of the
Fund for 482,118 shares of Variable U.S. Government Income Fund outstanding
as of the close of business on October, 15, 1999. Variable U.S. Government
Income Fund's net assets at that date were $5,110,012, including ($270,877)
of unrealized depreciation, were combined with those of the Fund. The
aggregate net assets of the Fund immediately before the acquisition were
$65,275,738.
NOTE 7 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED YEAR ENDED
JUNE 30, ----------------------------------- DECEMBER 31, JANUARY 31,
2000 1999(a) 1998(a) 1997 1996 1995 1995
---------- ------- ------- ------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.63 $ 11.18 $ 10.67 $ 9.87 $ 10.17 $ 9.39 $ 10.24
------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.34 0.63 0.63 0.59 0.58 0.54 0.53
------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 0.03 (0.78) 0.20 0.22 (0.35) 0.74 (0.88)
------------------------------------------------------------------------------------------------------
Total from investment
operations 0.37 (0.15) 0.83 0.81 0.23 1.28 (0.35)
------------------------------------------------------------------------------------------------------
Less distributions from
net investment income -- (0.40) (0.32) (0.01) (0.53) (0.50) (0.50)
------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 11.00 $ 10.63 $ 11.18 $ 10.67 $ 9.87 $ 10.17 $ 9.39
======================================================================================================
Total return(b) 3.48% (1.32)% 7.73% 8.16% 2.29% 13.84% (3.42)%
======================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $71,279 $70,761 $58,185 $33,800 $24,527 $19,545 $12,887
======================================================================================================
Ratio of expenses to
average net assets
(including interest
expense) 0.92%(c) 0.90% 0.76% 0.87% 0.91% 1.19%(d) 0.95%
======================================================================================================
Ratio of expenses to
average net assets
(excluding interest
expense) 0.81%(c) 0.80% 0.76% 0.87% 0.91% 1.19%(d) 0.95%
======================================================================================================
Ratio of net investment
income to average net
assets 6.04%(c) 5.75% 5.70% 5.85% 5.80% 5.78%(d) 5.51%
======================================================================================================
Ratio of interest
expense to average net
assets 0.11%(c) 0.10% -- -- -- -- --
======================================================================================================
Portfolio turnover rate 39% 41% 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 $69,789,667.
(d) Annualized.
AIM V.I. GOVERNMENT SECURITIES FUND 109
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Government Securities Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 5,980,940 200,395 258,891
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 5,755,363 263,463 421,400
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 5,674,032 299,553 466,641
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 5,782,563 282,728 374,935
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 5,783,441 259,288 397,497
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 5,657,406 330,427 452,393
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 5,684,149 349,659 406,418
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 5,676,732 382,266 381,228
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 5,670,887 354,128 415,211
(5) Approval of changing the Investment
Objective and Making it Non-
Fundamental........................ 5,598,889 387,476 453,861
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 5,987,478 134,780 317,968
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
110 AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. GROWTH FUND
FUND OUTPERFORMS INDEXES
<TABLE>
<S> <C> <C>
HOW DID THE FUND PERFORM DURING THE two market benchmarks. By comparison, (48.9%), health care (8.4%), capital
REPORTING PERIOD? the Russell 1000 Index returned 0.78% goods (7.9%) and consumer staples (7.1%).
Despite the volatility that characterized for the same period, while total return Within the technology sector, the fund
the financial markets for much of the for the S&P 500 (considered held stock in a variety of well-
first half of 2000, AIM V.I. Growth Fund representative of the stock market as a established companies in the
performed well for shareholders. For the whole) was -0.43% during the communications equipment, computer
six months ended June 30, 2000, the first six months of 2000. software and services, semiconductor
fund's total return was 4.90%, which The fund's total net assets stood at equipment and computer networking
exceeded that of $961.3 million on June 30, 2000, up more industries. During the reporting period,
than 35% from $704.1 million six months we added to our communications-equipment
FUND PERFORMANCE earlier. holdings. We eliminated our positions in
Lucent Technologies and Motorola, for
AVERAGE ANNUAL TOTAL RETURNS WHAT WERE THE MAJOR TRENDS IN example, and increased our holdings in
THE FINANCIAL MARKETS? Nortel Networks, JDS Uniphase and
As of 6/30/00 U.S. equity markets experienced signifi- Comverse Technology, among others.
cant volatility during the first half The once-staid utility industry has
----------------------------------------- of 2000, and investors changed their become interesting lately as deregulation
Inception (5/5/93) 21.99% investment strategies to deal with this and privatization reshape it. During the
----------------------------------------- volatility, which was most pronounced reporting period, the fund bought stock
5 years 25.71 among high-flying technology stocks, in Calpine and AES, two independent power
----------------------------------------- many of which fell sharply in March and producers. Calpine, the world's largest
1 year 26.01 April. But many non-technology geothermal operator, owns The Geysers in
----------------------------------------- stocks, particularly those that warned California, a state that has deregulated
of potential earnings shortfalls, were its electric power market. The company
TOTAL RETURNS volatile as well during the first half owns interests in power plants in 11
of the year. states and has significant natural-gas
For the six months ended 6/30/00 Following the March/April technology reserves. AES is one of the world's
sell-off, some investors sought safety leading independent power producers,
----------------------------------------- by shifting from growth stocks to value with interests in 125 plants in the
AIM V.I. GROWTH FUND 4.90% stocks, or from less-established to Americas, Europe, Asia and Australia
----------------------------------------- more-established companies. Other and in 17 distribution companies. In
RUSSELL 1000 INDEX 0.78 investors simply moved to cash--and 1999, Calpine's sales increased by more
----------------------------------------- waited. They waited to see whether the than 50% and AES's sales grew by more
S&P 500 INDEX -0.43 Federal Reserve Board (the Fed) would than 35%.
----------------------------------------- continue its year-long series of
interest-rate increases, waited to see WHAT ARE SOME OF THE FUND'S
GROWTH OF NET ASSETS where the economy was headed and waited MAJOR HOLDINGS?
to evaluate mid-year corporate earnings A large percentage of the fund's holdings
(in millions) reports. As they waited, the markets is in the technology sector--mainly well-
drifted for much of May and June. established, profitable companies that
----------------------------------------- are leaders in their fields. Nortel
12/31/99 $704.1 HOW DID YOU MANAGE THE FUND'S PORTFOLIO Networks and Cisco, the fund's two
----------------------------------------- DURING THE REPORTING PERIOD? largest tech holdings at the close of the
6/30/00 961.3 At the close of the period, the fund held reporting period, demonstrate the kind of
----------------------------------------- a widely diversified portfolio of 74 growth we look for in companies. During
stocks, down from 91 stocks six months the reporting period, Canada's Nortel
Past performance cannot guarantee earlier. Major sectors represented Networks, North America's second-largest
comparable future results. MARKET in the portfolio on June 30, 2000, were maker of telecommunications products,
VOLATILITY CAN SIGNIFICANTLY IMPACT technology reported that its quarterly
SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER
SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AIM V.I. GROWTH FUND 111
</TABLE>
<PAGE>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
<TABLE>
<S> <C> <C>
PORTFOLIO COMPOSITION high oil prices remain concerns, we are
cautiously optimistic that the Fed will
As of 6/30/00, based on total net assets succeed in piloting the U.S. economy to
a "soft landing." Indeed, shortly after
TOP 10 HOLDINGS TOP 10 INDUSTRIES the close of the reporting period, based
---------------------------------------- ---------------------------------------- on positive second-quarter earnings
1. Pfizer Inc. 3.87% 1. Communications Equipment 15.82% reports and the increasing likelihood
---------------------------------------- ---------------------------------------- that the Fed was approaching the end
2. Nortel Networks Corp. (Canada) 3.49 2. Electronics (Semiconductors) 11.80 of its tightening cycle, investor
---------------------------------------- ---------------------------------------- confidence seemed to increase, and the
3. Cisco Systems, Inc. 2.99 3. Computers markets rallied.
---------------------------------------- (Software & Services) 9.03 While some measure of market volatility
4. Intel Corp. 2.72 ---------------------------------------- will always be a fact of life for
---------------------------------------- 4. Electrical Equipment 5.24 investors, we continue to believe that
5. Tyco International Ltd. ---------------------------------------- the outlook for AIM V.I. Growth Fund is
(Bermuda) 2.66 5. Broadcasting (Television, 4.49 exciting. Technology and
---------------------------------------- Radio & Cable) telecommunications companies in the
6. Nextel Communications, Inc.- 2.25 ---------------------------------------- United States and elsewhere are producing
Class A 6. Equipment (Semiconductor) 4.46 innovative new products and
---------------------------------------- ---------------------------------------- infrastructure that could result in years
7. ADC Telecommunications, Inc. 2.13 7. Telecommunications 4.16 of above-average growth.
---------------------------------------- (Cellular/Wireless) AIM V.I. Growth Fund will continue to
8. Oracle Corp. 2.09 ---------------------------------------- seek out well-managed, financially strong,
---------------------------------------- 8. Health Care (Drugs- 3.87 industry-leading companies with the
9. Infinity Broadcasting Corp.- 2.09 Major Pharmaceuticals) potential to appreciate.
Class A ----------------------------------------
---------------------------------------- 9. Computers (Networking) 2.99 ---------------------------------------------
10. JDS Uniphase Corp. 2.05 ----------------------------------------
---------------------------------------- 10. Manufacturing (Diversified) 2.66 The performance figures shown here, which
---------------------------------------- represent AIM V.I. Growth Fund, are not
intended to reflect actual annuity
The fund's portfolio composition is subject to change, and there is no assurance values, and they do not reflect charges
that the fund will continue to hold any particular security. at the separate-account level which (if
applied) would lower them. AIM V.I.
revenue rose 48% to $6.3 billion-- more widely known, and include Sudafed, Growth Fund's performance figures are
$1 billion higher than expected--and Certs, Listerine and Schick, among historical, and they reflect the
that its earnings grew by almost 80%. others. reinvestment of distributions and
Cisco, which controls more than three- Another of the fund's top holdings, changes in net asset value. The fund's
quarters of the global market for Tyco International, is a diversified investment return and principal value
products that link networks and power manufacturing company that has grown will fluctuate, so an investor's shares,
the Internet, including routers and rapidly in recent years through acquiring when redeemed, may be worth more or less
switches, has a 60% share of the router other companies. Its Simplex Technologies than their original cost.
market, which is growing 40% annually. subsidiary is the world's leading
Last year, the company's annual supplier of undersea fiber-optic cable, The unmanaged Russell 1000 Index (the
revenues increased by 43.7% and its over which data and voice can be Russell 1000) represents the performance
net income increased by 55.2%. transported between continents in a of the stocks of large-capitalization
Outside the technology sector, our fraction of a second. Simplex is the only companies. The unmanaged Standard &
holdings included Pfizer. In June, integrated company that designs, Poor's Composite Index of 500 Stocks
following the completion of its merger manufactures, installs and services (the S&P 500) represents the performance
with Warner-Lambert, Pfizer became the undersea fiber-optic telecommunications of the stock market. An investment cannot
world's second-largest drugmaker. Its cable systems. be made in an index. Index results include
prescription drugs include such reinvested dividends.
market-leading names as arthritis pain WHAT IS YOUR OUTLOOK FOR THE FUTURE?
medicine Celebrex and cholesterol- There are signs that Fed rate hikes are
lowering Lipitor. Its consumer brands beginning to slow the economy, possibly
are even obviating the need for additional
increases. While a continuing tight
labor market and
112 AIM V.I. GROWTH FUND
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 69.19%
BIOTECHNOLOGY - 0.48%
Amgen Inc.(a) 66,000 $ 4,636,500
-------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 4.49%
AT&T Corp. - Liberty Media Group - Class A(a) 746,200 18,095,350
-------------------------------------------------------------------------
Cox Communications, Inc. - Class A(a) 110,000 5,011,875
-------------------------------------------------------------------------
Infinity Broadcasting Corp. - Class A(a) 550,050 20,042,447
-------------------------------------------------------------------------
43,149,672
-------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 7.79%
ADC Telecommunications, Inc.(a) 244,650 20,520,019
-------------------------------------------------------------------------
Comverse Technology, Inc.(a) 142,000 13,206,000
-------------------------------------------------------------------------
Copper Mountain Networks, Inc.(a) 134,000 11,808,750
-------------------------------------------------------------------------
JDS Uniphase Corp.(a) 164,000 19,659,500
-------------------------------------------------------------------------
QUALCOMM Inc.(a) 73,000 4,380,000
-------------------------------------------------------------------------
Scientific-Atlanta, Inc. 71,300 5,311,850
-------------------------------------------------------------------------
74,886,119
-------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 2.56%
Apple Computer, Inc.(a) 112,000 5,866,000
-------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 206,400 18,769,500
-------------------------------------------------------------------------
24,635,500
-------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 2.99%
Cisco Systems, Inc.(a) 452,000 28,730,250
-------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.21%
Brocade Communications Systems, Inc.(a) 27,800 5,100,866
-------------------------------------------------------------------------
EMC Corp.(a) 210,000 16,156,875
-------------------------------------------------------------------------
21,257,741
-------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 7.85%
Adobe Systems Inc. 58,700 7,631,000
-------------------------------------------------------------------------
America Online, Inc.(a) 132,900 7,010,475
-------------------------------------------------------------------------
Gemstar International Group Ltd.(a) 36,800 2,261,475
-------------------------------------------------------------------------
Oracle Corp.(a) 239,000 20,090,937
-------------------------------------------------------------------------
Portal Software, Inc.(a) 78,500 5,014,187
-------------------------------------------------------------------------
Rational Software Corp.(a) 80,500 7,481,469
-------------------------------------------------------------------------
Siebel Systems, Inc.(a) 29,100 4,759,669
-------------------------------------------------------------------------
Symantec Corp.(a) 55,000 2,966,562
-------------------------------------------------------------------------
VERITAS Software Corp.(a) 161,000 18,195,516
-------------------------------------------------------------------------
75,411,290
-------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT - 3.81%
Cree, Inc.(a) 80,000 $ 10,680,000
----------------------------------------------------------
General Electric Co. 180,000 9,540,000
----------------------------------------------------------
Sanmina Corp.(a) 63,000 5,386,500
----------------------------------------------------------
Symbol Technologies, Inc. 203,500 10,989,000
----------------------------------------------------------
36,595,500
----------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 11.53%
Altera Corp.(a) 90,300 9,204,956
----------------------------------------------------------
Amkor Technology, Inc.(a) 68,000 2,401,250
----------------------------------------------------------
Analog Devices, Inc.(a) 226,500 17,214,000
----------------------------------------------------------
Atmel Corp.(a) 81,500 3,005,312
----------------------------------------------------------
Cypress Semiconductor Corp.(a) 125,000 5,281,250
----------------------------------------------------------
Intel Corp. 195,500 26,135,906
----------------------------------------------------------
Linear Technology Corp. 125,000 7,992,187
----------------------------------------------------------
LSI Logic Corp.(a) 150,000 8,118,750
----------------------------------------------------------
Texas Instruments Inc. 174,000 11,951,625
----------------------------------------------------------
Xilinx, Inc.(a) 237,100 19,575,569
----------------------------------------------------------
110,880,805
----------------------------------------------------------
ENTERTAINMENT - 2.65%
Time Warner Inc. 150,800 11,460,800
----------------------------------------------------------
TV Guide, Inc. - Class A(a) 125,400 4,294,950
----------------------------------------------------------
Walt Disney Co. (The) 250,000 9,703,125
----------------------------------------------------------
25,458,875
----------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS) - 4.46%
Applied Materials, Inc.(a) 216,900 19,656,563
----------------------------------------------------------
Credence Systems Corp.(a) 85,200 4,701,975
----------------------------------------------------------
KLA-Tencor Corp.(a) 77,000 4,509,313
----------------------------------------------------------
Teradyne, Inc.(a) 190,500 14,001,750
----------------------------------------------------------
42,869,601
----------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.02%
Fannie Mae 72,500 3,783,594
----------------------------------------------------------
Freddie Mac 149,700 6,062,850
----------------------------------------------------------
9,846,444
----------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 2.59%
Allergan, Inc. 178,000 13,261,000
----------------------------------------------------------
IVAX Corp.(a) 280,000 11,620,000
----------------------------------------------------------
24,881,000
----------------------------------------------------------
</TABLE>
AIM V.I. GROWTH FUND 113
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.76%
Forest Laboratories, Inc.(a) 71,900 $ 7,261,900
------------------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 3.87%
Pfizer Inc. 775,500 37,224,000
------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.75%
Medtronic, Inc. 6,500 323,781
------------------------------------------------------------------------------
PE Corp - PE Biosystems Group 104,000 6,851,000
------------------------------------------------------------------------------
7,174,781
------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.95%
Morgan Stanley Dean Witter & Co. 110,000 9,157,500
------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.84%
AES Corp. (The)(a) 115,000 5,246,875
------------------------------------------------------------------------------
Calpine Capital Trust(a) 189,000 12,426,750
------------------------------------------------------------------------------
17,673,625
------------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 1.35%
Home Depot, Inc. (The) 103,000 5,143,563
------------------------------------------------------------------------------
Lowe's Cos., Inc. 191,700 7,871,681
------------------------------------------------------------------------------
13,015,244
------------------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 1.36%
Best Buy Co., Inc.(a) 150,000 9,487,500
------------------------------------------------------------------------------
Circuit City Stores - Circuit City Group 107,900 3,580,931
------------------------------------------------------------------------------
13,068,431
------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.17%
Tiffany & Co. 23,700 1,599,750
------------------------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 0.61%
Limited, Inc. (The) 272,000 5,882,000
------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 3.10%
Nextel Communications, Inc. - Class A(a) 354,000 21,660,375
------------------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 185,000 8,140,000
------------------------------------------------------------------------------
29,800,375
------------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $442,570,126) 665,096,903
------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 14.62%
BERMUDA - 2.66%
Tyco International Ltd.
(Manufacturing - Diversified) 540,000 25,582,500
------------------------------------------------------------------------------
CANADA - 3.75%
Nortel Networks Corp.
(Communications Equipment) 492,000 33,579,000
------------------------------------------------------------------------------
PMC-Sierra, Inc. (Electronics - Semiconductors)(a) 14,100 2,505,394
------------------------------------------------------------------------------
36,084,394
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINLAND - 1.97%
Nokia Oyj - ADR (Communications Equipment) 378,500 $ 18,901,348
-----------------------------------------------------------------------------
FRANCE - 1.04%
Alcatel - ADR (Communications Equipment) 150,000 9,975,000
-----------------------------------------------------------------------------
HONG KONG - 1.06%
China Telecom Ltd.
(Telecommunications - Cellular/Wireless)(a) 1,150,800 10,149,124
-----------------------------------------------------------------------------
ISRAEL - 1.18%
Check Point Software Technologies Ltd. - ADR
(Computers - Software & Services)(a) 53,500 11,328,625
-----------------------------------------------------------------------------
NETHERLANDS - 1.43%
Koninklijke (Royal) Philips Electronics N.V.
(Electrical Equipment) 184,000 8,661,025
-----------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics
N.V. - ADR (Electrical Equipment) 106,720 5,069,200
-----------------------------------------------------------------------------
13,730,225
-----------------------------------------------------------------------------
SWEDEN - 1.53%
Telefonaktiebolaget LM Ericsson A.B. - ADR
(Communications Equipment) 737,200 14,744,000
-----------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $96,907,623) 140,495,216
-----------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 0.39%
U.S. TREASURY BILLS - 0.39%(B)
U.S. Treasury Bills 5.66%, 09/21/00
(Cost $3,751,131) $ 3,800,000(c) 3,753,184
-----------------------------------------------------------------------------
MONEY MARKET FUNDS - 15.58%
STIC Liquid Assets Portfolio(d) 74,902,817 74,902,817
-----------------------------------------------------------------------------
STIC Prime Portfolio(d) 74,902,817 74,902,817
-----------------------------------------------------------------------------
Total Money Market Funds
(Cost $149,805,634) 149,805,634
-----------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.78%
(Cost $693,034,514) 959,150,937
-----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.22% 2,108,898
-----------------------------------------------------------------------------
NET ASSETS - 100.00% $961,259,835
=============================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at
the time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 8.
(d) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
114 AIM V.I. GROWTH FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $693,034,514) $959,150,937
----------------------------------------------------------------------
Foreign currencies, at value (cost $38,764) 38,587
----------------------------------------------------------------------
Receivables for:
Investments sold 3,330,156
----------------------------------------------------------------------
Variation margin 459,550
----------------------------------------------------------------------
Fund shares sold 1,401,916
----------------------------------------------------------------------
Dividends 671,169
----------------------------------------------------------------------
Investment for deferred compensation plan 32,413
----------------------------------------------------------------------
Total assets 965,084,728
----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,343,664
----------------------------------------------------------------------
Fund shares reacquired 373,037
----------------------------------------------------------------------
Deferred compensation plan 32,413
----------------------------------------------------------------------
Accrued advisory fees 478,984
----------------------------------------------------------------------
Accrued administrative services fees 586,597
----------------------------------------------------------------------
Accrued trustees' fees 1,898
----------------------------------------------------------------------
Accrued operating expenses 8,300
----------------------------------------------------------------------
Total liabilities 3,824,893
----------------------------------------------------------------------
Net assets applicable to shares outstanding $961,259,835
======================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 28,412,105
======================================================================
Net asset value, offering and redemption price per share $ 33.83
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $38,063) $ 3,590,442
----------------------------------------------------------------------------
Interest 71,895
----------------------------------------------------------------------------
Total investment income 3,662,337
----------------------------------------------------------------------------
EXPENSES:
Advisory fees 2,601,610
----------------------------------------------------------------------------
Administrative services fee 665,063
----------------------------------------------------------------------------
Custodian fees 61,431
----------------------------------------------------------------------------
Trustees' fees 4,501
----------------------------------------------------------------------------
Other 98,240
----------------------------------------------------------------------------
Total expenses 3,430,845
----------------------------------------------------------------------------
Less: Expenses paid indirectly (974)
----------------------------------------------------------------------------
Net expenses 3,429,871
----------------------------------------------------------------------------
Net investment income 232,466
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FUTURES AND OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities 26,217,945
----------------------------------------------------------------------------
Foreign currencies (712)
----------------------------------------------------------------------------
Futures contracts (569,905)
----------------------------------------------------------------------------
Option contracts written 69,331
----------------------------------------------------------------------------
25,716,659
----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 8,021,074
----------------------------------------------------------------------------
Foreign currencies (656)
----------------------------------------------------------------------------
Futures contracts (821,285)
----------------------------------------------------------------------------
Option contracts written 1,424,785
----------------------------------------------------------------------------
8,623,918
----------------------------------------------------------------------------
Net gain on investment securities, foreign currencies, futures
and option contracts 34,340,577
----------------------------------------------------------------------------
Net increase in net assets resulting from operations $34,573,043
============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GROWTH FUND 115
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 232,466 $ 184,029
-------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and option contracts 25,716,659 26,426,223
-------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, futures and option
contracts 8,623,918 137,276,135
-------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 34,573,043 163,886,387
-------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (1,318,758)
-------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (23,117,297)
-------------------------------------------------------------------------------
Share transaction - net 222,591,112 192,730,597
-------------------------------------------------------------------------------
Net increase in net assets 257,164,155 332,180,929
-------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 704,095,680 371,914,751
-------------------------------------------------------------------------------
End of period $961,259,835 $704,095,680
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $644,120,370 $421,529,258
-------------------------------------------------------------------------------
Undistributed net investment income 276,697 44,231
-------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 50,855,267 25,138,608
-------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 266,007,501 257,383,583
-------------------------------------------------------------------------------
$961,259,835 $704,095,680
===============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Growth Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to seek
growth of capital.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 Trust's officers in a manner specifically authorized by
the Board of Trustees.
116 AIM V.I. GROWTH FUND
<PAGE>
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. 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 NYSE. 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
customary trading session of the NYSE, which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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. Futures Contracts - The Fund may purchase or sell 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 that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
H. Covered Call Options - The Fund may write call options, 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 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $663,063 of which AIM retained $55,387 for accounting
services provided.
AIM V.I. GROWTH FUND 117
<PAGE>
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $2,272
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $974 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $974.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June 30, 2000 was
$620,756,206 and $465,620,145, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $276,650,762
---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (10,544,356)
---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $266,106,406
===========================================================================
</TABLE>
Cost of investments for tax purposes is $693,044,531.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
--------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ----------
<S> <C> <C>
Beginning of period 1,546 $1,540,128
------------------------------------------------------------------------
Closed (1,546) (1,540,128)
------------------------------------------------------------------------
End of period -- --
========================================================================
</TABLE>
NOTE 8 - FUTURES CONTRACTS
On June 30, 2000, $3,800,000 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>
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-------- --------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
S&P 500 182 Sept 00/Buy $66,798,550 $(107,072)
==========================================================
</TABLE>
118 AIM V.I. GROWTH FUND
<PAGE>
NOTE 9 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold 7,795,678 $263,510,939 8,907,542 $247,736,478
-------------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 820,552 24,436,055
-------------------------------------------------------------------------------
Reacquired (1,214,961) (40,919,827) (2,893,968) (79,441,936)
-------------------------------------------------------------------------------
6,580,717 $222,591,112 6,834,126 $192,730,597
===============================================================================
</TABLE>
NOTE 10 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
ELEVEN
SIX MONTHS YEAR ENDED DECEMBER 31, MONTHS ENDED YEAR ENDED
ENDED JUNE -------------------------------------- DECEMBER 31, JANUARY 31,
30, 2000 1999(A) 1998 1997 1996 1995 1995
---------- -------- -------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 32.25 $ 24.80 $ 19.83 $ 16.25 $ 14.44 $ 10.71 $ 11.59
---------------------------------------------------------------------------------------------------------
Income from investment
operations:
---------------------------------------------------------------------------------------------------------
Net investment income 0.01 0.01 0.08 0.08 0.07 0.09 0.06
---------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 1.57 8.63 6.57 4.27 2.52 3.65 (0.88)
---------------------------------------------------------------------------------------------------------
Total from investment
operations 1.58 8.64 6.65 4.35 2.59 3.74 (0.82)
---------------------------------------------------------------------------------------------------------
Less distributions:
---------------------------------------------------------------------------------------------------------
Dividends from net
investment income -- (0.06) (0.09) (0.09) (0.06) (0.01) (0.06)
---------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (1.13) (1.59) (0.68) (0.72) -- --
---------------------------------------------------------------------------------------------------------
Total distributions -- (1.19) (1.68) (0.77) (0.78) (0.01) (0.06)
---------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 33.83 $ 32.25 $ 24.80 $ 19.83 $ 16.25 $ 14.44 $ 10.71
=========================================================================================================
Total return(b) 4.90% 35.24% 34.12% 26.87% 18.09% 34.89% (7.11)%
=========================================================================================================
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000s omitted) $961,260 $704,096 $371,915 $258,852 $178,638 $102,600 $45,497
=========================================================================================================
Ratio of expenses to
average net assets 0.81%(c) 0.73% 0.72% 0.73% 0.78% 0.84%(d) 0.95%
=========================================================================================================
Ratio of net investment
income to average net
assets 0.05%(c) 0.04% 0.41% 0.54% 0.79% 0.95%(d) 0.71%
=========================================================================================================
Portfolio turnover rate 62% 101% 133% 132% 143% 125% 179%
=========================================================================================================
</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 $850,204,267.
(d) Annualized.
AIM V.I. GROWTH FUND 119
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Growth Fund (the "Fund"), a
portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized as
AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was held
on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert
H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 20,952,520 451,774 1,276,198
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 20,582,168 617,510 1,480,814
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 20,378,773 783,207 1,518,512
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 20,685,318 563,489 1,431,685
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 20,712,926 563,212 1,404,354
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 20,510,260 749,969 1,420,263
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 20,416,655 824,758 1,439,079
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 20,394,845 858,946 1,426,701
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 20,262,847 830,689 1,586,956
(5) Approval of changing the Investment
Objective and Making it Non-
Fundamental........................ 20,030,821 1,002,649 1,647,022
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 20,030,821 274,434 1,241,987
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
120 AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. GROWTH AND INCOME FUND
VOLATILITY CREATES CHALLENGING
ENVIRONMENT FOR FUND
HOW DID AIM V.I. GROWTH AND INCOME increase in May, the biggest increase in in terms of their earnings--we focus
FUND PERFORM OVER THE SIX-MONTH more than five years--to 6.50% in an on companies in growth industries
REPORTING PERIOD? effort to cool what it feared was a or sectors, and we strive to understand
Despite volatile markets, AIM V.I. Growth too-hot growth rate for the U.S. economy. what's behind the numbers, what factors
and Income Fund finished in positive With consumers spending more and drive a company's earnings and if those
territory for the reporting period. For companies struggling to hire enough factors are sustainable. This allows us
the six months ended June 30, 2000, the employees, the U.S. economy's record to make buy and sell decisions based
fund produced a total return of 1.11%. expansion appeared poised to set off on concrete research rather than on
This performance beat the S&P 500 Index, inflation. Investors and analysts alike market sentiment.
which had a return of -0.43% for the wondered how much farther the Fed
same period. would continue its tightening cycle--in WHAT WERE THE FUND'S TOP
progress since June 1999--before being SECTOR WEIGHTINGS?
WHAT WERE MARKET CONDITIONS LIKE OVER satisfied that inflation remained under Technology, financials and health care
THE REPORTING PERIOD? control. Many investors chose to wait continue to have the heaviest weightings
The watchwords for the first six months things out, evidenced in the general in the fund's portfolio. Our technology
of 2000 were volatility and inflation. decline of trading volumes late in the weighting is about 36%, with an emphasis
Coming off remarkable returns for 1999, reporting period. on software and services, communications
markets--particularly the technology ________________________________________ equipment and semiconductors. Technol-
sector--experienced pronounced volatility | WE MAINTAINED OUR BIAS TOWARD ogy continues to see tremendous growth
during the first quarter of 2000 and | LARGER, MORE ESTABLISHED COMPANIES. as a result of the proliferation of the
into the second quarter as some global wireless boom and increased
companies' sky-high valuations came into DID YOU MANAGE THE FUND DIFFERENTLY, spending by large corporations shifting
question. The sell-off that ensued caused GIVEN THE MARKET ENVIRONMENT? business models to compete in the
many such stocks to plummet in the Nasdaq We maintained our bias toward larger, Internet economy.
shakeout in April. more established companies. Our The financial and health-care sectors
Added to that were rising interest rates investment discipline holds that we do had a mixed first half of the year.
and investors' concerns regarding poten- not try to time the market by moving Financial stocks tend to get punished
tial inflation, both of which shook in and out of stocks that go in and out whenever inflation fears surface
market confidence across the board. Since of favor for various reasons. among investors, as happened over the
the beginning of the year, the Federal Instead, we look at companies last six months. Health-care stocks,
Reserve Board (the Fed) has raised the particularly drug companies, benefited
federal funds rate three times--including from the excitement
a 0.50%
____________________________________________________________________________________________________________________________________
|
| THE DECLINE OF DIVIDENDS
|
| For the first time in recent history, a quarter of dividends, and increasing numbers of major companies
| the value of the S&P 500 comes from companies that do are not paying them at all.
| not pay dividends. (A dividend is a distribution What does this mean for AIM V.I. Growth and Income
| of earnings to shareholders.) Twenty years ago, only 2% Fund? In February, the fund's investment policy was
| of the index's value came from such companies. changed to allow it to respond to market conditions
| What has changed? such as this downward dividend trend. Companies that pay
| A company previously used dividends to convince or raise their dividends will continue to be an important
| investors that it was successful and worthy of investment. part of the fund's portfolio, but so will high-quality
| Today, many investors consider stocks less risky than they growth companies.
| used to, so the demand for dividends has decreased. Fewer
| companies are raising
</TABLE>
AIM V.I. GROWTH AND INCOME FUND 121
<PAGE>
<TABLE>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION WHAT IS YOUR NEAR-TERM OUTLOOK?
While there are signs that the economy
As of 6/30/00, based on total net assets may at last be slowing to a sustainable
growth level, the Fed deems it too early
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES to say with finality that its rate hikes
---------------------------------------- ---------------------------------------- have indeed halted inflation. The fact
1. Tyco International Ltd. 1. Computers that the Fed did not raise interest
(Bermuda) 5.17% (Software & Services) 9.89% rates at its June meeting may indicate
---------------------------------------- ---------------------------------------- that its tightening cycle is winding
2. Pfizer Inc. 4.68 2. Communications Equipment 8.75 down.
---------------------------------------- ---------------------------------------- However, uncertainty over the Fed's
3. Target Corp. 4.11 3. Health Care (Diversified) 6.78 actions and other factors could
---------------------------------------- ---------------------------------------- perpetuate the volatility that has
4. Morgan Stanley 4. Electronics (Semiconductors) 6.18 characterized markets in recent months.
Dean Witter & Co. 3.63 ---------------------------------------- Although we believe that the environment
---------------------------------------- 5. Investment Banking/Brokerage 5.92 for equities remains largely favorable,
5. Cisco Systems, Inc. 3.47 ---------------------------------------- investors would be well advised to
---------------------------------------- 6. Financial (Diversified) 5.24 maintain a long-term perspective on
6. VERITAS Software Corp. 3.08 ---------------------------------------- their investment.
---------------------------------------- 7. Manufacturing (Diversified) 5.17
7. Chase Manhattan Corp. (The) 3.02 ---------------------------------------- FUND PERFORMANCE
---------------------------------------- 8. Computers (Hardware) 4.97
8. Citigroup Inc. 2.63 ---------------------------------------- AVERAGE ANNUAL TOTAL RETURNS
---------------------------------------- 9. Retail (General Merchandise) 4.53
9. American Express Co. 2.61 ---------------------------------------- As of 6/30/00
---------------------------------------- 10. Computers (Networking) 3.47
10. General Electric Co. 2.60 ---------------------------------------- -------------------------------------
---------------------------------------- Inception (5/2/94) 22.54%
-------------------------------------
The fund's portfolio is subject to change, and there is no assurance that the 5 years 23.83
fund will continue to hold any particular security. -------------------------------------
1 year 18.48
surrounding the mapping of the human relationship management software, -------------------------------------
genome. A rough draft of the genetic and e-business software and services.
makeup of the human body has been Past performance cannot guarantee
completed, which may lead to new block- WHAT OTHER HOLDINGS BENEFITED comparable future results. MARKET
buster drugs for the treatment of THE FUND? VOLATILITY CAN SIGNIFICANTLY IMPACT
disease. Pharmaceutical giant Pfizer, the fund's SHORT-TERM PERFORMANCE. RESULTS OF AN
second-largest holding, recently merged INVESTMENT MADE TODAY MAY DIFFER
WHAT TECH-RELATED COMPANIES with Warner-Lambert to become one of SUBSTANTIALLY FROM THE HISTORICAL
DID YOU FAVOR? the world's largest and fastest-growing PERFORMANCE SHOWN.
The fund's technology holdings are drug companies. The acquisition allows
earnings-momentum stocks with solid Pfizer to add Lipitor, a leading The performance figures in this report,
company fundamentals. For example, cholesterol-lowering drug, to its stable which represent AIM V.I. Growth and
VERITAS Software is a market leader in of successful medications, which Income Fund, are not intended to reflect
the storage-management software includes Celebrex (for arthritis), actual annuity values, and they do
business. Its products are embedded in Norvasc (for heart disease) and Zoloft not reflect charges at the separate-
most of the leading server systems (an anti-depressant). account level which (if applied) would
being sold to large corporations and Fund holding General Electric is a lower them. AIM V.I. Growth and Income
telecommunications service providers, dominant force in a wide range of indus- Fund's performance figures are historical,
as spending on Internet infrastructure tries. GE manufactures everything from and they reflect the reinvestment of
increases. household appliances to light bulbs to distributions and changes in net asset
Other tech-related holdings include medical imaging equipment--as well as value. The fund's investment return and
Cisco Systems and Nortel Networks. Cisco the power plants to run them. GE Capital principal value will fluctuate, so an
is the leading maker of routers, Services, which accounts for half the investor's shares, when redeemed, may
switches and other equipment used to company's sales, is among the largest be worth more or less than their
create Internet connections. Nortel is financial-services companies in the original cost.
a leader in fiber-optic systems for United States. The unmanaged National Association of
high-capacity data and voice networks, Securities Dealers Automated Quotation
and it has flourished by buying into System Composite Index (the Nasdaq) is
computer telephony, customer a market-value-weighted index comprising
all domestic and non-U.S.-based common
stocks listed on the Nasdaq system. It
includes more than 5,000 companies, and
it is often considered representative
of the small and medium-sized company stock
universe. While it includes many small
and mid-sized company stocks,
large-capitalization technology companies
tend to dominate the index.
The unmanaged Standard & Poor's
Composite Index of 500 Stocks
(the S&P 500) represents the performance
of the stock market in general. An
investment cannot be made in an index.
Unless otherwise indicated, index
results include reinvested dividends.
</TABLE>
122 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC STOCKS & OTHER EQUITY
INTERESTS - 77.92%
BANKS (MONEY CENTER) - 3.02%
Chase Manhattan Corp. (The) 1,800,000 $82,912,500
-------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.83%
AT&T Corp. - Liberty Media Group-Class A(a) 1,500,000 36,375,000
-------------------------------------------------------------------
Comcast Corp. - Class A(a) 1,025,000 41,512,500
-------------------------------------------------------------------
77,887,500
-------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 0.41%
Monsanto Co. - $2.60 Conv. Pfd. 250,000 11,312,500
-------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.86%
JDS Uniphase Corp.(a) 300,000 35,962,500
-------------------------------------------------------------------
QUALCOMM Inc.(a) 255,000 15,300,000
-------------------------------------------------------------------
51,262,500
-------------------------------------------------------------------
COMPUTERS (HARDWARE) - 4.66%
Dell Computer Corp.(a) 900,000 44,381,250
-------------------------------------------------------------------
Gateway, Inc.(a) 274,700 15,589,225
-------------------------------------------------------------------
Sun Microsystems, Inc.(a) 750,000 68,203,125
-------------------------------------------------------------------
128,173,600
-------------------------------------------------------------------
COMPUTERS (NETWORKING) - 3.47%
Cisco Systems, Inc.(a) 1,500,000 95,343,750
-------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 1.68%
EMC Corp.(a) 600,000 46,162,500
-------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 7.65%
Microsoft Corp.(a) 175,000 14,000,000
-------------------------------------------------------------------
Novell, Inc.(a) 1,080,000 9,990,000
-------------------------------------------------------------------
Oracle Corp.(a) 750,000 63,046,875
-------------------------------------------------------------------
VERITAS Software Corp.(a) 750,000 84,761,719
-------------------------------------------------------------------
Vitria Technology, Inc.(a) 325,000 19,865,625
-------------------------------------------------------------------
Yahoo! Inc.(a) 150,000 18,581,250
-------------------------------------------------------------------
210,245,469
-------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.21%
General Electric Co. 1,350,000 71,550,000
-------------------------------------------------------------------
Solectron Corp.(a) 400,000 16,750,000
-------------------------------------------------------------------
88,300,000
-------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 4.55%
Intel Corp. 525,000 70,185,937
-------------------------------------------------------------------
Linear Technology Corp. 215,000 13,746,562
-------------------------------------------------------------------
Texas Instruments Inc. 600,000 41,212,500
-------------------------------------------------------------------
125,144,999
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ENTERTAINMENT - 2.32%
Time Warner Inc. 454,520 $ 34,543,520
----------------------------------------------------------------------
Walt Disney Co. (The) 750,000 29,109,375
----------------------------------------------------------------------
63,652,895
----------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.99%
Applied Materials, Inc.(a) 300,000 27,187,500
----------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 5.24%
American Express Co. 1,375,000 71,671,875
----------------------------------------------------------------------
Citigroup Inc. 1,200,000 72,300,000
----------------------------------------------------------------------
143,971,875
----------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 6.78%
Allergan, Inc. 300,000 22,350,000
----------------------------------------------------------------------
American Home Products Corp. 600,000 35,250,000
----------------------------------------------------------------------
Pfizer Inc. 2,681,250 128,700,000
----------------------------------------------------------------------
186,300,000
----------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 0.94%
Genentech, Inc.(a) 150,000 25,800,000
----------------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 0.71%
Pharmacia Corp. 375,000 19,382,813
----------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.53%
Health Management Associates, Inc.-Class A(a) 1,116,000 14,577,750
----------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.94%
UnitedHealth Group Inc. 300,000 25,725,000
----------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.89%
Guidant Corp.(a) 225,000 11,137,500
----------------------------------------------------------------------
Medtronic, Inc. 270,000 13,449,375
----------------------------------------------------------------------
24,586,875
----------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 2.56%
American International Group, Inc. 600,000 70,500,000
----------------------------------------------------------------------
INSURANCE BROKERS - 0.67%
Marsh & McLennan Cos., Inc. 175,000 18,276,563
----------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 5.92%
Goldman Sachs Group, Inc. (The) 300,000 28,462,500
----------------------------------------------------------------------
Merrill Lynch & Co., Inc. 300,000 34,500,000
----------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 1,200,000 99,900,000
----------------------------------------------------------------------
162,862,500
----------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 1.86%
Schlumberger Ltd. 400,000 29,850,000
----------------------------------------------------------------------
Transocean Sedco Forex Inc. 400,000 21,375,000
----------------------------------------------------------------------
51,225,000
----------------------------------------------------------------------
</TABLE>
AIM V.I. GROWTH AND INCOME FUND 123
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL (INTERNATIONAL INTEGRATED) - 0.86%
Exxon Mobil Corp. 300,000 $ 23,550,000
--------------------------------------------------------------------------------
RAILROADS - 0.97%
Kansas City Southern Industries, Inc. 300,000 26,606,250
--------------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.82%
Home Depot, Inc. (The) 450,000 22,471,875
--------------------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 1.94%
Best Buy Co., Inc.(a) 450,000 28,462,500
--------------------------------------------------------------------------------
Circuit City Stores-Circuit City Group 750,000 24,890,625
--------------------------------------------------------------------------------
53,353,125
--------------------------------------------------------------------------------
RETAIL (DEPARTMENT STORES) - 0.91%
Kohl's Corp.(a)(b) 450,000 25,031,250
--------------------------------------------------------------------------------
RETAIL (DRUG STORES) - 0.70%
Walgreen Co. 600,000 19,312,500
--------------------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 4.53%
Target Corp. 1,950,000 113,100,000
--------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 200,000 11,525,000
--------------------------------------------------------------------------------
124,625,000
--------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.40%
Amazon.com, Inc.(a) 300,000 10,893,750
--------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.39%
Cendant Corp.-$3.75 Conv. PRIDES 300,000 10,695,660
--------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.04%
First Data Corp. 575,000 28,534,375
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.67%
Nextel Communications, Inc.-Class A(a) 750,000 45,890,625
--------------------------------------------------------------------------------
Total Domestic Stocks & Other Equity Interests (Cost
$1,517,847,055) 2,141,758,499
--------------------------------------------------------------------------------
FOREIGN STOCKS - 12.95%
BERMUDA - 5.17%
Tyco International Ltd. (Manufacturing - Diversified) 3,000,000 142,125,000
--------------------------------------------------------------------------------
CANADA - 3.86%
Celestica Inc. (Electronics - Semiconductors)(a) 900,000 44,662,500
--------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 900,000 61,425,000
--------------------------------------------------------------------------------
106,087,500
--------------------------------------------------------------------------------
FINLAND - 2.50%
Nokia Oyj - ADR (Communications Equipment) 1,377,600 68,793,900
--------------------------------------------------------------------------------
SWEDEN - 1.42%
Telefonaktiebolaget LM Ericsson - ADR (Communications
Equipment) 1,950,000 39,000,000
--------------------------------------------------------------------------------
Total Foreign Stocks (Cost $259,939,237) 356,006,400
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS & NOTES - 3.74%
COMMUNICATIONS EQUIPMENT - 0.73%
Juniper Networks, Inc., Unsec. Conv. Notes, 4.75%,
03/15/07 $18,000,000 $ 19,980,000
-------------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.31%
Candescent Technology Corp., Sr. Conv. Sub. Deb.,
8.00%, 05/01/03 (Acquired 04/17/98-03/07/00; Cost
$10,738,438)(c) 12,000,000 8,700,000
-------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 2.24%
Redback Networks Inc., Conv. Notes, 5.00%, 04/01/07
(Acquired 04/13/00-04/17/00; Cost $10,036,550)(c) 15,000,000 17,156,250
-------------------------------------------------------------------------------
VERITAS Software Corp., Conv. Unsec. Notes, 5.25%,
11/01/04 3,750,000 44,376,562
-------------------------------------------------------------------------------
61,532,812
-------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.46%
Amazon.com, Inc., Conv. Sub. Deb., 4.75%, 02/01/09 20,000,000 12,675,000
-------------------------------------------------------------------------------
Total Corporate Bonds & Notes (Cost $63,470,015) 102,887,812
-------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS - 5.36%
STIC Liquid Assets Portfolio(d) 73,713,889 73,713,889
-------------------------------------------------------------------------------
STIC Prime Portfolio(d) 73,713,889 73,713,889
-------------------------------------------------------------------------------
Total Money Market Funds (Cost $147,427,778) 147,427,778
-------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.97%
(Cost $1,988,684,085) 2,748,080,489
-------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.03% 747,675
-------------------------------------------------------------------------------
NET ASSETS - 100.00% $2,748,828,164
===============================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 6.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 06/30/00 was $25,856,250
which represented 0.94% of the Fund's net assets.
(d) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
124 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $1,988,684,085) $2,748,080,489
------------------------------------------------------------------------
Receivables for:
Investments sold 9,194,715
------------------------------------------------------------------------
Fund shares sold 1,630,010
------------------------------------------------------------------------
Dividends and Interest 2,128,407
------------------------------------------------------------------------
Investment for deferred compensation plan 34,616
------------------------------------------------------------------------
Other assets 94,010
------------------------------------------------------------------------
Total assets 2,761,162,247
------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 8,550,935
------------------------------------------------------------------------
Fund shares reacquired 909,247
------------------------------------------------------------------------
Options written (premiums received $297,990) 228,125
------------------------------------------------------------------------
Deferred compensation plan 34,616
------------------------------------------------------------------------
Accrued advisory fees 1,353,520
------------------------------------------------------------------------
Accrued administrative services fees 1,254,550
------------------------------------------------------------------------
Accrued trustees' fees 3,090
------------------------------------------------------------------------
Total liabilities 12,334,083
------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,748,828,164
========================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 86,073,747
========================================================================
Net asset value, offering and redemption price per share $ 31.94
========================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $62,266) $ 8,887,356
----------------------------------------------------------------------------
Interest 1,781,413
----------------------------------------------------------------------------
Total investment income 10,668,769
----------------------------------------------------------------------------
EXPENSES:
Advisory fees 7,809,155
----------------------------------------------------------------------------
Administrative services fee 2,660,343
----------------------------------------------------------------------------
Custodian fees 118,102
----------------------------------------------------------------------------
Trustees' fees 7,217
----------------------------------------------------------------------------
Other 378,893
----------------------------------------------------------------------------
Total expenses 10,973,710
----------------------------------------------------------------------------
Less: Expenses paid indirectly (2,367)
----------------------------------------------------------------------------
Net expenses 10,971,343
----------------------------------------------------------------------------
Net investment income (loss) (302,574)
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND OPTION CONTRACTS
Net realized gain from:
Investment securities 68,935,933
----------------------------------------------------------------------------
Option contracts written 1,072,868
----------------------------------------------------------------------------
70,008,801
----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (39,913,305)
----------------------------------------------------------------------------
Foreign currencies (1,550)
----------------------------------------------------------------------------
Option contracts written 69,865
----------------------------------------------------------------------------
(39,844,990)
----------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
option contracts 30,163,811
----------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 29,861,237
============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND 125
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
--------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (302,574) $ 3,782,645
------------------------------------------------------------------------------
Net realized gain from investment securities
and option contracts 70,008,801 71,650,427
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies and option contracts (39,844,990) 487,767,671
------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 29,861,237 563,200,743
------------------------------------------------------------------------------
Distributions to shareholders from net
investment income -- (11,988,578)
------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains -- (8,277,648)
------------------------------------------------------------------------------
Share transactions-net 275,702,947 638,270,694
------------------------------------------------------------------------------
Net increase in net assets 305,564,184 1,181,205,211
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,443,263,980 1,262,058,769
------------------------------------------------------------------------------
End of period $ 2,748,828,164 $2,443,263,980
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 1,849,889,064 $1,574,186,117
------------------------------------------------------------------------------
Undistributed net investment income 3,108,472 3,411,046
------------------------------------------------------------------------------
Undistributed net realized gain from
investment securities and option contracts 136,369,819 66,361,018
------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 759,460,809 799,305,799
------------------------------------------------------------------------------
$ 2,748,828,164 $2,443,263,980
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Growth and Income Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is growth of
capital with a secondary objective of current income.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and option contracts
126 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. 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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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. Covered Call Options - The Fund may write call options, 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 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $2,660,343 of which AIM retained $82,352 for
accounting services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $3,462
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $2,367 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $2,367.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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. GROWTH AND INCOME FUND 127
<PAGE>
NOTE 6 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period -- $ --
-------------------------------------------
Written 7,500 4,210,934
-------------------------------------------
Closed (2,119) (1,461,184)
-------------------------------------------
Exercised (2,131) (749,192)
-------------------------------------------
Expired (2,750) (1,702,568)
-------------------------------------------
End of period 500 $ 297,990
===========================================
</TABLE>
Open call option contracts written at June 30, 2000 were as follows:
<TABLE>
<CAPTION>
JUNE 30,
CONTRACT STRIKE NUMBER OF PREMIUMS 2000 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- -------- ------ --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Kohl's Corp. Jul-00 $53 500 $297,990 $228,125 $69,865
==========================================================================
</TABLE>
NOTE 7 - 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, 2000 was
$1,281,392,566 and $1,029,828,800, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $788,843,149
---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (32,894,106)
---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $755,949,043
===========================================================================
</TABLE>
Cost of investments for tax purposes is $1,992,131,446.
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 9,970,233 $314,764,915 27,157,175 $712,881,530
------------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 704,177 20,266,226
------------------------------------------------------------------------------
Reacquired (1,234,950) (39,061,968) (3,653,912) (94,877,062)
------------------------------------------------------------------------------
8,735,283 $275,702,947 24,207,440 $638,270,694
==============================================================================
</TABLE>
128 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN MAY 2, 1994
ENDED YEAR ENDED DECEMBER 31, MONTHS ENDED (DATE OPERATIONS
JUNE 30, ------------------------------------------ DECEMBER 31, COMMENCED) TO
2000 1999(a) 1998(a) 1997 1996 1995 JANUARY 31, 1995
---------- ---------- ---------- -------- -------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 31.59 $ 23.75 $ 18.87 $ 15.03 $ 12.68 $ 9.98 $10.00
----------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) (0.01) 0.06 0.26 0.13 0.16 0.14 0.11
----------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 0.36 8.05 4.95 3.74 2.36 3.11 (0.02)
----------------------------------------------------------------------------------------------------------------------
Total from investment
operations 0.35 8.11 5.21 3.87 2.52 3.25 0.09
----------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.16) (0.09) (0.01) (0.14) (0.14) (0.11)
----------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.11) (0.24) (0.02) (0.03) (0.41) --
----------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.27) (0.33) (0.03) (0.17) (0.55) (0.11)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 31.94 $ 31.59 $ 23.75 $ 18.87 $ 15.03 $ 12.68 $ 9.98
======================================================================================================================
Total return(b) 1.11% 34.25% 27.68% 25.72% 19.95% 32.65% 0.90%
======================================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $2,748,828 $2,443,264 $1,262,059 $639,113 $209,332 $38,567 $7,380
======================================================================================================================
Ratio of expenses to
average net assets 0.85%(c) 0.77% 0.65% 0.69% 0.78% 0.78%(d) 1.07%(d)(e)
======================================================================================================================
Ratio of net investment
income (loss) to
average net assets (0.02)%(c) 0.22% 1.34% 1.15% 2.05% 1.92%(d) 1.95%(d)(e)
======================================================================================================================
Portfolio turnover rate 41% 93% 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 $2,590,887,455.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.72% (annualized).
AIM V.I. GROWTH AND INCOME FUND 129
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Growth and Income Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund so that it is
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 71,570,581 1,924,160 5,027,462
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 69,168,631 2,869,760 6,483,812
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 68,609,341 3,358,060 6,554,802
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 69,643,515 2,827,728 6,050,960
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 69,607,197 2,745,331 6,169,675
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 68,993,727 3,421,142 6,107,334
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 68,919,694 3,520,901 6,081,608
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 68,539,395 3,819,587 6,163,221
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 68,289,716 3,771,235 6,461,252
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 67,976,340 3,792,344 6,753,519
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 72,850,056 1,017,822 4,654,325
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
130 AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. HIGH YIELD FUND
BOND MARKET CONTINUES TO STRUGGLE
THUS FAR, 2000 HAS BEEN ANOTHER IN JUNE, THE CORPORATE BOND SECTOR | While the Treasury market rallied,
CHALLENGING YEAR FOR CORPORATE BONDS. HOW RECORDED ONE OF THE BEST RETURNS OF | corporate bonds struggled at the
DID AIM V.I. HIGH YIELD FUND PERFORM? ANY FIXED-INCOME SECTOR, UP MORE | beginning of the year but returned
Stock-market volatility, rising interest THAN 2% FOR THE MONTH. | to life near the end of the reporting
rates and large cash outflows from high- ______________________________________| period. In June, the corporate bond
yield mutual funds weighed heavily on the sector recorded one of the best returns
high-yield bond sector. AIM V.I. High increase was the sixth since last summer of any fixed-income sector, up more than
Yield Fund was not immune to this trend. and the largest in more than five years. 2% for the month.
For the six months ended June 30, 2000, Market observers, however, blew a
the fund posted a return of -3.21%. collective sigh of relief when the Fed, HOW DID HIGH-YIELD BONDS FARE IN THIS
While the high-yield market struggled seeing signs that the economy was slow- DIFFICULT MARKET?
through much of the reporting period, ing, decided not to raise interest Until nearly June, the high-yield bond
the six-month return belies an improving rates again in June. market suffered from what could be
high-yield picture as the fund posted a considered a difficult technical
return of 2.46% for June. HOW DID FIXED-INCOME MARKETS REACT TO situation--more cash outflows than
RISING INTEREST-RATE CONDITIONS? inflows and poor liquidity. In fact,
WHAT CONDITIONS INFLUENCED FIXED- U.S. Treasury issues handily outpaced cash outflows from high-yield mutual funds
INCOME MARKETS FOR THE FIRST HALF OF corporate issues (particularly high-yield thus far this year have been higher than
2000? bonds) on a total-return basis during the all cash inflows into high-yield funds
A tight labor market, signs of rising first quarter of the year and for the for all 1999. Fortunately, a reversal
inflation and persistently robust growth reporting period. The 30-year Treasury of this trend began in June, as cash
led the Federal Reserve Board (the Fed) to bond in particular had a stellar first inflows started averaging $145 million
raise interest rates three times in the quarter, providing one of the strongest per week.
first two quarters of this year. The Fed total returns of any security. More outflows than inflows into a
hiked interest rates twice in the first Beyond investor flight from a volatile market is significant, as it means you
quarter for a total increase of 50 basis stock market, the government bond market have more sellers than buyers. In most
points (a basis point is one was buoyed by a unique situation. In cases, this does not mean there is
one-hundredth of a percentage point) and January, the Treasury announced its a fundamental problem with the company
raised rates another 50 basis points intention to buy back $30 billion in issuing the debt. But when a market
again in May. The May Treasury securities and perhaps to cease experiences more sellers than buyers,
issuing 30-year Treasury bonds in the securities' prices generally go down.
FUND PERFORMANCE not-too-distant future. This (among In the high-yield market, for instance,
other factors) literally turned the to get new issues into the market,
AVERAGE ANNUAL TOTAL RETURNS Treasury market upside-down, or in they must be priced attractively.
bond parlance, inverted the Treasury This effectively reprices the rest of
As of 6/30/00 yield curve. The yield curve--a graph the market, sending existing bond prices
of Treasury security yields from three down and pushing their yields up.
---------------------------------------- months to 30 years--under normal And yields on high-yield bonds were at
Inception (5/1/98) -0.54% conditions slopes upward, with short- some of their highest levels in years
---------------------------------------- term yields lower than longer-term during the first half of 2000, yielding
1 year 0.81 yields. With an inverted curve, however, over 13% in May. One has to go back to
short-term Treasuries actually yield the 1990-91 period to find higher yields.
Past performance cannot guarantee more than longer-term ones. Spreads (the difference between yields
comparable future results. MARKET on high-yield bonds and comparable
VOLATILITY CAN SIGNIFICANTLY IMPACT maturity Treasuries) were also wide at
SHORT-TERM PERFORMANCE. RESULTS OF AN well over 600 basis points. Once again,
INVESTMENT MADE TODAY MAY DIFFER that's probably not due to credit-quality
SUBSTANTIALLY FROM THE HISTORICAL concerns as much
PERFORMANCE SHOWN.
</TABLE>
AIM V.I. HIGH YIELD FUND 131
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
TOP 10 HOLDINGS TOP 10 INDUSTRIES
---------------------------------------- -------------------------------------------
1. Winslow Furniture, Inc.-- 1. Telephone 14.97% OTHER 7.43%
Series B 3.50% -------------------------------------------
---------------------------------------- 2. Telecommunications EQUITIES 2.85%
2. Tele 1 Europe B.V. (Long Distance) 13.22
(Netherlands) 3.48 ------------------------------------------- FOREIGN HIGH YIELD BONDS 2.70%
---------------------------------------- 3. Telecommunications
3. Alamosa PCS Holdings, Inc. 3.43 (Cellular/Wireless) 11.74 DOMESTIC HIGH-YIELD BONDS 87.02%
---------------------------------------- -------------------------------------------
4. KMC Telecom Holdings, Inc. 3.05 4. Broadcasting (Television,
---------------------------------------- Radio & Cable) 6.26
5. Primus Telecom Group, Inc. 2.77 -------------------------------------------
---------------------------------------- 5. Gaming, Lottery, & Parimutuel Cos 4.00
6. Equinix, Inc. 2.24 -------------------------------------------
---------------------------------------- 6. Manufacturing (Specialized) 3.98
7. PTC International Finance II -------------------------------------------
S.A. (Luxembourg) 2.11 7. Household Furniture & Appliances 3.54
---------------------------------------- -------------------------------------------
8. Destia Communications, Inc. 2.00 8. Financial (Diversified) 3.09
---------------------------------------- -------------------------------------------
9. D J Orthopedics LLC 1.98 9. Health Care (Drugs--Generic) 2.73
---------------------------------------- -------------------------------------------
10. Ono Finance PLC 10. Computers (Peripherals) 2.24
(United Kingdom) 1.87
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any particular
security.
as to comparatively rich prices in the does in coming months. Has the Fed ______________________________________________
Treasury market and rather low demand with its string of rate hikes
for corporate bonds. But as investors orchestrated the proverbial "soft The performance figures shown here,
return to the high-yield market, those landing"? which represent AIM V.I. High Yield
spreads have narrowed a bit. A string of recent statistical Fund, are not intended to reflect
releases suggests that the pace of actual annuity values, and they do not
HOW DID YOU MANAGE THE FUND? economic activity is indeed slowing. If reflect changes at the separate-account
The fund's relatively small size worked this continues, and if the Fed does not level which (if applied) would lower
to its advantage as we were able to feel the need to raise rates again in them. AIM V.I. High Yield Fund's
pursue some attractive yield August, that could bring about a performance figures are historical,
opportunities. recovery in the bond market. and they reflect the reinvestment of
The single-B and CCC sectors of the For the high-yield investor, June distributions and changes in net asset
high-yield market underperformed for provided a reversal of sorts. Attractive value. The fund's investment return and
much of the year. With the majority of yields enticed investors back into the principal value will fluctuate, so an
fund assets in single-B credits high-yield sector. Although the past investor's shares, when redeemed, may
and a number of holdings in the CCC year has been challenging for the high- be worth more or less than their
sector, the fund suffered a bit. yield market, increased demand is original cost.
Overall, the fund has an average credit encouraging. Although we cannot predict Government securities (such as U.S.
quality of B, as measured by Standard to what extent or for how long these Treasury bills, notes and bonds)
& Poor's, a widely known credit-rating increased cash inflows will continue, offer a high degree of safety, and
agency. we believe that high-yield bonds remain they guarantee the timely payment of
an attractive option for investors principal and interest if held to
WHAT IS YOUR OUTLOOK FOR THE looking for high income with some maturity. Fund shares are not insured,
BOND MARKET? potential appreciation. and their value will vary with market
The near-term outlook for the conditions. The fund invests in higher-
fixed-income investor depends largely yielding, lower-rated corporate bonds,
on what the economy commonly known as junk bonds. These
bonds have a greater risk of price
fluctuation and loss of principal
than do U.S. government securities
(such as U.S. Treasury bills, notes and
bonds) for which the government
guarantees the repayment of principal
and interest if held to maturity.
An investment cannot be made in an
index. Unless otherwise indicated,
index results include reinvested
dividends.
</TABLE>
132 AIM V.I. HIGH YIELD FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS & NOTES - 89.70%
AEROSPACE/DEFENSE - 1.01%
Precision Partners, Inc., Sr. Unsec. Sub. Notes,
12.00%, 03/15/09 $ 500,000 $ 292,500
-------------------------------------------------------------------------------
AIR FREIGHT - 0.66%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 185,000 190,550
-------------------------------------------------------------------------------
AIRLINES - 1.33%
Amtran, Inc., Sr. Unsec. Gtd. Notes, 10.50%, 08/01/04 205,000 189,113
-------------------------------------------------------------------------------
Dunlop Standard Aerospace Holdings PLC (United
Kingdom), Sr. Unsec. Yankee Sub. Notes,
11.88%, 05/15/09 200,000 197,000
-------------------------------------------------------------------------------
386,113
-------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.77%
Exide Corp., Sr. Notes, 10.00%, 04/15/05 250,000 225,000
-------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 6.26%
Adelphia Communications Corp., Sr. Unsec. Notes, 9.38%,
11/15/09 500,000 462,500
-------------------------------------------------------------------------------
Charter Communications Holdings LLC,
Sr. Unsec. Notes, 10.25%, 01/15/10 400,000 390,000
-------------------------------------------------------------------------------
Sr. Unsec. Disc. Notes, 9.92%, 04/01/11(a) 350,000 200,375
-------------------------------------------------------------------------------
Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes,
10.25%, 11/01/07(a) 250,000 156,250
-------------------------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc. Notes,
11.88%, 10/15/07(a) 250,000 135,625
-------------------------------------------------------------------------------
United Pan-Europe Communications N.V. (Netherlands) -
Series B, Sr. Unsec. Disc. Yankee Notes, 13.38%,
02/01/10(a) 1,000,000 475,000
-------------------------------------------------------------------------------
1,819,750
-------------------------------------------------------------------------------
BUILDING MATERIALS - 1.63%
Blount Inc., Sr. Unsec. Gtd. Sub. Notes,
13.00%, 08/01/09 250,000 256,250
-------------------------------------------------------------------------------
Dayton Superior Corp., Sr. Sub. Notes,
13.00%, 06/15/09 (Acquired 06/09/00;
Cost $214,364)(b)(c) 220,000 218,350
-------------------------------------------------------------------------------
474,600
-------------------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 1.57%
Avecia Group PLC (United Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 11.00%, 07/01/09 200,000 197,000
-------------------------------------------------------------------------------
Sterling Chemicals, Inc. - Series B, Sr. Gtd. Sec. Sub.
Notes, 12.38%, 07/15/06 250,000 258,750
-------------------------------------------------------------------------------
455,750
-------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.51%
Convergent Communications - Series B, Sr. Unsec. Notes,
13.00%, 04/01/08 210,000 147,525
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
COMPUTERS (PERIPHERALS) - 2.24%
Equinix Inc., Sr. Notes, 13.00%, 12/01/07(b)(d) $ 630,000 $ 650,475
-------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 1.65%
Globix Corp., Sr. Unsec. Notes, 12.50%, 02/01/10 580,000 479,950
-------------------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 1.49%
Cherokee International LCC - Series B, Sr. Unsec. Sub.
Notes, 10.50%, 05/01/09 500,000 432,500
-------------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 0.86%
Morrison Knudsen Corp., Sr. Notes,
11.00%, 07/01/10 (Acquired 06/28/00; Cost $248,155)(c) 250,000 249,375
-------------------------------------------------------------------------------
ENTERTAINMENT - 0.48%
Callahan Nordrhein Westfalen (Denmark), Sr. Yankee
Notes, 14.00%, 07/15/10 (Acquired 06/29/00; Cost
$140,000)(c) 140,000 140,175
-------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 2.81%
Madison River Capital, Sr. Notes,
13.25%, 03/01/10(d) 300,000 274,500
-------------------------------------------------------------------------------
ONO Finance PLC (United Kingdom), Sr. Gtd. Sub. Euro
Notes, 13.00%, 05/01/09 550,000 541,750
-------------------------------------------------------------------------------
816,250
-------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 4.00%
MGM Grand, Inc., Sr. Unsec. Gtd. Sub. Notes,
9.75%, 06/01/07 250,000 255,000
-------------------------------------------------------------------------------
Resort at Summerlin LP - Series B, Sr. Unsec. Sub.
Notes, 13.00%, 12/15/07 608,000 398,240
-------------------------------------------------------------------------------
Venetian Casino Resort LLC, Sec. Gtd. Mortgage Notes,
12.25%, 11/15/04 500,000 507,500
-------------------------------------------------------------------------------
1,160,740
-------------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.73%
King Pharmaceuticals, Inc., Sr. Unsec. Gtd. Sub. Notes,
10.75%, 02/15/09 270,000 280,800
-------------------------------------------------------------------------------
Warner Chilcott, Inc., Sr. Unsec. Gtd. Notes,
12.63%, 02/15/08(d) 500,000 512,500
-------------------------------------------------------------------------------
793,300
-------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.98%
DJ Orthopedics, LLC, Sr. Unsec. Gtd. Sub. Notes,
12.63%, 06/15/09 600,000 574,500
-------------------------------------------------------------------------------
HOMEBUILDING - 0.76%
Lennar Corp., Sr. Notes, 9.95%, 05/01/10(d) 225,000 221,625
-------------------------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES - 3.50%
Winsloew Furniture, Inc. - Series B, Sr. Gtd. Sub.
Notes, 12.75%, 08/15/07 1,100,000 1,017,500
-------------------------------------------------------------------------------
</TABLE>
AIM V.I. HIGH YIELD FUND 133
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
LEISURE TIME (PRODUCTS) - 1.86%
Marvel Enterprises, Inc., Sr. Unsec. Gtd. Sub. Notes,
12.00%, 06/15/09 $ 700,000 $ 540,750
-------------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 3.98%
Brand Scaffold Services, Inc., Sr. Unsec. Notes,
10.25%, 02/15/08 300,000 265,500
-------------------------------------------------------------------------------
Flextronics International Ltd. (Singapore), Sr. Sub
Yankee Notes, 9.88%, 07/01/10 (Acquired 06/26/00; Cost
$138,908)(c) 140,000 142,450
-------------------------------------------------------------------------------
MMI Products Inc. - Series B, Sr. Unsec. Sub. Notes,
11.25%, 04/15/07 275,000 270,875
-------------------------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes, 10.50%, 06/15/07 250,000 226,250
-------------------------------------------------------------------------------
Tekni-Plex Inc., Sr. Sub. Notes, 12.75%, 06/15/10
(Acquired 06/15/00; Cost $246,575)(c) 250,000 250,625
-------------------------------------------------------------------------------
1,155,700
-------------------------------------------------------------------------------
METALS MINING - 1.16%
Bulong Operations PTV Ltd. (Australia), Sr. Sec. Yankee
Notes, 12.50%, 12/15/08(e) 700,000 337,750
-------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 2.23%
Comstock Resources, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.25%, 05/01/07 250,000 255,000
-------------------------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec. Notes, 11.75%, 11/15/09 250,000 251,250
-------------------------------------------------------------------------------
Pioneer Natural Resources Co., Sr. Unsec. Gtd. Notes,
9.63%, 04/01/10 135,000 140,400
-------------------------------------------------------------------------------
646,650
-------------------------------------------------------------------------------
OIL & GAS (REFINING & MARKETING) - 0.32%
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes,
11.13%, 07/01/06 110,000 94,050
-------------------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 1.52%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 420,000 440,475
-------------------------------------------------------------------------------
RAILROADS - 0.83%
TFM S.A. de C.V. (Mexico), Sr. Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(a) 350,000 242,375
-------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.48%
CSK Auto Inc. - Series A, Sr. Gtd. Sub. Deb., 11.00%,
11/01/06 150,000 138,750
-------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.54%
Avis Group Holdings, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/01/09 150,000 157,125
-------------------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.74%
MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.38%, 01/15/08 225,000 213,750
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 11.47%
AirGate PCS, Inc., Sr. Disc. Sub. Notes,
13.50%, 10/01/09(a)(b) $ 500,000 $ 297,500
-------------------------------------------------------------------------------
Alamosa PCS Holdings, Inc., Sr. Unsec. Gtd. Disc.
Notes, 12.88%, 02/15/10(a) 1,900,000 997,500
-------------------------------------------------------------------------------
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 100,000 102,000
-------------------------------------------------------------------------------
Sr. Unsec. Disc. Notes, 10.63%, 11/15/07(a) 200,000 149,500
-------------------------------------------------------------------------------
IPCS, Inc., Sr. Disc. Notes, 14.00%, 07/15/10(a)(b) 100,000 52,000
-------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr. Unsec. Notes, 13.50%,
05/15/09 1,000,000 885,000
-------------------------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes, 11.88%, 06/15/05 350,000 250,250
-------------------------------------------------------------------------------
Spectrasite Holdings, Inc.,
Sr. Disc. Notes, 12.00%, 07/15/08(a) 400,000 266,000
-------------------------------------------------------------------------------
Sr. Unsec. Disc. Notes, 11.25%, 04/15/09(a) 270,000 157,950
-------------------------------------------------------------------------------
UbiquiTel Operating Co., Sr. Gtd. Disc. Notes,
14.00%, 04/15/10(a)(b)(d) 300,000 175,125
-------------------------------------------------------------------------------
3,332,825
-------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 12.07%
360networks Inc. (Canada), Sr. Unsec. Yankee Notes,
12.00%, 08/01/09 500,000 477,500
-------------------------------------------------------------------------------
Destia Communications, Inc., Sr. Unsec. Notes, 13.50%,
07/15/07 650,000 581,750
-------------------------------------------------------------------------------
Primus Telecommunications Group, Inc., Sr. Unsec.
Notes, 12.75%, 10/15/09 1,000,000 805,000
-------------------------------------------------------------------------------
RSL Communications PLC (United Kingdom), Sr. Unsec.
Gtd. Yankee Notes, 12.88%, 03/01/10 (Acquired
03/23/00; Cost $388,000)(c) 400,000 298,000
-------------------------------------------------------------------------------
Tele1 Europe B.V. (Netherlands), Sr. Unsec. Yankee
Notes, 13.00%, 05/15/09(b) 1,000,000 1,010,000
-------------------------------------------------------------------------------
Versatel Telecom International N.V. (Netherlands), Sr.
Unsec. Yankee Notes, 13.25%, 05/15/08 200,000 205,000
-------------------------------------------------------------------------------
Sr. Yankee Notes, 13.25%, 05/15/08 100,000 102,500
-------------------------------------------------------------------------------
Viatel, Inc., Sr. Unsec. Notes, 11.50%, 03/15/09 34,000 26,010
-------------------------------------------------------------------------------
3,505,760
-------------------------------------------------------------------------------
TELEPHONE - 13.90%
GT Group Telecom Inc. (Canada), Sr. Disc. Yankee Notes,
13.25%, 02/01/10(a)(b)(d) 500,000 277,500
-------------------------------------------------------------------------------
ICG Services, Inc., Sr. Unsec. Disc. Notes,
10.00%, 02/15/08(a) 600,000 333,624
-------------------------------------------------------------------------------
IMPSAT Fiber Networks, Inc., Sr. Yankee Notes, 13.75%,
02/15/05 (Acquired 06/12/00;
Cost $239,594)(c) 275,000 248,875
-------------------------------------------------------------------------------
Intermedia Communications, Inc. - Series B, Sr. Disc.
Notes, 11.25%, 07/15/07(a) 375,000 298,125
-------------------------------------------------------------------------------
Jazztel PLC (United Kingdom), Sr. Unsec. Yankee Notes,
14.00%, 04/01/09 500,000 467,500
-------------------------------------------------------------------------------
Logix Communications Enterprises, Sr. Unsec. Notes,
12.25%, 06/15/08 550,000 193,875
-------------------------------------------------------------------------------
</TABLE>
134 AIM V.I. HIGH YIELD FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELEPHONE - (CONTINUED)
NEXTLINK Communications, Inc., Sr. Unsec. Disc., Notes,
12.25%, 06/01/09(a) $ 500,000 $ 312,500
-------------------------------------------------------------------------------
NTL Communications Corp. - Series B, Sr. Unsec. Notes,
12.38%, 10/01/08 750,000 487,500
-------------------------------------------------------------------------------
PF.Net Communications Inc., Sr. Notes, 13.75%, 05/15/10
(Acquired 05/05/00;
Cost $300,000)(b)(c) 300,000 303,750
-------------------------------------------------------------------------------
PTC International Finance II S.A. (Luxembourg), Sr.
Unsec. Gtd. Yankee Sub. Notes, 11.25%, 12/01/09 600,000 612,000
-------------------------------------------------------------------------------
U.S. Xchange LLC, Sr. Unsec. Notes,
15.00%, 07/01/08 460,000 502,550
-------------------------------------------------------------------------------
4,037,799
-------------------------------------------------------------------------------
TRUCKERS - 0.81%
North American Van Lines Inc., Sr. Sub. Notes, 13.38%,
12/01/09(d) 250,000 236,250
-------------------------------------------------------------------------------
TRUCKS & PARTS - 0.55%
FleetPride Inc., Sr. Unsec. Gtd. Sub. Notes,
12.00%, 08/01/05 220,000 159,500
-------------------------------------------------------------------------------
WASTE MANAGEMENT - 1.00%
Allied Waste North America Inc. - Series B, Sr. Unsec.
Gtd. Sub. Notes, 10.00%, 08/01/09 345,000 289,800
-------------------------------------------------------------------------------
Total U.S. Dollar Denominated Bonds & Notes
(Cost $27,831,925) 26,057,487
-------------------------------------------------------------------------------
SHARES
STOCKS & OTHER EQUITY INTERESTS - 1.46%
SERVICES (COMPUTER SYSTEMS) - 0.04%
Convergent Communications, Inc.(f) 1,350 10,800
-------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.27%
AirGate PCS, Inc.(f) 365 19,194
-------------------------------------------------------------------------------
World Access, Inc. - Series D, Conv. Pfd. (Acquired
03/03/00; Cost $97,271)(c)(f) 93 59,752
-------------------------------------------------------------------------------
78,946
-------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.15%
FirstWorld Communications Inc. - Class B(f) 2,765 29,033
-------------------------------------------------------------------------------
Tele1 Europe Holding A.B. - ADR (Netherlands)(f) 11,448 138,091
-------------------------------------------------------------------------------
Versatel Telecom International N.V. - ADR
(Netherlands)(f) 3,868 166,808
-------------------------------------------------------------------------------
333,932
-------------------------------------------------------------------------------
Total Stocks & Other Equity Interests
(Cost $382,763) 423,678
-------------------------------------------------------------------------------
WARRANTS - 1.39%
COMPUTERS (PERIPHERALS) - 0.00%
Equinix Inc., expiring 12/01/07 (Acquired 05/30/00;
Cost $0)(c)(g) 630 0
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED) - 0.28%
ONO Finance PLC (United Kingdom), expiring
05/31/09(g) 550 $ 82,637
-----------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.00%
Resort At Summerlin LP, expiring 12/15/07(g) 467 0
-----------------------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES - 0.04%
Winsloew Furniture, Inc., expiring 08/15/07 (Acquired
12/06/99; Cost $0)(c)(g) 1,100 11,000
-----------------------------------------------------------------------------
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc., expiring 04/15/03(g) 60 0
-----------------------------------------------------------------------------
SHIPPING - 0.00%
Millenium Seacarriers, expiring 07/15/03(g) 100 150
-----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.00%
Long Distance International, Inc., expiring
04/13/08(g) 140 0
-----------------------------------------------------------------------------
TELEPHONE - 1.07%
Jazztel PLC (United Kingdom), expiring 04/01/09
(Acquired 03/31/99; Cost $0)(c)(g) 2,250 311,638
-----------------------------------------------------------------------------
Total Warrants (Cost $170) 405,425
-----------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY NOTES - 3.51%
6.63%, 05/31/02 $ 300,000 301,329
-----------------------------------------------------------------------------
6.75%, 05/15/05 500,000 511,955
-----------------------------------------------------------------------------
6.50%, 02/15/10 200,000 206,876
-----------------------------------------------------------------------------
Total U.S. Treasury Notes
(Cost $1,014,948) 1,020,160
-----------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS - 3.20%
STIC Liquid Assets Portfolio(h) 465,240 465,240
-----------------------------------------------------------------------------
STIC Prime Portfolio(h) 465,240 465,240
-----------------------------------------------------------------------------
Total Money Market Funds (Cost $930,480) 930,480
-----------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.26%
(COST $30,160,286) 28,837,230
-----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.74% 213,539
-----------------------------------------------------------------------------
NET ASSETS - 100.00% $29,050,769
=============================================================================
</TABLE>
AIM V.I. HIGH YIELD FUND 135
<PAGE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Discounted bond at purchase. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable
the holder to purchase shares of the issuer at a predetermined price.
(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 Trustees. The
aggregate market value of these securities at 06/30/00 was $2,233,983 which
represented 7.69% of the Fund's net assets.
(d) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(e) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(f) Non-income producing security.
(g) Acquired as part of a unit with or in exchange for other securities.
(h) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
136 AIM V.I. HIGH YIELD FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $30,160,286) $28,837,230
---------------------------------------------------------------------
Cash 43,750
---------------------------------------------------------------------
Receivables for:
Investments sold 49,688
---------------------------------------------------------------------
Fund shares sold 7,856
---------------------------------------------------------------------
Dividends and interest 652,301
---------------------------------------------------------------------
Investment for deferred compensation plan 9,946
---------------------------------------------------------------------
Total assets 29,600,771
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 488,563
---------------------------------------------------------------------
Fund shares reacquired 49
---------------------------------------------------------------------
Deferred compensation plan 9,946
---------------------------------------------------------------------
Accrued advisory fees 6,786
---------------------------------------------------------------------
Accrued administrative services fees 24,058
---------------------------------------------------------------------
Accrued trustees' fees 1,727
---------------------------------------------------------------------
Accrued operating expenses 18,873
---------------------------------------------------------------------
Total liabilities 550,002
---------------------------------------------------------------------
Net assets applicable to shares outstanding $29,050,769
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 3,326,443
=====================================================================
Net asset value, offering and redemption price per share $ 8.73
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $1,683,906
----------------------------------------------------------------------------
Dividends 54,520
----------------------------------------------------------------------------
Total investment income 1,738,426
----------------------------------------------------------------------------
EXPENSES:
Advisory fees 84,757
----------------------------------------------------------------------------
Administrative services fees 44,777
----------------------------------------------------------------------------
Custodian fees 6,940
----------------------------------------------------------------------------
Trustee's fees 3,017
----------------------------------------------------------------------------
Professional fees 17,347
----------------------------------------------------------------------------
Other 7,221
----------------------------------------------------------------------------
Total expenses 164,059
----------------------------------------------------------------------------
Less:Fees waived (10,805)
----------------------------------------------------------------------------
Expenses paid indirectly (3,131)
----------------------------------------------------------------------------
Net expenses 150,123
----------------------------------------------------------------------------
Net investment income 1,588,303
----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (1,228,059)
----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,293,378)
----------------------------------------------------------------------------
Net gain (loss) from investment securities (2,521,437)
----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (933,134)
============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND 137
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,588,303 $ 1,834,622
----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities (1,228,059) (517,194)
----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (1,293,378) 296,072
----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (933,134) 1,613,500
----------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (1,900,359)
----------------------------------------------------------------------------
Share transactions - net 4,715,717 17,588,744
----------------------------------------------------------------------------
Net increase in net assets 3,782,583 17,301,885
----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 25,268,186 7,966,301
----------------------------------------------------------------------------
End of period $29,050,769 $25,268,186
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $30,966,541 $26,250,824
----------------------------------------------------------------------------
Undistributed net investment income 1,525,667 (62,636)
----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (2,118,383) (890,324)
----------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (1,323,056) (29,678)
----------------------------------------------------------------------------
$29,050,769 $25,268,186
============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. High Yield Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 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 higher rated debt securities.
High yield bonds may be more susceptible to real or perceived adverse economic
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 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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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
138 AIM V.I. HIGH YIELD FUND
<PAGE>
determined in good faith by or under the supervision of the Trust's officers
in a manner specifically authorized by the Board of Trustees. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. For purposes of determining net asset value
per share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. 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 NYSE. 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
customary trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $792,625 which may be carried forward to offset future
taxable gains, if any, which expires in varying increments, if not
previously utilized, in the year 2007.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the annual rate of 0.625%
on the first $200 million of the Fund's average daily net assets, plus 0.55%
on the next $300 million of the Fund's average daily net assets, plus 0.50% on
the next $500 million of the Fund's average daily net assets, plus 0.45% on
the Fund's average daily net assets in excess of $1 billion. During the six
months ended June 30, 2000, AIM waived fees of $10,805.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $44,777 of which AIM retained $25,000 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,734
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $3,131 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $3,131.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $17,028,284 and $9,925,459, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<PAGE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 1,073,639
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,396,695)
--------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(1,323,056)
==========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
AIM V.I. HIGH YIELD FUND 139
<PAGE>
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
--------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold 838,406 $ 7,539,754 2,064,369 $19,155,692
-------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 211,621 1,900,359
-------------------------------------------------------------------------
Reacquired (312,008) (2,824,037) (377,620) (3,467,307)
-------------------------------------------------------------------------
526,398 $ 4,715,717 1,898,370 $17,588,744
=========================================================================
</TABLE>
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
MAY 1, 1998
(DATE OPERATIONS
SIX MONTHS ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2000(a) 1999(a) 1998
---------------- ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 9.02 $ 8.84 $10.00
--------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.52 1.03 0.39
--------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized and
unrealized) (0.81) (0.10) (1.15)
--------------------------------------------------------------------------------
Total from investment
operations (0.29) 0.93 (0.76)
--------------------------------------------------------------------------------
Less distributions from net
investment income -- (0.75) (0.40)
--------------------------------------------------------------------------------
Net asset value, end of period $ 8.73 $ 9.02 $ 8.84
================================================================================
Total return(b) (3.21)% 10.52% (7.61)%
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $29,051 $25,268 $7,966
================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.13%(c) 1.14% 1.13%(d)
--------------------------------------------------------------------------------
Without fee waivers 1.21%(c) 1.42% 2.50%(d)
================================================================================
Ratio of net investment income
to average net assets 11.74%(c) 11.07% 9.75%(d)
================================================================================
Portfolio turnover rate 40% 127% 39%
================================================================================
</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 $27,217,706.
(d) Annualized.
140 AIM V.I. HIGH YIELD FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. High Yield Fund (the "Fund"), a
portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized
as AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was
held on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 2,367,341 31,701 221,664
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 2,177,795 70,631 372,280
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 2,244,360 81,853 294,493
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 2,293,606 54,236 272,864
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 2,262,427 92,811 265,468
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 2,254,266 100,855 265,585
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 2,242,258 93,069 285,379
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 2,248,167 106,411 266,128
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 2,215,992 132,393 272,321
(5) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 2,371,454 16,938 232,314
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. HIGH YIELD FUND 141
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. INTERNATIONAL EQUITY FUND
INTERNATIONAL MARKETS SUFFER VOLATILITY
HOW DID AIM V.I. INTERNATIONAL EQUITY THE FUND WILL CONTINUE TO FAVOR | WHAT HAPPENED IN EUROPE?
FUND PERFORM OVER THE REPORTING PERIOD? INTERNATIONAL MARKET LEADERS WITH A | European equity markets suffered a
Intense volatility in international CAPACITY FOR INNOVATION, SALES-VOLUME | correction near the end of the reporting
markets hurt fund performance over the EXPANSION, PRICING FLEXIBILITY AND HIGH | period. Our holdings mainly consisted
six-month reporting period ended PRODUCTIVITY. | of major technology, media and
June 30, 2000. The fund reported a ________________________________________ telecommunications companies (commonly
-10.86% return, compared to its known as TMTs), which hurt the fund's
benchmark, the MSCI EAFE --Registered HOW DID YOU MANAGE THE FUND IN THIS performance somewhat. Despite this
Trademark-- Index, which produced a ENVIRONMENT? recent dip, we remain bullish on the
-4.06% six-month return. Recent volatility has not changed our region for a number of reasons:
investment strategy. We focus on . Earnings appear strong for many
WHAT HAPPENED IN INTERNATIONAL MARKETS high-quality companies that produce European companies; in fact, earnings
OVER THE PAST SIX MONTHS? earnings. Over the past six months, are forecasted to grow by 24% in 2000,
International markets saw intense our analysis has led us to stocks in according to Morgan Stanley.
day-to-day volatility during the the technology infrastructure, bandwidth . European merger-and-acquisition
reporting period as several factors and storage areas. We have steered away activity is booming. Year-to-date, 40%
combined to shake investor confidence. from Internet stocks, such as Internet of all global deals announced involve
Concerns intensified about the service providers and Web-portal a European company as an acquirer.
valuation of technology stocks, and companies, because they don't meet our . The European equity culture is growing
sentiment shifted away from riskier earnings criteria. This strategy has as initial public offerings outpace
growth stocks to more traditional helped the fund reduce risk. those of the United States. Europe's
value-oriented equities. In addition, stock exchanges are also gaining
rising interest rates in the United JAPAN IS YOUR TOP COUNTRY ALLOCATION. strength.
States and Europe contributed to WHAT WERE THE MAJOR TRENDS THERE? . Europe currently lags behind the United
world market volatility. Japan's technology stocks reached new States in technology and communications
Japanese stocks weakened in the heights in late 1999, only to suffer a spending, but we expect the region to
second quarter, hurt by lower-than- major correction in 2000. We mitigated catch up. In fact, Europe's Internet
expected gross domestic product the effects on the fund by reducing our and mobile-communications growth is
numbers. Asian stocks mirrored the Japanese holdings by almost 40%, from faster than that of the United States.
choppy performance of U.S. markets 26.88% of the portfolio as of
because of their heavy weightings in December 31, 1999, to 16.39% as of IN WHAT OTHER COUNTRIES DID THE FUND
technology stocks. Meanwhile, Latin June 30, 2000. INVEST?
American markets dipped on concerns Meanwhile, Japan's economic recovery We had holdings in Asia, including Hong
about the U.S. economy and local remains questionable. Its gross domestic Kong, Singapore, Thailand and Taiwan--
political issues. product declined for two consecutive markets where technology and
quarters, officially signaling recession. telecommunications sectors were strong.
FUND PERFORMANCE But many analysts predict that the worst Our favorite emerging economy outside
may be over. Information technology, Asia and Europe was Mexico. The country
AVERAGE ANNUAL TOTAL RETURNS especially wireless communications, has benefited from lowered trade
As of 6/30/00 could help jump-start economic growth. barriers and growing demand from U.S.
For instance, the number of mobile consumers. We expect economic conditions
----------------------------------- phones in Japan now surpasses the to remain favorable, and we anticipate a
Inception (5/5/93) 15.54% number of fixed-line phones, and one smooth transition when President-elect
----------------------------------- in 20 Japanese uses a mobile phone to Vicente Fox takes office in December.
5 years 17.27 access the Internet.
-----------------------------------
1 year 32.34
Past performance cannot guarantee
comparable future results.
MARKET VOLATILITY CAN SIGNIFICANTLY
IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER
SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
</TABLE>
142 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
<S> <C> <C>
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
1. Nortel Networks Corp. (Canada) 3.01% 1. Communications Equipment 11.20% 1. Japan 16.39%
2. Nokia Oyj (Finland) 2.93 2. Electronics (Component 2. France 13.65
Distributors) 7.54
3. Koninklijke (Royal) Philips 3. United Kingdom 9.29
Electronics N.V. (Netherlands) 1.97 3. Telecommunications
(Cellular/Wireless) 6.86 4. Canada 8.73
4. China Telecom Ltd. (Hong Kong) 1.93
4. Electronics (Semiconductors) 6.72 5. Switzerland 6.77
5. Telefonaktiebolaget LM Ericsson
A.B.--Class B (Sweden) 1.87 5. Telephone 4.92 6. Germany 4.57
6. Total Fina Elf S.A. (France) 1.71 6. Electrical Equipment 4.63 7. Sweden 4.30
7. BNP Paribas (France) 1.63 7. Services (Commercial & Consumer) 4.52 8. Netherlands 3.50
8. SANYO Electric Co., Ltd. (Japan) 1.60 8. Oil (International Integrated) 4.01 9. Mexico 3.50
9. NEC Corp. (Japan) 1.56 9. Computers (Software & Services) 2.81 10. Hong Kong 3.14
10. STMicroelectronics N.V. (France) 1.54 10. Insurance (Multi-Line) 2.67
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any particular
security.
WHAT WERE YOUR TOP HOLDINGS? bulbs, electric shavers, appliances, country's economic situation.
We invested in international leaders in components, PC monitors and semicon- In general, the fund will continue to
wireless communications, the Internet and ductors. Its brand names include favor international market leaders with a
electronics: Marantz, Norelco and Magnavox. capacity for innovation, sales-volume
. Nortel Networks--Canadian-based Nor- expansion, pricing flexibility and high
tel beat analysts' estimates in the WHAT'S YOUR OUTLOOK FOR THE REST productivity. We regard dips in the share
first quarter of 2000, reflecting the OF THE YEAR? prices of solid companies as buying
strength of its optical networking, We expect the markets to remain volatile, opportunities.
wireless Internet and high-speed but we believe that the long-term prospects
Internet access businesses. The for international growth investing are ------------------------------------------
second-largest communications strong, especially in the technology and The performance figures shown here, which
company in North America, Nortel telecommunications sectors. represent AIM V.I. International Equity
has increased its forecast for The outlook for Europe remains bright. Fund, are not intended to reflect actual
revenue and earnings growth in 2000. In the future, we expect Europe to resem- annuity values, and they do not reflect
. Nokia--The Finnish company, which ble the United States more closely in terms charges at the separate-account level
controls more than a quarter of the of Internet usage, connectivity and broad- which (if applied) would lower them. AIM
world's mobile-phone market, continues band access. As Internet penetration in V.I. International Equity Fund's per-
to post significant earnings increases. Europe is only half that of the United formance figures are historical, and they
The company has high hopes for its next States (Finland and Sweden are notable reflect the reinvestment of distributions
generation of mobile phones, which give exceptions), enthusiasm for technology and changes in net asset value. The
handsets access to the Internet. should remain strong. fund's investment return and principal
. Philips Electronics--The Netherlands- In Japan, technology is gaining momen- value will fluctuate, so an investor's
based company makes TVs, VCRs, CD tum, but the economy is still struggling. shares, when redeemed, may be worth more
and DVD players, phones, pagers, and We search for individual Japanese stocks or less than their original cost.
other electronic devices, plus light that may perform well regardless of the International investing presents
certain risks not associated with investing
solely in the United States. These include
risks relating to fluctuations in the
value of the U.S. dollar relative to other
currencies, the custodial arrangements
made for the fund's foreign holdings,
accounting differences, political risks
and the lesser degree of public information
required to be provided by non-U.S.
companies.
The unmanaged MSCI EAFE --Registered
Trademark-- (Europe, Australasia and the
Far East) Index is a group of foreign
securities tracked by Morgan Stanley
Capital International.
An investment cannot be made in an
index. Unless otherwise indicated, index
results include reinvested dividends.
AIM V.I. INTERNATIONAL EQUITY FUND
143
</TABLE>
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 87.78%
AUSTRALIA - 0.91%
AMP Ltd. (Insurance - Life/Health) 120,800 $ 1,226,615
------------------------------------------------------------------------------
Brambles Industries Ltd. (Air Freight) 37,700 1,155,995
------------------------------------------------------------------------------
Cable & Wireless Optus Ltd. (Telephone)(a) 268,000 797,180
------------------------------------------------------------------------------
Telstra Corp. Ltd. (Telephone) 26,200 106,102
------------------------------------------------------------------------------
Telstra Corp. Ltd. - Installment Receipts (Telephone) 466,800 1,059,515
------------------------------------------------------------------------------
4,345,407
------------------------------------------------------------------------------
BRAZIL - 0.98%
Embratel Participacoes S.A. - ADR (Telephone) 45,100 1,065,488
------------------------------------------------------------------------------
Petroleo Brasileiro S.A. - Petrobras-Pfd.
(Oil & Gas - Exploration & Production) 74,739 2,259,160
------------------------------------------------------------------------------
Tele Centro Sul Participacoes S.A. - ADR (Telephone) 11,971 874,569
------------------------------------------------------------------------------
Telesp - Telecomunicacoes de Sao Paulo S.A. - ADR
(Telephone) 27,200 503,200
------------------------------------------------------------------------------
4,702,417
------------------------------------------------------------------------------
CANADA - 8.73%
360networks Inc. (Telecommunications - Long
Distance)(a) 58,800 896,700
------------------------------------------------------------------------------
Bombardier Inc. - Class B (Aerospace/Defense) 255,500 6,943,686
------------------------------------------------------------------------------
C-MAC Industries, Inc. (Electronics - Component
Distributors)(a) 90,500 4,282,720
------------------------------------------------------------------------------
Celestica Inc. (Electronics - Semiconductors)(a) 94,400 4,601,298
------------------------------------------------------------------------------
Mitel Corp. (Communications Equipment)(a) 95,800 2,001,230
------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 210,468 14,364,448
------------------------------------------------------------------------------
Rogers Communications, Inc. - Class B
(Telecommunications - Cellular/Wireless)(a) 158,300 4,489,376
------------------------------------------------------------------------------
Shaw Communications Inc. - Class B
(Broadcasting - Television, Radio & Cable) 167,200 4,125,744
------------------------------------------------------------------------------
41,705,202
------------------------------------------------------------------------------
DENMARK - 1.50%
Novo Nordisk A/S. - Class B (Health Care -
Drugs - Major Pharmaceuticals)(a) 28,575 4,853,364
------------------------------------------------------------------------------
Vestas Wind Systems A/S
(Manufacturing - Specialized) 63,500 2,327,344
------------------------------------------------------------------------------
7,180,708
------------------------------------------------------------------------------
FINLAND - 2.93%
Nokia Oyj (Communications Equipment) 274,672 13,988,999
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE - 13.65%
Alcatel (Communications Equipment) 82,500 $ 5,400,516
-----------------------------------------------------------------------------
Altran Technologies S.A. (Services - Commercial &
Consumer) 33,013 6,451,715
-----------------------------------------------------------------------------
AXA (Insurance - Multi-Line) 45,032 7,079,942
-----------------------------------------------------------------------------
BNP Paribas (Banks - Major Regional) 81,100 7,789,434
-----------------------------------------------------------------------------
Legrand S.A. (Housewares) 20,275 4,539,973
-----------------------------------------------------------------------------
M6 Metropole Television (Broadcasting -
Television, Radio & Cable) 20,900 1,266,566
-----------------------------------------------------------------------------
Pinault - Printemps - Redoute S.A. (Retail - General
Merchandise) 19,400 4,301,527
-----------------------------------------------------------------------------
PSA Peugeot Citroen (Automobiles) 16,600 3,324,799
-----------------------------------------------------------------------------
Societe Generale (Banks - Major Regional) 76,500 4,592,261
-----------------------------------------------------------------------------
Societe Television Francaise 1 (Broadcasting -
Television, Radio & Cable) 71,050 4,942,099
-----------------------------------------------------------------------------
STMicroelectronics N.V.
(Electronics - Seminconductors) 116,850 7,348,474
-----------------------------------------------------------------------------
Total Fina Elf S.A. (Oil - International Integrated) 53,525 8,190,808
-----------------------------------------------------------------------------
65,228,114
-----------------------------------------------------------------------------
GERMANY - 4.57%
Epcos A.G. (Electronics - Component Distributors)(a) 49,000 4,921,089
-----------------------------------------------------------------------------
Infineon Technologies A.G.
(Electronics - Semiconductors)(a) 54,100 4,278,582
-----------------------------------------------------------------------------
Intershop Communications A.G.
(Computers - Software & Services)(a) 2,900 1,307,024
-----------------------------------------------------------------------------
Marschollek, Lautenschlaeger und Partner A.G.
(Services - Commercial & Consumer) 2,200 1,098,445
-----------------------------------------------------------------------------
Porsche A.G.-Pfd. (Automobiles) 1,135 3,082,232
-----------------------------------------------------------------------------
Siemens A.G. (Manufacturing - Diversified) 47,500 7,128,509
-----------------------------------------------------------------------------
21,815,881
-----------------------------------------------------------------------------
HONG KONG - 3.14%
China Telecom Ltd. (Telecommunications -
Cellular/Wireless)(a) 1,046,000 9,224,873
-----------------------------------------------------------------------------
Dao Heng Bank Group Ltd. (Banks - Regional) 374,000 1,655,186
-----------------------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail - Food Chains) 328,900 4,134,719
-----------------------------------------------------------------------------
15,014,778
-----------------------------------------------------------------------------
INDONESIA - 0.19%
Gulf Indonesia Resources Ltd. (Oil - International
Integrated)(a) 111,400 891,200
-----------------------------------------------------------------------------
</TABLE>
144 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ITALY - 1.04%
Gruppo Editoriale L'Espresso (Publishing) 61,000 $ 778,278
------------------------------------------------------------------------------
Telecom Italia Mobile S.p.A. (Telecommunications -
Cellular/Wireless) 409,000 4,169,957
------------------------------------------------------------------------------
4,948,235
------------------------------------------------------------------------------
JAPAN - 16.39%
Advantest Corp. (Electronics - Instrumentation) 27,500 6,126,077
------------------------------------------------------------------------------
Crayfish Co. Ltd. - ADR (Computers - Software &
Services)(a) 98,000 686,000
------------------------------------------------------------------------------
DDI Corp. (Telephone) 400 3,843,074
------------------------------------------------------------------------------
Fast Retailing Co. Ltd. (Retail - Specialty Apparel) 44 18,402
------------------------------------------------------------------------------
Hirose Electric Co. Ltd. (Electronics - Component
Distributors) 27,800 4,323,252
------------------------------------------------------------------------------
Hoya Corp. (Manufacturing - Specialized) 32,000 2,863,467
------------------------------------------------------------------------------
Matsushita Communication Industrial Co., Ltd.
(Telephone) 23,000 2,682,052
------------------------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics - Component Distributors) 30,000 4,300,852
------------------------------------------------------------------------------
NEC Corp. (Computers - Hardware) 238,000 7,465,172
------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications - Long Distance) 292 3,878,114
------------------------------------------------------------------------------
NTT Data Corp. (Computers - Software & Services)(a) 228 2,340,884
------------------------------------------------------------------------------
NTT DoCoMo, Inc. (Telecommunications -
Cellular/Wireless) 171 4,622,710
------------------------------------------------------------------------------
Ricoh Co., Ltd. (Office Equipment & Supplies) 132,000 2,791,315
------------------------------------------------------------------------------
Rohm Co. Ltd. (Electronics - Component Distributors) 12,600 3,679,179
------------------------------------------------------------------------------
Sanix Inc. (Services - Commercial & Consumer) 30,450 1,606,179
------------------------------------------------------------------------------
Sanyo Electric Co., Ltd. (Electronics - Component
Distributors)(a) 852,000 7,656,083
------------------------------------------------------------------------------
Sharp Corp. (Electrical Equipment) 106,000 1,872,086
------------------------------------------------------------------------------
Sony Corp. (Electrical Equipment) 38,200 3,562,191
------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. (Health
Care - Drugs - Generic & Other) 73,000 4,785,758
------------------------------------------------------------------------------
Tokyo Electron Ltd. (Electronics - Semiconductors) 41,000 5,607,498
------------------------------------------------------------------------------
Trend Micro Inc. (Computers - Software & Services)(a) 21,900 3,609,947
------------------------------------------------------------------------------
78,320,292
------------------------------------------------------------------------------
MEXICO - 3.50%
Coca-Cola Femsa S.A. - ADR (Beverages -
Non-Alcoholic) 95,200 1,796,900
------------------------------------------------------------------------------
Fomento Economico Mexicano, S.A. de C.V. - ADR
(Beverages - Alcoholic) 74,709 3,217,156
------------------------------------------------------------------------------
Grupo Modelo S.A. de C.V. - Series C
(Beverages - Alcoholic) 523,000 1,213,993
------------------------------------------------------------------------------
Grupo Televisa S.A. - GDR (Entertainment)(a) 60,160 4,147,280
------------------------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper
& Forest Products) 226,000 642,828
------------------------------------------------------------------------------
Telefonos de Mexico S.A. de C.V. - Class L - ADR
(Telephone) 58,936 3,366,719
------------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V. - Series C (Retail -
General Merchandise)(a) 1,014,000 2,338,257
------------------------------------------------------------------------------
16,723,133
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS - 3.50%
ASM Lithography Holding N.V.
(Machinery - Diversified)(a) 80,700 $ 3,461,813
----------------------------------------------------------------------------
Koninklijke (Royal) Philips Electronics N.V.
(Electrical Equipment) 200,440 9,434,869
----------------------------------------------------------------------------
VNU N.V. (Publishing) 74,400 3,835,259
----------------------------------------------------------------------------
16,731,941
----------------------------------------------------------------------------
SINGAPORE - 1.34%
Chartered Semiconductor Manufacturing Ltd. - ADR
(Electronics - Semiconductors)(a) 13,700 1,233,000
----------------------------------------------------------------------------
Datacraft Asia Ltd. (Communications Equipment) 139,360 1,226,368
----------------------------------------------------------------------------
DBS Group Holdings Ltd. (Banks - Money Center) 143,979 1,850,266
----------------------------------------------------------------------------
Keppel Corp. Ltd. (Engineering & Construction) 331,000 716,608
----------------------------------------------------------------------------
Singapore Press Holdings Ltd. (Publishing -
Newspapers) 87,563 1,368,559
----------------------------------------------------------------------------
6,394,801
----------------------------------------------------------------------------
SOUTH KOREA - 2.34%
Korea Telecom Corp. - ADR (Telephone) 53,530 2,589,514
----------------------------------------------------------------------------
L.G. Chemical Ltd. (Chemicals - Diversified) 58,000 1,159,974
----------------------------------------------------------------------------
Pohang Iron & Steel Co. Ltd. - ADR (Iron & Steel) 85,815 2,059,560
----------------------------------------------------------------------------
Samsung Electronics N.V. (Electronics - Component
Distributors)(a) 16,200 5,361,135
----------------------------------------------------------------------------
11,170,183
----------------------------------------------------------------------------
SPAIN - 1.38%
Telefonica S.A. (Telephone)(a) 308,743 6,619,180
----------------------------------------------------------------------------
SWEDEN - 4.30%
NetCom A.B. - Class B (Telecommunications -
Cellular/Wireless)(a) 77,200 5,691,127
----------------------------------------------------------------------------
OM Grupppen A.B. (Investment Banking/Brokerage) 45,000 2,007,746
----------------------------------------------------------------------------
Skandia Forsakrings A.B. (Insurance Brokers) 147,900 3,902,330
----------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson A.B. - B Shares
(Communications Equipment) 453,200 8,955,406
----------------------------------------------------------------------------
20,556,609
----------------------------------------------------------------------------
SWITZERLAND - 6.77%
ABB Ltd. (Electrical Equipment) 60,600 7,235,904
----------------------------------------------------------------------------
Adecco S.A. (Services - Commercial & Consumer) 8,395 7,115,625
----------------------------------------------------------------------------
Compagnie Financiere Richemont A.G. (Tobacco) 2,375 6,383,393
----------------------------------------------------------------------------
Kudelski S.A. (Electronics - Component
Distributors)(a) 120 1,505,871
----------------------------------------------------------------------------
Serono S.A. (Health Care - Drugs - Generic & Other) 5,280 4,391,389
----------------------------------------------------------------------------
Zurich Allied A.G. (Insurance - Multi-Line) 11,550 5,693,065
----------------------------------------------------------------------------
32,325,247
----------------------------------------------------------------------------
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND 145
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TAIWAN - 1.22%
Far Eastern Textile Ltd. - GDR (Textiles-Apparel)(a) 26,400 $ 333,300
------------------------------------------------------------------------------
Far Eastern Textile Ltd. - GDR (Textiles-Apparel)
(Acquired 11/11/99-04/19/00;
Cost $2,460,764)(a)(b) 151,600 1,913,950
------------------------------------------------------------------------------
GT Taiwan Fund (Investment Management)(a)(c)(d) 15,291 248,483
------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR
(Electronics - Semiconductors) 85,760 3,323,200
------------------------------------------------------------------------------
5,818,933
------------------------------------------------------------------------------
THAILAND - 0.11%
Siam Commercial Bank Public Co. Ltd.
(Banks - Regional)(a) 32,800 18,420
------------------------------------------------------------------------------
Siam Commercial Bank Public Co. Ltd. - $1.37 Conv.
Pfd. (Banks - Regional) (Acquired 04/29/99; Cost
$593,771)(a)(b) 846,000 431,908
------------------------------------------------------------------------------
Siam Commercial Bank Public Co. Ltd. - Wts., expiring
05/10/02 (Banks - Regional)(d) 846,000 99,339
------------------------------------------------------------------------------
549,667
------------------------------------------------------------------------------
UNITED KINGDOM - 9.29%
ARM Holdings PLC (Electronics - Semiconductors)(a) 459,500 4,921,857
------------------------------------------------------------------------------
BP Amoco PLC (Oil - International Integrated)(a) 346,000 3,318,758
------------------------------------------------------------------------------
Capita Group PLC (Services - Commercial & Consumer) 216,800 5,303,707
------------------------------------------------------------------------------
CMG PLC (Computers - Software & Services) 256,200 3,612,979
------------------------------------------------------------------------------
Dialog Semiconductor PLC (Electronics -
Semiconductors)(a) 16,000 808,017
------------------------------------------------------------------------------
Logica PLC (Computers - Software & Services) 78,600 1,859,814
------------------------------------------------------------------------------
Marconi PLC (Communications Equipment) 378,940 4,930,366
------------------------------------------------------------------------------
Pace Micro Technology PLC (Communications Equipment) 181,900 2,619,871
------------------------------------------------------------------------------
Shell Transport & Trading Co. (Oil - International
Integrated) 810,000 6,758,351
------------------------------------------------------------------------------
Vodafone AirTouch PLC (Telecommunications -
Cellular/Wireless) 1,113,655 4,498,546
------------------------------------------------------------------------------
Vodafone AirTouch PLC - ADR (Telecommunications -
Cellular/Wireless) 1,750 72,516
------------------------------------------------------------------------------
WPP Group PLC (Services - Advertising/Marketing) 387,000 5,650,001
------------------------------------------------------------------------------
44,354,783
------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$307,144,951) 419,385,710
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS - 10.87%
STIC Liquid Assets Portfolio(e) 25,966,176 $ 25,966,176
---------------------------------------------------------------------
STIC Prime Portfolio(e) 25,966,176 25,966,176
---------------------------------------------------------------------
Total Money Market Funds (Cost $51,932,352) 51,932,352
---------------------------------------------------------------------
TOTAL INVESTMENTS - 98.65%
(Cost $359,077,303) 471,318,062
---------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.35% 6,436,520
---------------------------------------------------------------------
NET ASSETS - 100.00% $477,754,582
=====================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
GDR - Global Depositary Receipt
Pfd. - Preferred
Wts. - Warrants
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 Trustees. The
market value of these securities at 06/30/00 was $2,345,858 which
represented 0.49% of the Fund's net assets.
(c) The security is managed by an affiliate of the advisor. The security is in
the process of being liquidated to its shareholders at a price of $16.25 a
share.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(e) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
146 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $359,077,303) $471,318,062
----------------------------------------------------------------------
Foreign currencies, at value (cost $2,886,778) 2,908,269
----------------------------------------------------------------------
Receivables for:
Investments sold 2,627,006
----------------------------------------------------------------------
Fund shares sold 3,207,901
----------------------------------------------------------------------
Dividends and Interest 1,006,690
----------------------------------------------------------------------
Due from advisor 8,510
----------------------------------------------------------------------
Investment for deferred compensation plan 31,405
----------------------------------------------------------------------
Total assets 481,107,843
----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,699,739
----------------------------------------------------------------------
Fund shares reacquired 83,513
----------------------------------------------------------------------
Deferred compensation plan 31,405
----------------------------------------------------------------------
Accrued advisory fees 282,348
----------------------------------------------------------------------
Accrued administrative services fees 250,780
----------------------------------------------------------------------
Accrued trustees' fees 1,800
----------------------------------------------------------------------
Accrued operating expenses 3,676
----------------------------------------------------------------------
Total liabilities 3,353,261
----------------------------------------------------------------------
Net assets applicable to shares outstanding $477,754,582
======================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 18,294,817
======================================================================
Net asset value, offering and redemption price per share $ 26.11
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $268,775) $ 6,339,074
------------------------------------------------------------------------------
Interest 22,238
------------------------------------------------------------------------------
Total investment income 6,361,312
------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,676,489
------------------------------------------------------------------------------
Administrative services fee 318,164
------------------------------------------------------------------------------
Custodian fees 173,279
------------------------------------------------------------------------------
Trustees' fees 3,345
------------------------------------------------------------------------------
Other 79,041
------------------------------------------------------------------------------
Total expenses 2,250,318
------------------------------------------------------------------------------
Less: Expenses paid indirectly (778)
------------------------------------------------------------------------------
Net expenses 2,249,540
------------------------------------------------------------------------------
Net investment income 4,111,772
------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities 22,597,932
------------------------------------------------------------------------------
Foreign currencies (919,402)
------------------------------------------------------------------------------
21,678,530
------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (74,650,490)
------------------------------------------------------------------------------
Foreign currencies 56,978
------------------------------------------------------------------------------
(74,593,512)
------------------------------------------------------------------------------
Net gain (loss) on investment securities and foreign currencies (52,914,982)
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(48,803,210)
==============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND 147
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,111,772 $ 1,052,906
------------------------------------------------------------------------------
Net realized gain from investment securities and
foreign currencies 21,678,530 28,410,687
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (74,593,512) 127,549,239
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (48,803,210) 157,012,832
------------------------------------------------------------------------------
Distributions to shareholders from net investment
income -- (2,918,487)
------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (12,247,382)
------------------------------------------------------------------------------
Share transactions - net 72,498,241 71,898,276
------------------------------------------------------------------------------
Net increase in net assets 23,695,031 213,745,239
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 454,059,551 240,314,312
------------------------------------------------------------------------------
End of period $477,754,582 $454,059,551
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $329,234,295 $256,736,054
------------------------------------------------------------------------------
Undistributed net investment income (loss) 4,027,674 (84,098)
------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities and foreign currencies 32,285,170 10,606,640
------------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 112,207,443 186,800,955
------------------------------------------------------------------------------
$477,754,582 $454,059,551
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. International Equity Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
provide long-term growth of capital.
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 preparation 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 Trust's officers in a manner specifically authorized by
the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
148 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. 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 NYSE. 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 customary
trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $318,164 of which AIM retained $45,674 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $2,049
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $778 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $778.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $235,496,511 and $190,680,300, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $124,043,655
---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (12,140,233)
---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $111,903,422
===========================================================================
</TABLE>
Cost of investments for tax purposes is $359,414,640.
AIM V.I. INTERNATIONAL EQUITY FUND 149
<PAGE>
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold 11,595,395 $ 316,051,378 6,613,497 $ 145,638,150
-----------------------------------------------------------------------------
Issued as reinvestment
of dividends -- -- 582,183 15,165,869
-----------------------------------------------------------------------------
Issued in connection
with acquisitions* -- -- 2,243,929 49,699,501
-----------------------------------------------------------------------------
Reacquired (8,804,011) (243,553,137) (6,185,749) (138,605,244)
-----------------------------------------------------------------------------
2,791,384 $ 72,498,241 3,253,860 $ 71,898,276
=============================================================================
</TABLE>
* As of the close of business on October 22, 1999, the Fund acquired all the
net assets of the following funds: GT Global Variable International Fund, GT
Global Variable Europe Fund, GT Global Variable Natural Resources Fund, GT
Global Variable Infrastructure Fund, GT Global Variable New Pacific Fund, GT
Global Variable Latin America Fund and GT Global Variable Emerging Markets
Fund, collectively (the "Variable Funds"), pursuant to a plan of
reorganization approved by the Variable Funds shareholders on August 25,
1999. The acquisitions were accomplished by a tax-free exchange of 2,243,929
shares of the Fund for the respective shares of each of the Variable Funds
outstanding as of the close of business October 22, 1999 (see following
table) and by combining the net assets of the Fund as of that date with
those of the respective Variable Funds outlined in the following table:
<TABLE>
<CAPTION>
NET ASSETS
IMMEDIATELY APPRECIATION/
SHARES BEFORE (DEPRECIATION)
VARIABLE FUNDS: EXCHANGED ACQUISITIONS INCLUDED
------------------------ --------- ------------ --------------
<S> <C> <C> <C>
GT Global Variable
International Fund 398,165 $4,159,686 $ 591,925
-----------------------------------------------------------------------------
GT Global Variable
Europe Fund 2,101,240 16,722,795 1,876,631
-----------------------------------------------------------------------------
GT Global Variable
Natural Resources Fund 426,574 5,000,655 167,642
-----------------------------------------------------------------------------
GT Global Variable
Infrastructure Fund 253,110 3,837,109 609,331
-----------------------------------------------------------------------------
GT Global Variable New
Pacific Fund 857,885 7,747,489 1,306,187
-----------------------------------------------------------------------------
GT Global Variable Latin
America Fund 731,544 7,915,791 (1,572,891)
-----------------------------------------------------------------------------
GT Global Variable
Emerging Markets Funds 544,479 4,315,976 117,775
-----------------------------------------------------------------------------
</TABLE>
The net assets of the Fund immediately before the acquisitions were
$285,111,544.
150 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX
MONTHS ELEVEN
ENDED YEAR ENDED DECEMBER 31, MONTHS ENDED YEAR ENDED
JUNE 30, -------------------------------------- DECEMBER 31, JANUARY 31,
2000 1999(a) 1998 1997 1996 1995 1995
-------- -------- -------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 29.29 $ 19.62 $ 17.13 $ 16.36 $ 13.66 $ 11.03 $ 12.49
-----------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.23 0.08 0.15 0.10 0.07 0.07 0.06
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (3.41) 10.59 2.50 1.03 2.67 2.58 (1.49)
-----------------------------------------------------------------------------------------------------------
Total from investment
operations (3.18) 10.67 2.65 1.13 2.74 2.65 (1.43)
-----------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.19) (0.16) (0.08) (0.04) (0.02) (0.03)
-----------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.81) -- (0.28) -- -- --
===========================================================================================================
Total distributions -- (1.00) (0.16) (0.36) (0.04) (0.02) (0.03)
-----------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 26.11 $ 29.29 $ 19.62 $ 17.13 $ 16.36 $ 13.66 $ 11.03
===========================================================================================================
Total return(b) (10.86)% 55.04% 15.49% 6.94% 20.05% 24.04% (11.48)%
===========================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $477,755 $454,060 $240,314 $211,023 $165,738 $82,257 $55,019
===========================================================================================================
Ratio of expenses to
average net assets 0.98%(c) 0.97% 0.91% 0.93% 0.96% 1.15%(d) 1.27%(e)
===========================================================================================================
Ratio of net investment
income to average net
assets 1.79%(c) 0.38% 0.80% 0.68% 0.78% 0.75%(d) 0.60%
===========================================================================================================
Portfolio turnover rate 45% 97% 76% 57% 59% 67% 64%
===========================================================================================================
</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 $462,674,876.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.28%.
AIM V.I. INTERNATIONAL EQUITY FUND 151
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. International Equity Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 13,967,686 350,596 1,070,735
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 13,625,093 475,137 1,288,787
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 13,476,309 582,138 1,330,570
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 13,715,114 491,764 1,182,139
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 13,762,202 451,275 1,175,540
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 13,647,715 543,142 1,198,160
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 13,618,516 550,377 1,220,124
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 13,508,317 612,651 1,268,049
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 13,480,994 619,196 1,288,827
(5) Approval of changing the Investment
Objective and Making it Non-
Fundamental........................ 13,314,762 688,330 1,385,925
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 13,314,762 197,956 922,149
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
152 AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. MONEY MARKET FUND
FUND A BULWARK IN VOLATILE MARKETS
HOW DID AIM V.I. MONEY MARKET FUND THE FUND CONTINUED TO PROVIDE STEADY | actions and other factors could perpetu-
PERFORM OVER THE SIX-MONTH INCOME AND SAFETY OF PRINCIPAL IN | ate the volatility that has characterized
REPORTING PERIOD? THIS ENVIRONMENT... | markets in recent months. Whatever the
The first six months of 2000 proved _______________________________________| case, the fund is well positioned to
quite unsettling for many investors, with respond quickly to any interest-rate
volatility pushing some to move assets enough employees, the U.S. economy's changes and to continue to provide a
into more stable securities such as those record expansion appeared poised to set competitive yield.
in which this fund invests. The fund off inflation. Since the beginning of
continued to provide steady income and 2000, the Fed has raised the federal An investment in the fund is not a
safety of principal in this environment, funds rate three times--including a deposit of a bank and is not insured or
with a weighted average maturity (WAM) 0.50% increase at its May meeting, its guaranteed by the Federal Deposit
in the 20- to 25-day range during the biggest increase in more than five Insurance Corporation or any other
reporting period. As of June 30, 2000, years--to 6.50%. government agency. Although a money
the WAM stood at 20.86 days, and the market fund seeks to preserve the value
seven-day yield for the fund was 5.96%. HOW DID THIS ENVIRONMENT AFFECT YIELDS? of your investment at $1.00 per share,
The fund finished the six-month The Treasury yield curve, which normally it is possible to lose money by
reporting period with a total return rises steadily from left to right, investing in the fund. The performance
of 2.75%. This return is particularly became inverted early in the year and figures in this report which represent
noteworthy when compared to the Dow remained so as of this report. The AIM V.I. Money Market Fund are not
and the Nasdaq, which had returns of 30-year Treasury bond, long considered intended to reflect actual annuity
-8.44% and -2.54%, respectively, for the a benchmark for interest rates, has seen values, and they do not reflect charges
reporting period. The divergence of these its yield fall since the government at the separate-account level which
returns is a testament to the stability announced plans to buy back some 30-year (if applied) would lower them. Past
the fund can offer in times of market issues. As a result, the 10-year bond performance cannot guarantee comparable
volatility. has become more of a general benchmark. future results.
Even so, the two-year Treasury note The Dow Jones Industrial Average
WHY HAVE MARKETS BEEN SO VOLATILE? was the high point of the yield curve (the Dow) is a price-weighted average
A number of factors have contributed at the end of the reporting period as of 30 actively traded primarily
to the markets' volatility. During the some investors, wary of the market's industrial stocks.
first quarter of the year and into the volatility, sought the liquidity and The unmanaged National Association of
second quarter, volatility was safety of shorter-term issues. Cash Securities Dealers Automated Quotation
particularly pronounced in the in the form of three- and six-month System Composite Index (the Nasdaq) is
technology sector where some companies' Treasury bills continued to perform a market-value-weighted index comprising
sky-high valuations came into question. well, with yields rising from 5.31% all domestic and non-U.S.-based common
Added to that were rate hikes implemented to 5.86% and 5.73% to 6.22%, respec- stocks listed on the Nasdaq system. It
by the Federal Reserve Board (the Fed) tively, during the reporting period. includes more than 5,000 companies, and
and investors' concerns regarding it is often considered representative
potential inflation, which shook market WHAT IS YOUR NEAR-TERM OUTLOOK? of the small and medium-sized company
confidence across the board. While there are signs that the economy stock universe.
may at last be slowing to a sustainable While it includes many small and
WHAT WAS THE INTEREST-RATE ENVIRONMENT growth level, the Fed deems it too early mid-sized company stocks, large-
DURING THE REPORTING PERIOD? to say with finality that its rate hikes capitalization technology companies tend
The Fed has been raising interest rates have indeed halted inflation. The fact to dominate the index.
since June 1999 in an effort to slow that the Fed did not raise interest An investment cannot be made in an
what it feared was a too-hot growth rate rates at its recent June meeting may index. Unless otherwise indicated,
for the U.S. economy. With consumers indicate that its tightening cycle is index results include reinvested
spending more and companies struggling winding down. However, uncertainty over dividends.
to hire the Fed's
</TABLE>
AIM V.I. MONEY MARKET FUND 153
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
PAR
(000) VALUE
<S> <C> <C>
COMMERCIAL PAPER - 29.25%(a)
ASSET-BACKED SECURITIES - CONSUMER RECEIVABLES - 4.72%
Old Line Funding Corp.
6.57%, 08/04/00 $ 3,359 $ 3,338,157
-------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - MULTI PURPOSE - 10.58%
Falcon Asset Securitization Corp.
6.19%, 09/18/00 2,000 1,972,833
-------------------------------------------------------------------------------
Fountain Square Commercial Funding Corp.
6.65%, 09/28/00 2,559 2,516,929
-------------------------------------------------------------------------------
Preferred Receivables Funding Corp.
6.62%, 07/13/00 3,000 2,993,380
-------------------------------------------------------------------------------
7,483,142
-------------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 3.17%
Corporate Asset Funding Co.
6.59%, 08/07/00 2,260 2,244,693
-------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 10.78%
Du Pont (E.I.) de Nemours and Co.
6.54%, 07/19/00 3,000 2,990,190
-------------------------------------------------------------------------------
General Electric Capital Corp.
6.06%, 08/28/00 2,000 1,980,473
-------------------------------------------------------------------------------
National Rural Utilities Cooperative Finance Corp.
6.60%, 09/18/00 2,700 2,660,895
-------------------------------------------------------------------------------
7,631,558
-------------------------------------------------------------------------------
Total Commercial Paper (Cost $20,697,550) 20,697,550
-------------------------------------------------------------------------------
SHORT-TERM OBLIGATIONS - 5.18%
FINANCIAL (DIVERSIFIED) - 5.18%
AT&T Capital Corp., Medium Term Notes
7.50%, 11/15/00 1,660 1,665,495
-------------------------------------------------------------------------------
Beneficial Corp., Medium Term Notes
6.33%, 12/18/00 1,000 998,072
-------------------------------------------------------------------------------
General Electric Capital Corp., Floating Rate Notes,
Daily VRD Series
6.86%, 08/21/00(b)(c) 1,000 999,708
-------------------------------------------------------------------------------
Total Short-Term Obligations
(Cost $3,663,275) 3,663,275
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PAR
(000) VALUE
<S> <C> <C>
CERTIFICATES OF DEPOSIT - 2.83%
Bank Austria
5.65%, 07/06/00 $ 1,000 $ 999,994
--------------------------------------------------------------------------------
Commerzbank
6.31%, 08/22/00 1,000 1,000,053
--------------------------------------------------------------------------------
Total Certificates of Deposit (Cost $2,000,047) 2,000,047
--------------------------------------------------------------------------------
MASTER NOTE AGREEMENTS - 11.17%(D)
Merrill Lynch Mortgage Capital, Inc.
7.40%, 08/17/00(e) 3,900 3,900,000
--------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.
7.23%, 09/01/00(f) 4,000 4,000,000
--------------------------------------------------------------------------------
Total Master Note Agreements
(Cost $7,900,000) 7,900,000
--------------------------------------------------------------------------------
Total Investments (excluding repurchase agreements)
(Cost $34,260,872) 34,260,872
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 50.88%(g)
Banc One Capital Markets, Inc.
6.85%, 07/03/00(h) 2,208 2,208,110
--------------------------------------------------------------------------------
Bear, Stearns & Co., Inc.
6.85%(i) 3,000 3,000,000
--------------------------------------------------------------------------------
Chase Securities, Inc.
6.80%, 07/03/00(j) 3,400 3,400,000
--------------------------------------------------------------------------------
Deutsche Bank Securities Inc.
6.72%, 07/03/00(k) 3,400 3,400,000
--------------------------------------------------------------------------------
UBS Warburg
6.85%, 07/03/00(l) 17,000 17,000,000
--------------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale
6.85%, 07/03/00(m) 7,000 7,000,000
--------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $36,008,110) 36,008,110
--------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.31% 70,268,982(n)
--------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.69% 486,096
--------------------------------------------------------------------------------
NET ASSETS - 100.00% $ 70,755,078
================================================================================
</TABLE>
Investment Abbreviations:
VRD - Variable Rate Demand
154 AIM V.I. MONEY MARKET FUND
<PAGE>
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 coupon rate shown on floating rate notes represents the rate at
period end.
(c) Demand security; payable upon demand by the Fund with usually no more
than seven calendar days notice. Interest rates are redetermined daily.
Rates shown are rates in effect on 06/30/00.
(d) The investments in master note 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) 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 06/30/00.
(f) The portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon three business days notice to the issuer.
Interest rates on master notes are redetermined periodically. Rate shown
is the rate in effect on 06/30/00.
(g) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is
marked to market daily to ensure its market value as being 102% of the
sales price of the repurchase agreement. 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.
(h) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$150,085,625. Collateralized by $153,264,000 par value of U.S. Government
and Treasury obligations, 0% to 8.00% due 07/03/00 to 08/25/14 with an
aggregate market value at 06/30/00 of $153,002,163.
(i) Joint 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 $382,155,000 par value of U.S.
Government obligations, 0% to 8.22% due 07/05/00 to 01/25/10 with an
aggregate market value at 06/30/00 of $358,294,343.
(j) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$300,170,000. Collateralized by $543,975,698 par value of U.S. Government
and Treasury obligations, 0% to 9.00% due 06/15/09 to 03/01/33 with an
aggregate market value at 06/30/00 of $306,003,760.
(k) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$150,084,000. Collateralized by $154,584,000 par value of U.S. Government
and Treasury obligations, 0% to 7.25% due 11/02/00 to 05/13/05 with an
aggregate market value at 06/30/00 of $153,004,476.
(l) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$250,142,708. Collateralized by $310,901,218 par value of U.S. Government
and Treasury obligations, 6.00% to 8.50% due 03/15/01 to 12/15/37 with an
aggregate market value at 06/30/00 of $255,000,262.
(m) Joint repurchase agreement entered into 06/30/00 with a maturing value of
$200,114,167. Collateralized by $293,357,525 par value of U.S. Government
and Treasury obligations, 5.50% to 9.50% due 01/31/02 to 08/01/29 with an
aggregate market value at 06/30/00 of $204,000,456.
(n) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND 155
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $34,260,872
---------------------------------------------------------------------
Repurchase agreements 36,008,110
---------------------------------------------------------------------
Receivables for:
Fund shares sold 660,149
---------------------------------------------------------------------
Interest 156,448
---------------------------------------------------------------------
Investment for deferred compensation plan 29,809
---------------------------------------------------------------------
Other assets 306
---------------------------------------------------------------------
Total assets 71,115,694
---------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 242,250
---------------------------------------------------------------------
Deferred compensation plan 29,809
---------------------------------------------------------------------
Accrued advisory fees 24,329
---------------------------------------------------------------------
Accrued administrative services fees 53,112
---------------------------------------------------------------------
Accrued trustees' fees 1,630
---------------------------------------------------------------------
Accrued operating expenses 9,486
---------------------------------------------------------------------
Total liabilities 360,616
---------------------------------------------------------------------
Net assets applicable to shares outstanding $70,755,078
=====================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 70,755,021
=====================================================================
Net asset value, offering and redemption price per share $ 1.00
=====================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,468,508
----------------------------------------------------------------
EXPENSES:
Advisory fees 162,682
----------------------------------------------------------------
Administrative services fee 57,938
----------------------------------------------------------------
Custodian fees 11,295
----------------------------------------------------------------
Trustees' fees 1,939
----------------------------------------------------------------
Other 28,675
----------------------------------------------------------------
Total expenses 262,529
----------------------------------------------------------------
Net investment income 2,205,979
----------------------------------------------------------------
Net increase in net assets resulting from operations $2,205,979
================================================================
</TABLE>
See Notes to Financial Statements.
156 AIM V.I. MONEY MARKET FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,205,979 $ 3,640,927
-----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 2,205,979 3,640,927
-----------------------------------------------------------------------------
Distributions to shareholders from net investment
income (2,205,979) (3,640,927)
-----------------------------------------------------------------------------
Share transactions - net (24,397,091) 31,061,846
-----------------------------------------------------------------------------
Net increase (decrease) in net assets (24,397,091) 31,061,846
-----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 95,152,169 64,090,323
-----------------------------------------------------------------------------
End of period $ 70,755,078 $95,152,169
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 70,755,021 $95,152,112
-----------------------------------------------------------------------------
Undistributed net realized gain from investment
securities 57 57
-----------------------------------------------------------------------------
$ 70,755,078 $95,152,169
=============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Money Market Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 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.
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 preparation 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 and Investment Income - 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 on the accrual basis from settlement date.
C. Distributions - It is the policy of the Fund to declare and pay dividends
daily from net investment income. Distributions from net realized capital
gains, if any, are generally paid annually and recorded on ex-dividend
date.
D. 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 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment
AIM V.I. MONEY MARKET FUND 157
<PAGE>
advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of
0.40% on 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $57,938 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,756
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 4 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Sold 48,551,801 $ 48,551,801 113,630,564 $ 113,630,564
--------------------------------------------------------------------------------
Issued as reinvestment
of dividends 2,205,979 2,205,979 3,640,927 3,640,927
--------------------------------------------------------------------------------
Issued in connection
with acquisitions* -- -- 29,800,869 29,800,869
--------------------------------------------------------------------------------
Reacquired (75,154,871) (75,154,871) (116,010,514) (116,010,514)
--------------------------------------------------------------------------------
(24,397,091) $(24,397,091) 31,061,846 $ 31,061,846
================================================================================
</TABLE>
* As of the close of business on October 15, 1999, the Fund acquired all the
net assets of GT Global Variable Money Market Fund ("Variable Money Market
Fund") pursuant to a plan of reorganization approved by Variable Money
Market Fund's shareholders on August 25, 1999. The acquisition was
accomplished by a tax-free exchange of 29,800,869 shares of the Fund for
29,800,869 shares of Variable Money Market Fund outstanding as of the close
of business on October 15, 1999. Variable Money Market Fund net assets at
that date of $29,800,869 were combined with those of the Fund. The net
assets of the Fund immediately before the acquisition were $80,730,864.
158 AIM V.I. MONEY MARKET FUND
<PAGE>
NOTE 5 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, YEAR ENDED
JUNE 30, ---------------------------------- ELEVEN MONTHS JANUARY 31,
2000 1999 1998 1997 1996 ENDED 1995 1995
---------- ------- ------- ------- ------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.03 0.05 0.05 0.05 0.05 0.05 0.04
-------------------------------------------------------------------------------------------------------
Less distributions from
net investment income (0.03) (0.05) (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 $ 1.00
=======================================================================================================
Total return(a) 2.75% 4.66% 5.06% 5.14% 4.97% 5.22% 3.98%
=======================================================================================================
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000s omitted) $70,755 $95,152 $64,090 $58,635 $63,529 $65,506 $31,017
=======================================================================================================
Ratio of expenses to
average net assets 0.65%(b) 0.60% 0.58% 0.59% 0.55% 0.53%(c) 0.63%(d)
=======================================================================================================
Ratio of net investment
income to average net
assets 5.45%(b) 4.59% 4.94% 5.01% 4.84% 5.40%(c) 4.14%
=======================================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $81,430,192.
(c) Annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.70%.
AIM V.I. MONEY MARKET FUND 159
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Money Market Fund (the "Fund"),
a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized
as AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was
held on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 82,407,076 765,331 8,898,575
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 77,944,551 3,697,133 10,429,298
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 74,951,345 6,425,362 10,694,275
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 74,006,451 6,558,990 11,505,541
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 77,160,135 3,498,461 11,412,386
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 75,439,544 5,079,344 11,552,094
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 73,475,397 7,985,788 10,609,797
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 74,140,229 7,161,336 10,769,417
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 72,995,172 7,461,236 11,614,574
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 74,678,430 6,311,105 11,081,447
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 83,381,955 567,088 8,121,939
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
160 AIM V.I. MONEY MARKET FUND
<PAGE>
<TABLE>
<CAPTION>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
VOLATILE MARKET HITS TECHNOLOGY STOCKS
<S> <C> <C>
HOW DID AIM V.I. TELECOMMUNICATIONS RECENT VOLATILITY HAS NOT | showed fundamental weakness. These
AND TECHNOLOGY FUND PERFORM DURING THE DAMPENED OUR ENTHUSIASM FOR | included stocks of some business-to-
REPORTING PERIOD? TELECOMMUNICATIONS AND TECHNOLOGY | business companies.
Technology stocks experienced extreme STOCKS. IN FACT, THIS MARKET | The majority of stocks in the fund's
volatility during the past six months, PRESENTED MAJOR BUYING | portfolio had earnings growth and solid
which hurt fund performance. The fund OPPORTUNITIES. | company fundamentals, making them
reported a six-month return of 0.70%, ______________________________________| good long-term investments. Earnings
slightly outperforming its benchmark, were strong for many of our holdings,
the S&P 500, which produced a return of supporting our investment strategy.
-0.43% during the same time frame. We look at companies in terms of their
earnings--we strive to understand what's
WHAT WERE THE MAJOR TRENDS IN EQUITY market volatility. The Federal Reserve behind the numbers, what factors drive a
MARKETS OVER THE REPORTING PERIOD? Board (the Fed) continued its year-long company's earnings and if those factors
Equity markets reached record highs series of interest-rate increases. In May, are sustainable.
near the beginning of 2000 in a rally the Fed raised the federal funds rate to Meanwhile, long-term trends remain
dominated by technology, media and 6.50%, its highest level in nine years. positive, including global expansion,
telecommunications stocks, commonly Since June 1999, the Fed has increased mergers and acquisitions, the growth of
dubbed TMTs. This rally lasted until interest rates six times for a total of wireless communications and the build-out
March, when a sharp sell-off in TMT 175 basis points (1.75%) in a pre-emptive of the Internet.
stocks ensued. In mid-April, the tech- effort to keep inflation in check. At its
heavy Nasdaq plunged, and other major June 2000 meeting, the Fed opted to leave WHAT TECHNOLOGY TRENDS WERE MOST
markets followed suit. The rest of the rates unchanged, but left the door IMPORTANT TO THE FUND'S INVESTMENT
period was marked by intense day-to-day open for possible increases in August. STRATEGY?
volatility. Markets were weak throughout Problems with software giant Microsoft
May and improved in June, essentially also contributed to tech-market volatility. We believe that one of the most important
ending the period flat. In April, a federal judge ruled that trends to watch is increasing bandwidth.
Microsoft is a monopoly, and the Justice Think of fiber-optic phone wires and
WHY WERE TECHNOLOGY STOCKS SO VOLATILE Department asked the court to split television cables as pipes through which
OVER THE PAST SIX MONTHS? Microsoft into two companies. (The fund information flows. Bandwidth measures
A number of factors combined to shake does not hold Microsoft stock.) the size of the pipe--the higher the
investor confidence and contribute to In addition, stocks of business-to- bandwidth, the more information that
business and business-to-consumer can flow through at faster speeds. We
FUND PERFORMANCE technology companies declined because invested in companies that are building
investors wanted to see profits to the pipelines to improve the flow of
Average Annual Total Returns justify their high valuations. video, audio and data over the Internet.
As of 6/30/00 These firms included fiber optics,
----------------------------------------- HOW DID YOU MANAGE THE PORTFOLIO DURING networking, equipment and chip manu-
Inception (10/18/93) 27.20% THIS ENVIRONMENT? facturers, especially communications
----------------------------------------- integrated circuits.
5 years 30.14 Recent volatility has not dampened our In addition, the fund sought to capitalize
----------------------------------------- enthusiasm for telecommunications and on the trend toward consolidation in the
1 year 66.40 technology stocks. In fact, this market fiber-optics industry. On June 30, JDS
----------------------------------------- presented major buying opportunities. Uniphase completed a $15 billion acquisi-
We added to holdings that were down tion of E-Tek Dynamics, both of which
Past performance does not guarantee com- quite a bit but still met our investment were fund holdings. On July 11 (after
parable future results. Market volatility discipline. At the same time, we trimmed the fund's reporting period closed), JDS
can significantly impact short-term per- positions from those holdings that bid $41 billion for SDL, another fund
formance. Results of an investment made holding.
today may differ substantially from the
historical performance shown.
</TABLE>
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND 161
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
TOP 10 HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
------------------------------------------ ------------------------------------------ ------------------------------------------
1. Corning Inc. 4.61% 1. Communications Equipment 20.75% 1. United States 75.99%
------------------------------------------ ------------------------------------------ ------------------------------------------
2. Brocade Communications 2. Computers (Software & Services) 15.80 2. Canada 3.77
Systems, Inc. 4.51 ------------------------------------------ ------------------------------------------
------------------------------------------ 3. Electronics (Semiconductors) 14.20 3. Japan 3.37
3. E-Tek Dynamics, Inc. 3.76 ------------------------------------------ ------------------------------------------
------------------------------------------ 4. Telecommunications 4. Finland 3.16
4. Oracle Corp. 3.67 (Cellular/Wireless) 9.08 ------------------------------------------
------------------------------------------ ------------------------------------------ 5. Hong Kong 1.46
5. Cisco Systems, Inc. 3.49 5. Computers (Peripherals) 8.15 ------------------------------------------
------------------------------------------ ------------------------------------------ 6. Sweden 1.29
6. SDL, Inc. 3.30 6. Computers (Networking) 6.18 ------------------------------------------
------------------------------------------ ------------------------------------------ 7. Singapore 1.24
7. JDS Uniphase Corp. 3.19 7. Capital Goods/Electrical ------------------------------------------
------------------------------------------ Equipment 4.61 8. United Kingdom 1.04
8. Nokia Oyj-ADR (Finland) 3.17 ------------------------------------------ ------------------------------------------
------------------------------------------ 8. Technology/Computer- 9. Spain 0.66
9. Juniper Networks, Inc. 2.76 Networking 2.76 ------------------------------------------
------------------------------------------ ------------------------------------------ 10. France 0.51
10. CIENA Corp. 2.40 9. Telephone 2.70 ------------------------------------------
------------------------------------------ ------------------------------------------
10. Equipment (Semiconductor) 1.93
------------------------------------------
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any particular
security.
We believe that this aggressive acquisition WHAT'S YOUR OUTLOOK FOR THE NEAR FUTURE? --------------------------------------------
strategy will continue to make JDS a The performance figures shown here,
leader in fiber optics. In addition, our Markets could be volatile for the near which represent AIM V.I. Telecom-
No. 1 holding, Corning, is the world's top term because of interest-rate concerns. munications and Technology Fund, are
producer of fiber-optic cable, which it However, recent economic data indicates not intended to reflect actual
invented more than 20 years ago. that the economy may be slowing, annuity values, and they do not reflect
eliminating the need for further rate charges at the separate-account level
WHAT WERE SOME OF THE FUND'S OTHER hikes. which (if applied) would lower them. AIM
TOP HOLDINGS? Even if the Fed raises rates in August, V.I. Telecom-munications and Technology
many technology and telecommunications Fund's performance figures are historical,
. Brocade Communications makes companies have little debt, making them and they reflect the reinvestment of
switches and related software for largely immune to the effects of rising distributions and changes in net asset
connecting corporate storage systems interest rates. Historically, weak markets value. The fund's investment return and
and servers, turning them into are the ideal time to invest and prepare principal value will fluctuate, so an
storage-area networks. for the next move up as companies innovate investor's shares, when redeemed, may
. Oracle, the leading maker of database and grow in new areas. be worth more or less than their
software, gives multiple users access Over the long range, we believe that original cost.
to the same data simultaneously. technology and telecommunications will
. Cisco Systems is the world's biggest continue to drive the world economy as The unmanaged National Association of
manufacturer of computer networking wireless communications and Internet Securities Dealers Automated Quotation
equipment--the switches and routers usage expand throughout the globe. The System Composite Index (the Nasdaq) is
that direct data across the Internet. fund will maintain its focus on investing a market-value-weighted index
It controls three-fourths of the global in companies that are leading the global comprising all domestic and non-U.S.
market for these products. information-technology revolution. based common stocks listed on the Nasdaq
system. It includes more than 5,000
companies, and it is often considered
representative of the small and medium-
sized company stock universe. While it
includes many small and mid-sized
company stocks, large capitalization
companies tend to dominate the index.
Investing in a single-sector mutual
fund may involve greater risk and
potential reward than investing in a
more diversified fund.
The unmanaged Standard & Poor's
Composite Index of 500 Stocks (the
S&P 500) represents the performance
of the stock market.
An investment cannot be made in an
index. Unless otherwise indicated, index
results include reinvested dividends.
</TABLE>
162 AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 75.99%
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.92%
UnitedGlobalCom Inc. - Class A(a) 20,700 $ 967,725
------------------------------------------------------------------
CAPITAL GOODS/ELECTRICAL EQUIPMENT - 4.61%
Corning Inc. 18,000 4,857,750
------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 13.37%
CIENA Corp.(a) 15,200 2,533,650
------------------------------------------------------------------
Copper Mountain Networks, Inc.(a) 10,700 942,937
------------------------------------------------------------------
E-Tek Dynamics, Inc.(a) 15,000 3,957,188
------------------------------------------------------------------
JDS Uniphase Corp.(a) 28,000 3,356,500
------------------------------------------------------------------
Redback Networks Inc.(a) 3,200 569,600
------------------------------------------------------------------
Sawtek Inc.(a) 11,900 684,994
------------------------------------------------------------------
Scientific-Atlanta, Inc. 5,200 387,400
------------------------------------------------------------------
Turnstone Systems, Inc.(a) 10,000 1,656,719
------------------------------------------------------------------
14,088,988
------------------------------------------------------------------
COMPUTERS (NETWORKING) - 6.18%
Cisco Systems, Inc.(a) 57,800 3,673,912
------------------------------------------------------------------
Exodus Communications, Inc.(a) 24,000 1,105,500
------------------------------------------------------------------
VeriSign, Inc.(a) 9,800 1,729,700
------------------------------------------------------------------
6,509,112
------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 8.15%
Brocade Communications Systems, Inc.(a) 25,900 4,752,245
------------------------------------------------------------------
EMC Corp.(a) 30,000 2,308,125
------------------------------------------------------------------
Network Appliance, Inc.(a) 10,000 805,000
------------------------------------------------------------------
SanDisk Corp.(a) 11,800 722,012
------------------------------------------------------------------
8,587,382
------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 15.80%
BEA Systems, Inc.(a) 7,500 370,781
------------------------------------------------------------------
BroadVision, Inc.(a) 24,000 1,219,500
------------------------------------------------------------------
InfoSpace.com, Inc.(a) 39,000 2,154,750
------------------------------------------------------------------
Inktomi Corp.(a) 16,000 1,892,000
------------------------------------------------------------------
Oracle Corp.(a) 46,000 3,866,875
------------------------------------------------------------------
Siebel Systems, Inc.(a) 6,100 997,731
------------------------------------------------------------------
StorageNetworks, Inc.(a) 400 36,100
------------------------------------------------------------------
VERITAS Software Corp.(a) 19,000 2,147,297
------------------------------------------------------------------
VerticalNet, Inc.(a) 16,500 609,469
------------------------------------------------------------------
WatchGuard Technologies, Inc.(a) 16,000 879,000
------------------------------------------------------------------
Yahoo! Inc.(a) 20,000 2,477,500
------------------------------------------------------------------
16,651,003
------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.45%
Cree, Inc.(a) 6,000 801,000
------------------------------------------------------------------
EchoStar Communications Corp.(a) 18,400 609,212
------------------------------------------------------------------
Stratos Lightwave, Inc.(a) 4,300 119,863
------------------------------------------------------------------
1,530,075
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (DEFENSE) - 1.00%
General Motors Corp. - Class H(a) 12,000 $1,053,000
--------------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.59%
Alpha Industries, Inc.(a) 14,000 616,875
--------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 11.77%
Advanced Micro Devices, Inc.(a) 14,000 1,081,500
--------------------------------------------------------------------------
Analog Devices, Inc.(a) 15,000 1,140,000
--------------------------------------------------------------------------
Applied Micro Circuits Corp.(a) 22,000 2,172,500
--------------------------------------------------------------------------
Broadcom Corp. - Class A(a) 10,600 2,320,738
--------------------------------------------------------------------------
Rambus Inc.(a) 9,200 947,600
--------------------------------------------------------------------------
SDL, Inc.(a) 12,200 3,479,288
--------------------------------------------------------------------------
Texas Instruments Inc. 18,300 1,256,981
--------------------------------------------------------------------------
12,398,607
--------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 1.93%
Novellus Systems, Inc.(a) 25,000 1,414,063
--------------------------------------------------------------------------
Teradyne, Inc.(a) 8,500 624,750
--------------------------------------------------------------------------
2,038,813
--------------------------------------------------------------------------
TECHNOLOGY/COMPUTER - HARDWARE - 1.05%
Sycamore Networks, Inc.(a) 10,000 1,103,750
--------------------------------------------------------------------------
TECHNOLOGY/COMPUTER - NETWORKING - 2.76%
Juniper Networks, Inc.(a) 20,000 2,911,250
--------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 4.62%
Nextel Communications, Inc. - Class A(a) 10,000 611,875
--------------------------------------------------------------------------
Phone.com, Inc.(a) 5,000 325,625
--------------------------------------------------------------------------
Rural Cellular Corp. - Class A(a) 8,000 612,500
--------------------------------------------------------------------------
Triton PCS Holdings, Inc. - Class A(a) 30,000 1,732,500
--------------------------------------------------------------------------
Western Wireless Corp. - Class A(a) 29,000 1,580,500
--------------------------------------------------------------------------
4,863,000
--------------------------------------------------------------------------
TELEPHONE - 1.79%
Qwest Communications International Inc.(a) 38,000 1,888,125
--------------------------------------------------------------------------
Total Domestic Common Stocks (Cost $55,865,544) 80,065,455
--------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 17.09%
AUSTRALIA - 0.25%
Telstra Corp. Ltd. - Installment Receipts (Telephone) 115,500 262,155
--------------------------------------------------------------------------
CANADA - 3.77%
Microcell Telecommunications Inc. - Class B-ADR
(Telecommunications - Cellular/Wirless)(a) 4,900 177,013
--------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 23,734 1,647,816
--------------------------------------------------------------------------
Nortel Networks Corp. - ADR (Communications Equipment) 21,000 1,433,250
--------------------------------------------------------------------------
PMC-Sierra, Inc. (Electronics-Semiconductors)(a) 4,000 710,750
--------------------------------------------------------------------------
3,968,829
--------------------------------------------------------------------------
</TABLE>
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND 163
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINLAND - 3.16%
Nokia Oyj - ADR (Communications Equipment) 66,800 $ 3,335,825
-------------------------------------------------------------------------------
FRANCE - 0.51%
STMicroelectronics N.V. (Electronics - Seminconductors) 8,600 540,838
-------------------------------------------------------------------------------
GERMANY - 0.34%
Epcos A.G. (Electronics - Component Distributors)(a) 3,600 361,549
-------------------------------------------------------------------------------
HONG KONG - 1.46%
China Telecom Ltd. (Telecommunications -
Cellular/Wireless)(a) 174,000 1,534,539
-------------------------------------------------------------------------------
JAPAN - 3.37%
Nippon Telegraph & Telephone Corp.
(Telecommunications - Long Distance) 97 1,288,278
-------------------------------------------------------------------------------
NTT DoCoMo, Inc. (Telecommunications -
Cellular/Wireless) 70 1,892,337
-------------------------------------------------------------------------------
Sony Corp. (Electrical Equipment) 4,000 373,004
-------------------------------------------------------------------------------
3,553,619
-------------------------------------------------------------------------------
SINGAPORE - 1.24%
Chartered Semiconductor Manufacturing Ltd. - ADR
(Electronics - Semiconductors)(a) 14,500 1,305,000
-------------------------------------------------------------------------------
SPAIN - 0.66%
Telefonica S.A. (Telephone)(a) 32,251 691,433
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWEDEN - 1.29%
Telefonaktiebolaget LM Ericsson A.B. - ADR
(Communications Equipment) 68,000 $ 1,360,000
----------------------------------------------------------------------------
UNITED KINGDOM - 1.04%
Vodafone AirTouch PLC (Telecommunications -
Cellular/Wireless) 271,064 1,094,948
----------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$8,192,550) 18,008,735
----------------------------------------------------------------------------
MONEY MARKET FUNDS - 6.53%
STIC Liquid Assets Portfolio(b) 3,438,903 3,438,903
----------------------------------------------------------------------------
STIC Prime Portfolio(b) 3,438,903 3,438,903
----------------------------------------------------------------------------
Total Money Market Funds (Cost $6,877,806) 6,877,806
----------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.61%
(COST $70,935,900) 104,951,996
----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.39% 407,517
----------------------------------------------------------------------------
NET ASSETS - 100.00% $105,359,513
============================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
a) Non-income producing security.
b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
164 AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $70,935,900) $104,951,996
----------------------------------------------------------------------
Foreign currencies, value (cost $536,832) 539,595
----------------------------------------------------------------------
Receivables for:
Investments sold 802,591
----------------------------------------------------------------------
Dividends 36,033
----------------------------------------------------------------------
Investment for deferred compensation plan 2,845
----------------------------------------------------------------------
Total assets 106,333,060
----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 779,775
----------------------------------------------------------------------
Deferred compensation plan 2,845
----------------------------------------------------------------------
Accrued advisory fees 84,277
----------------------------------------------------------------------
Accrued administrative services fees 40,899
----------------------------------------------------------------------
Accrued trustees' fees 1,517
----------------------------------------------------------------------
Accrued operating expenses 64,234
----------------------------------------------------------------------
Total liabilities 973,547
----------------------------------------------------------------------
Net assets applicable to shares outstanding $105,359,513
======================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 3,175,102
======================================================================
Net asset value, offering and redemption price per share $ 33.18
======================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $6,025) $ 1,942,227
-------------------------------------------------------------------------------
Interest 424
-------------------------------------------------------------------------------
Total investment income 1,942,651
-------------------------------------------------------------------------------
EXPENSES:
Advisory fees 526,762
-------------------------------------------------------------------------------
Administrative services fee 115,338
-------------------------------------------------------------------------------
Custodian fees 29,825
-------------------------------------------------------------------------------
Transfer agent fees 1,046
-------------------------------------------------------------------------------
Trustees' fees 1,670
-------------------------------------------------------------------------------
Printing 56,338
-------------------------------------------------------------------------------
Other 25,943
-------------------------------------------------------------------------------
Total expenses 756,922
-------------------------------------------------------------------------------
Net investment income 1,185,729
-------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND
FOREIGN CURRENCIES
Net realized gain from:
Investment securities 17,735,955
-------------------------------------------------------------------------------
Foreign currencies 24,323
-------------------------------------------------------------------------------
17,760,278
-------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (18,865,560)
-------------------------------------------------------------------------------
Foreign currencies (8,411)
-------------------------------------------------------------------------------
(18,873,971)
-------------------------------------------------------------------------------
Net gain (loss) on investment securities and foreign currencies (1,113,693)
-------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 72,036
===============================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
165
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,185,729 $ (468,914)
-----------------------------------------------------------------------------
Net realized gain from investment securities and
foreign currencies 17,760,278 21,064,128
-----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (18,873,971) 36,865,952
-----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 72,036 57,461,166
-----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (15,618,065)
-----------------------------------------------------------------------------
Share transactions--net (3,140,287) (2,874,672)
-----------------------------------------------------------------------------
Net increase (decrease) in net assets (3,068,251) 38,968,429
-----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 108,427,764 69,459,335
-----------------------------------------------------------------------------
End of period $105,359,513 $108,427,764
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 40,942,513 $ 44,082,800
-----------------------------------------------------------------------------
Undistributed net investment income 1,185,729 --
-----------------------------------------------------------------------------
Undistributed net realized gain from investment
securities and foreign currencies 29,223,569 11,463,291
-----------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 34,007,702 52,881,673
-----------------------------------------------------------------------------
$105,359,513 $108,427,764
=============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Telecommunications and Technology Fund (the "Fund"), (formerly named
the GT Global Variable Telecommunications Fund), is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is long-term
growth of capital.
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 preparation 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 as of the close of
the customary trading session 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 as of
the close of the customary trading session 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 Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of
166 AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
<PAGE>
determining net asset value per share, futures and option contracts
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. 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 NYSE. 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
customary trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the annual rate of 1.00% of
the Fund's average daily net assets.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $115,338 of which AIM retained $24,863 for accounting
services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,764
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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, 2000 was $63,959,154 and $66,114,552, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $37,092,678
--------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,076,582)
--------------------------------------------------------------------------
Net unrealized appreciation of investment securities $34,016,096
==========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND 167
<PAGE>
NOTE 6 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
---------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Sold 455,842 $ 15,592,700 6,650,710 $ 148,837,352
------------------------------------------------------------------------------
Issued as reinvestment of
dividends -- -- 763,720 15,618,065
------------------------------------------------------------------------------
Reacquired (570,760) (18,732,987) (7,487,234) (167,330,089)
------------------------------------------------------------------------------
(114,918) $ (3,140,287) (72,804) $ (2,874,672)
==============================================================================
</TABLE>
NOTE 7 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------
2000 1999 1998 1997 1996 1995
---------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 32.96 $ 20.66 $ 18.40 $ 18.14 $ 16.87 $ 13.98
-----------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) 0.37 (0.14) (0.01) (0.02) (0.05) 0.02
-----------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.15) 18.46 3.99 2.59 3.31 3.26
-----------------------------------------------------------------------------------------
Total from investment
operations 0.22 18.32 3.98 2.57 3.26 3.28
-----------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- -- -- -- (0.02) (0.03)
-----------------------------------------------------------------------------------------
Distributions from net
realized gains -- (6.02) (1.72) (2.31) (1.97) (0.36)
-----------------------------------------------------------------------------------------
Total distributions -- (6.02) (1.72) (2.31) (1.99) (0.39)
-----------------------------------------------------------------------------------------
Net asset value, end of
period $ 33.18 $ 32.96 $ 20.66 $ 18.40 $ 18.14 $ 16.87
=========================================================================================
Total return(a) 0.67% 106.52% 22.11% 14.56% 19.34% 23.66%
=========================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $105,360 $108,428 $69,459 $68,186 $63,258 $50,778
=========================================================================================
Ratio of expenses to
average net assets
with fee waivers 1.44%(b) 1.27% 1.17% 1.11% 1.12% 1.20%
-----------------------------------------------------------------------------------------
without fee waivers 1.44%(b) 1.27% 1.18% 1.16% 1.17% 1.26%
=========================================================================================
Ratio of interest
expense to average net
assets -- 0.01% 0.01% -- -- --
=========================================================================================
Ratio of net investment
income (loss) to
average net assets 2.25%(b) (0.62)% (0.04)% (0.10)% (0.26)% 0.16%
=========================================================================================
Portfolio turnover rate 63% 124% 73% 91% 77% 70%
=========================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $106,062,593.
168 AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Diversified Income Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund so that it is
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 2,692,442 86,309 320,685
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 2,598,639 142,777 358,020
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 2,585,923 183,324 330,189
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 2,579,593 122,016 397,827
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 2,529,339 168,336 401,761
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 2,580,424 124,721 394,291
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 2,479,229 211,303 408,904
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 2,505,624 189,803 404,009
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 2,506,633 184,979 407,824
(5) Approval of changing the Investment
Objective so that it is Non-
Fundamental........................ 2,503,307 191,474 404,655
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 2,787,379 40,460 271,597
</TABLE>
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND 169
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
AIM V.I. VALUE FUND
FUND WEATHERS VOLATILE MARKET
HOW DID AIM V.I. VALUE FUND PERFORM OVER IN THIS ENVIRONMENT, | at good prices were difficult to find over
THE REPORTING PERIOD? WE TENDED TO FOCUS MORE ON | the past few months. In this environment,
AIM V.I. Value Fund reported flat results EARNINGS GROWTH. | we tended to focus more on earnings
for the six months ended June 30, 2000, _________________________________________| growth.
with a -0.27% return. The fund's To concentrate on our best-performing
performance was in line with that of its WHAT WERE MARKET CONDITIONS LIKE companies, we kept the number of holdings
benchmark, the S&P 500, which produced a DURING THE PAST SIX MONTHS? at about 50. The fund's major sectors
return of -0.43% during the same time The past six months saw extreme market continued to be broadcasting, technology,
frame. volatility. During the first three months retail and finance.
While the fund and its benchmark were of 2000, market indexes such as the Dow
both relatively flat on a six-month basis, and the Nasdaq rose to new heights in a BESIDES MARKET VOLATILITY, WHAT OTHER
AIM V.I. Value Fund beat the S&P 500's rally dominated by technology stocks. But FACTORS AFFECTED FUND PERFORMANCE?
performance over the year ended June 30, near the end of March, market sentiment Our holdings in cable TV hurt performance
2000. The fund reported average annual soured as investors worried whether tech in the second quarter of 2000. Cable-TV
total returns of 13.20%, compared to the stocks were overpriced. A sharp sell-off stocks such as fund holdings Comcast and
7.24% return of the S&P 500. in the technology sector ensued, Cox Communications took a hit near the end
particularly for Internet companies with of the reporting period because of
no earnings. concerns over cash-flow growth and
Interest-rate concerns also roiled the competition from satellite companies.
FUND PERFORMANCE markets during the reporting period. The Even though short-term performance
Federal Reserve Board (the Fed) continued disappointed, we believe that the long-
AVERAGE ANNUAL TOTAL RETURNS to raise interest rates in an effort to term prospects for these firms and cable
slow the economy and prevent inflation. stocks in general are strong, especially
As of 6/30/00 In May, the Fed raised the federal funds as cable companies enter the telephone
rate to 6.50%, its highest level in nine business.
------------------------------------------ years. Since June 1999, the Fed has In addition, the fund was under-
Inception (5/5/93) 21.26% increased interest rates six times for a weighted in health-care stocks,
------------------------------------------ total of 1.75%. At its June 2000 meeting, particularly drug manufacturers, an area
5 years 21.82 the Fed chose to leave rates unchanged but that performed well during the past six
------------------------------------------ hinted that more increases may occur later months. We were cautious about this
1 year 13.20 in the summer. industry because of political risks:
For all the intense market activity of Congress and President Clinton continue
RESULTS OF A $10,000 INVESTMENT the past six months, the S&P 500 ended the to dicker over how to inject a Medicare
period flat, with the Dow down 8.44% and drug benefit into the current system. In
5/5/93-6/30/00 the Nasdaq down 2.54%. addition, drug companies face increasing
pressure from consumers to lower costs.
AIM V.I. Value Fund......... $39,718 HOW DID YOU MANAGE THE FUND DURING
S&P 500 Index............... $38,261 THESE CONDITIONS? WHAT STOCKS PERFORMED WELL FOR
Volatility hurt the fund's performance THE FUND?
Index's performance figures are for the during the second quarter of 2000. The Our semiconductor holdings such as Analog
period 4/30/93 through 6/30/00. Past fund invests in companies with strong Devices and Applied Materials benefited
performance cannot guarantee comparable earnings growth and reasonable stock from strong demand for computer chips,
future results. MARKET VOLATILITY CAN prices; however, good companies selling increased earnings and rising stock
SIGNIFICANTLY IMPACT SHORT-TERM prices. Cellular-phone maker Nokia and
PERFORMANCE. RESULTS OF AN INVESTMENT mobile-phone service provider Nextel also
MADE TODAY MAY DIFFER SUBSTANTIALLY reported excellent earnings, propelled by
FROM THE HISTORICAL PERFORMANCE SHOWN.
170 AIM V.I. Value Fund
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEMIANNUAL REPORT/MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
TOP 10 HOLDINGS TOP 10 INDUSTRIES
------------------------------------------ 1. Broadcasting (Television, Radio
1. Comcast Corp.-Class A 5.95% & Cable) 10.16%
------------------------------------------ ------------------------------------------
2. Nextel Communications, Inc.- 2. Computers (Hardware) 8.19
Class A 5.60 ------------------------------------------
------------------------------------------ 3. Communications Equipment 7.12
3. Nokia Oyj-ADR (Finland) 4.89 ------------------------------------------
------------------------------------------ 4. Retail (General Merchandise) 6.35
4. Target Corp. 4.38 ------------------------------------------
------------------------------------------ 5. Telecommunications (Cellular/
5. Cox Communications, Inc.-Class A 4.21 Wireless) 5.60
------------------------------------------ ------------------------------------------
6. Tyco International Ltd. (Bermuda)3.89 6. Electronics (Semiconductors) 4.61
------------------------------------------ ------------------------------------------
7. Morgan Stanley Dean Witter & Co. 3.47 7. Investment Banking/Brokerage 4.21
------------------------------------------ ------------------------------------------
8. Apple Computer, Inc. 3.45 8. Equipment (Semiconductor) 4.03
------------------------------------------ ------------------------------------------
9. Analog Devices, Inc. 2.93 9. Manufacturing (Diversified) 3.89
------------------------------------------ ------------------------------------------
10. First Data Corp. 2.92 10. Services (Data Processing) 3.68
------------------------------------------ ------------------------------------------
The fund's portfolio composition is subject to change, and there is no assurance that the fund will continue to hold any
particular security.
THE NEAR-TERM OUTLOOK FOR STOCKS | vindicating the company. The diversified ------------------------------------------
COULD DEPEND TO A LARGE EXTENT | corporation has interests in electronics,
ON THE FED'S ABILITY TO BRING THE | plastics, valves and pipes, and fire and The performance figures shown represent
ECONOMY TO A "SOFT LANDING." | security products. AIM V.I. Value Fund; they are not intended
________________________________________| to reflect actual annuity values, and they
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM? do not reflect charges at the separate-
The near-term outlook for stocks could account level which (if applied) would
depend to a large extent on the Fed's lower the performance results.
the explosive growth of the wireless- ability to bring the economy to a "soft
telecommunications market. landing." There are signs that the economy The fund's performance figures are
We also continued to hold Target could be slowing. Consequently, the Fed historical, and they reflect the
because the company shows strong earnings may wind down its tightening cycle, reinvestment of distributions and changes
growth, and its stock is selling at a although the central bank could approve in net asset value.
reasonable price. Formerly Dayton Hudson, one or two more rate hikes in the months
the company changed its name in January to ahead. If the Fed succeeds in slowing The fund's investment return and principal
Target. We anticipate that the name change economic growth to a more sustainable rate value will fluctuate, so fund shares, when
will benefit the stock as more investors and in keeping inflation under control, it redeemed, may be worth more or less than
connect the stock name with the successful could prolong the current record economic their original cost.
retailer. expansion. Such an environment could prove
Another long-time fund holding, Tyco favorable for stocks. The unmanaged Dow Jones Industrial Average
International, continues to show earnings However, uncertainty over the Fed's (the Dow) is a price-weighted average of
growth. After the end of the reporting actions and other factors could perpetuate 30 actively traded primarily industrial
period, its stock price jumped on news the volatility that has characterized stocks.
that the Securities and Exchange markets in recent months. In such an
Commission had dropped its inquiry into environment, investors would be well The unmanaged National Association of
Tyco's accounting practices, essentially advised to take a long-term perspective Securities Dealers Automated Quotation
on their investment. System Composite Index (the Nasdaq) is a
market-value-weighted index comprising all
domestic and non-U.S. based common stocks
listed on the Nasdaq system. It includes
more than 5,000 companies, and it is often
considered representative of the small and
medium-sized company stock universe. While
it includes many small and mid-sized
company stocks, large capitalization
companies tend to dominate the index.
The unmanaged Standard & Poor's Composite
Index of 500 Stocks (the S&P 500)
represents the performance of the stock
market.
An investment cannot be made in an index.
Index results include reinvested dividends.
</TABLE>
AIM V.I. VALUE FUND
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 75.46%
BANKS (MONEY CENTER) - 1.73%
Chase Manhattan Corp. (The) 1,065,000 $ 49,056,562
--------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 10.16%
Comcast Corp. - Class A(a) 4,170,000 168,885,000
--------------------------------------------------------------------------
Cox Communications, Inc. - Class A(a) 2,624,000 119,556,000
--------------------------------------------------------------------------
288,441,000
--------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 8.19%
Apple Computer, Inc.(a) 1,870,000 97,941,250
--------------------------------------------------------------------------
Dell Computer Corp.(a) 1,191,700 58,765,706
--------------------------------------------------------------------------
Gateway, Inc.(a) 693,100 39,333,425
--------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 401,000 36,465,937
--------------------------------------------------------------------------
232,506,318
--------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.35%
EMC Corp.(a) 107,000 8,232,312
--------------------------------------------------------------------------
Lexmark International Group, Inc. - Class A(a) 871,700 58,621,825
--------------------------------------------------------------------------
66,854,137
--------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 1.87%
At Home Corp. - Series A(a) 1,500,000 31,125,000
--------------------------------------------------------------------------
Citrix Systems, Inc.(a) 188,000 3,560,250
--------------------------------------------------------------------------
Oracle Corp.(a) 145,000 12,189,062
--------------------------------------------------------------------------
Unisys Corp.(a) 428,000 6,232,750
--------------------------------------------------------------------------
53,107,062
--------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.74%
Solectron Corp.(a) 505,000 21,146,875
--------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 3.39%
Analog Devices, Inc.(a) 1,096,200 83,311,200
--------------------------------------------------------------------------
Texas Instruments Inc. 187,000 12,844,562
--------------------------------------------------------------------------
96,155,762
--------------------------------------------------------------------------
ENTERTAINMENT - 0.12%
Time Warner Inc. 45,700 3,473,200
--------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 4.03%
Applied Materials, Inc.(a) 807,100 73,143,438
--------------------------------------------------------------------------
Teradyne, Inc.(a) 562,300 41,329,050
--------------------------------------------------------------------------
114,472,488
--------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 2.77%
American Express Co. 753,000 39,250,125
--------------------------------------------------------------------------
Citigroup Inc. 652,000 39,283,000
--------------------------------------------------------------------------
78,533,125
--------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DIVERSIFIED) - 1.41%
Johnson & Johnson 393,300 $ 40,067,438
-----------------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR
PHARMACEUTICALS) - 2.29%
Pfizer Inc. 1,356,600 65,116,800
-----------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES) - 1.97%
Guidant Corp.(a) 1,133,000 56,083,500
-----------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 1.11%
Colgate-Palmolive Co. 110,000 6,586,250
-----------------------------------------------------------------------------
Kimberly-Clark Corp. 434,000 24,900,750
-----------------------------------------------------------------------------
31,487,000
-----------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 2.78%
American International Group, Inc. 632,000 74,260,000
-----------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 85,000 4,754,688
-----------------------------------------------------------------------------
79,014,688
-----------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 4.21%
Merrill Lynch & Co., Inc. 184,000 21,160,000
-----------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 1,183,000 98,484,750
-----------------------------------------------------------------------------
119,644,750
-----------------------------------------------------------------------------
NATURAL GAS - 1.52%
Williams Cos., Inc. (The) 1,038,000 43,271,625
-----------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.38%
Schlumberger Ltd. 145,000 10,820,625
-----------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.25%
Weyerhaeuser Co. 162,000 6,966,000
-----------------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 0.36%
Eastman Kodak Co. 172,600 10,269,700
-----------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.06%
Lowe's Cos., Inc. 39,500 1,621,969
-----------------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 2.11%
Best Buy Co., Inc.(a) 946,000 59,834,500
-----------------------------------------------------------------------------
RETAIL (DRUG STORES) - 1.83%
Walgreen Co. 1,618,000 52,079,375
-----------------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 2.38%
Kroger Co. (The)(a) 1,108,000 24,445,250
-----------------------------------------------------------------------------
Safeway Inc.(a) 956,000 43,139,500
-----------------------------------------------------------------------------
67,584,750
-----------------------------------------------------------------------------
</TABLE>
172 AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL MERCHANDISE) - 6.35%
Costco Wholesale Corp.(a) 1,700,000 $ 56,100,000
-------------------------------------------------------------------------------
Target Corp. 2,144,000 124,352,000
-------------------------------------------------------------------------------
180,452,000
-------------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.82%
Omnicom Group Inc. 581,000 51,745,313
-------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 3.68%
Automatic Data Processing, Inc. 400,000 21,425,000
-------------------------------------------------------------------------------
First Data Corp. 1,672,000 82,973,000
-------------------------------------------------------------------------------
104,398,000
-------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 5.60%
Nextel Communications, Inc. - Class A(a) 2,600,000 159,087,500
-------------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $1,742,846,294) 2,143,292,062
-------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER
EQUITY INTERESTS - 12.32%
BERMUDA - 3.89%
Tyco International Ltd. (Manufacturing - Diversified) 2,330,000 110,383,750
-------------------------------------------------------------------------------
CANADA - 3.54%
360networks Inc. (Telecommunications - Long
Distance)(a) 162,300 2,475,075
-------------------------------------------------------------------------------
Celestica Inc. (Electronics - Semiconductors)(a) 701,000 34,787,125
-------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 927,500 63,301,875
-------------------------------------------------------------------------------
100,564,075
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINLAND - 4.89%
Nokia Oyj - ADR (Communications Equipment) 2,783,000 $ 138,976,063
--------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $195,746,424) 349,923,888
--------------------------------------------------------------------------
MONEY MARKET FUNDS - 12.62%
STIC Liquid Assets Portfolio(b) 179,242,405 179,242,405
--------------------------------------------------------------------------
STIC Prime Portfolio(b) 179,242,405 179,242,405
--------------------------------------------------------------------------
Total Money Market Funds
(Cost $358,484,810) 358,484,810
--------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.40%
(Cost $2,297,077,528) 2,851,700,760
--------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (0.40%) (11,533,376)
--------------------------------------------------------------------------
NET ASSETS - 100.00% $2,840,167,384
==========================================================================
</TABLE>
Investment Abbreviation:
ADR - American Depositary Receipt
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
AIM V.I. VALUE FUND 173
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $2,297,077,528) $2,851,700,760
------------------------------------------------------------------------
Receivables for:
Investments sold 50,005,091
------------------------------------------------------------------------
Fund shares sold 4,117,476
------------------------------------------------------------------------
Dividends 1,937,380
------------------------------------------------------------------------
Investment for deferred compensation plan 39,724
------------------------------------------------------------------------
Other assets 124,235
------------------------------------------------------------------------
Total assets 2,907,924,666
------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 60,570,394
------------------------------------------------------------------------
Fund shares reacquired 485,515
------------------------------------------------------------------------
Foreign currency contracts - closed 1,877,130
------------------------------------------------------------------------
Foreign currency contracts outstanding 1,519,487
------------------------------------------------------------------------
Deferred compensation plan 39,724
------------------------------------------------------------------------
Accrued advisory fees 1,394,233
------------------------------------------------------------------------
Accrued administrative services fees 1,782,203
------------------------------------------------------------------------
Accrued trustees' fees 3,119
------------------------------------------------------------------------
Accrued operating expenses 85,477
------------------------------------------------------------------------
Total liabilities 67,757,282
------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,840,167,384
========================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 85,000,452
========================================================================
Net asset value, offering and redemption price per share $ 33.41
========================================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $103,785) $ 11,496,234
-----------------------------------------------------------------------------
EXPENSES:
Advisory fees 7,923,757
-----------------------------------------------------------------------------
Administrative services fee 2,581,721
-----------------------------------------------------------------------------
Custodian fees 119,068
-----------------------------------------------------------------------------
Trustees' fees 3,840
-----------------------------------------------------------------------------
Other 292,912
-----------------------------------------------------------------------------
Total expenses 10,921,298
-----------------------------------------------------------------------------
Less: Expenses paid indirectly (4,380)
-----------------------------------------------------------------------------
Net expenses 10,916,918
-----------------------------------------------------------------------------
Net investment income 579,316
-----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FOREIGN CURRENCY CONTRACTS AND OPTION
CONTRACTS
Net realized gain from:
Investment securities 112,298,575
-----------------------------------------------------------------------------
Foreign currency contracts 14,369,233
-----------------------------------------------------------------------------
Option contracts written 184,917
-----------------------------------------------------------------------------
126,852,725
-----------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (131,660,860)
-----------------------------------------------------------------------------
Foreign currencies (69)
-----------------------------------------------------------------------------
Foreign currency contracts (7,198,624)
-----------------------------------------------------------------------------
(138,859,553)
-----------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign currencies,
foreign currency contracts and option contracts (12,006,828)
-----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $ (11,427,512)
=============================================================================
</TABLE>
See Notes to Financial Statements.
174 AIM V.I. VALUE FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, 2000 1999
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 579,316 $ 3,440,737
------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, foreign currency
contracts and option contracts 126,852,725 111,811,218
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies, foreign currency
contracts and option contracts (138,859,553) 360,547,238
------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (11,427,512) 475,799,193
------------------------------------------------------------------------------
Distributions to shareholders from net
investment income -- (6,235,364)
------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains -- (32,606,763)
------------------------------------------------------------------------------
Share transactions - net 468,228,325 725,025,960
------------------------------------------------------------------------------
Net increase in net assets 456,800,813 1,161,983,026
------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,383,366,571 1,221,383,545
------------------------------------------------------------------------------
End of period $2,840,167,384 $2,383,366,571
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $2,048,218,292 $1,579,989,967
------------------------------------------------------------------------------
Undistributed net investment income 3,962,918 3,383,602
------------------------------------------------------------------------------
Undistributed net realized gain from
investment securities, foreign currencies,
foreign currency contracts and option
contracts 234,882,834 108,030,109
------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies, foreign
currency contracts and option contracts 553,103,340 691,962,893
------------------------------------------------------------------------------
$2,840,167,384 $2,383,366,571
==============================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Value Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement
and Plan of Reorganization which was approved by shareholders of the Fund on
April 10, 2000. Effective May 1, 2000, pursuant to the Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be 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 Fund. 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 Fund's investment objective is to
achieve long-term growth of capital. Income is a secondary objective.
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 preparation 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 as of the close of
the customary trading session 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 as of
the close of the customary trading session 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 Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and option contracts
generally will be valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
AIM V.I. VALUE FUND 175
<PAGE>
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. 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 NYSE. 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
customary trading session of the NYSE which would 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 Trustees.
B. Securities Transactions and Investment Income - 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 on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. 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.
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 the 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.
Outstanding foreign currency contracts at June 30, 2000 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACT TO APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
09/29/00 CAD 92,300,000 $ 62,369,475 $ 62,542,020 $ (172,545)
08/28/00 EUR 97,850,000 92,326,752 93,583,251 (1,256,499)
10/03/00 EUR 54,500,000 52,148,700 52,239,143 (90,443)
-------------------------------------------------------------------------
244,650,000 $206,844,927 $208,364,414 $(1,519,487)
=========================================================================
</TABLE>
G. Covered Call Options - The Fund may write call options, 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 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust 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 the 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 with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $2,581,721 of which AIM retained $81,468 for
accounting services provided.
The Trust 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 trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $3,464
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
176 AIM V.I. VALUE FUND
<PAGE>
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $4,380 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $4,380.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, 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 Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 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, 2000, 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 by the Fund during the six months ended June
30, 2000 was $1,163,996,153 and $776,686,706, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $607,448,954
---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (54,997,717)
---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $552,451,237
===========================================================================
</TABLE>
Cost of investments for tax purposes is $2,299,249,523.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
--------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Beginning of period -- $ --
----------------------------------------------------------------------------
Written 900 184,917
----------------------------------------------------------------------------
Expired (900) (184,917)
============================================================================
End of period -- $ --
============================================================================
</TABLE>
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold 17,185,455 $ 581,596,937 30,095,501 $ 884,324,432
-----------------------------------------------------------------------------
Issued as reinvestment
of dividends -- -- 1,227,239 38,842,126
-----------------------------------------------------------------------------
Reacquired (3,330,806) (113,368,612) (6,712,560) (198,140,598)
-----------------------------------------------------------------------------
13,854,649 $ 468,228,325 24,610,180 $ 725,025,960
=============================================================================
</TABLE>
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED YEAR ENDED
JUNE 30, ------------------------------------------ DECEMBER 31, JANUARY 31,
2000(a) 1999(a) 1998 1997 1996 1995 1995
---------- ---------- ---------- -------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 33.50 $ 26.25 $ 20.83 $ 17.48 $ 16.11 $ 11.83 $ 12.17
---------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.01 0.06 0.09 0.08 0.30 0.11 0.10
---------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.10) 7.76 6.59 4.05 2.09 4.18 (0.35)
---------------------------------------------------------------------------------------------------------------
Total from investment
operations (0.09) 7.82 6.68 4.13 2.39 4.29 (0.25)
---------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income -- (0.09) (0.13) (0.19) (0.10) (0.01) (0.09)
---------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.48) (1.13) (0.59) (0.92) -- --
---------------------------------------------------------------------------------------------------------------
Total distributions -- (0.57) (1.26) (0.78) (1.02) (0.01) (0.09)
---------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 33.41 $ 33.50 $ 26.25 $ 20.83 $ 17.48 $ 16.11 $ 11.83
===============================================================================================================
Total return(b) (0.27)% 29.90% 32.41% 23.69% 15.02% 36.25% (2.03)%
===============================================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $2,840,167 $2,383,367 $1,221,384 $690,841 $369,735 $257,212 $109,257
===============================================================================================================
Ratio of expenses to
average net assets 0.84%(c) 0.76% 0.66% 0.70% 0.73% 0.75%(d) 0.82%
===============================================================================================================
Ratio of net investment
income to average net
assets 0.04%(c) 0.20% 0.68% 1.05% 2.00% 1.11%(d) 1.17%
===============================================================================================================
Portfolio turnover rate 32% 62% 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 $2,629,984,948.
(d) Annualized.
AIM V.I. VALUE FUND 177
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Value Fund (the "Fund"), a
portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized
as AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was
held on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S.
Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
------------------------------------- ----------- --------- -----------
<C> <S> <C> <C> <C>
(1)* Charles T. Bauer................... 336,558,177 N/A 9,129,703
Bruce L. Crockett.................. 337,513,648 N/A 8,174,232
Owen Daly II....................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ............... 337,481,093 N/A 8,206,787
Jack M. Fields..................... 337,574,973 N/A 8,112,907
Carl Frischling.................... 337,177,860 N/A 8,510,020
Robert H. Graham................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis................. 337,262,043 N/A 8,425,837
Lewis F. Pennock................... 337,440,897 N/A 8,246,983
Louis S. Sklar..................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan
of Reorganization which provided
for the reorganization of AIM
Variable Insurance Funds, Inc. as a
Delaware business trust............ 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment
Advisory Agreement................. 64,733,758 2,205,729 5,113,810
(4)(a) Change to Fundamental Restriction
on Issuer Diversification.......... 62,782,614 2,813,455 6,457,228
(4)(b) Change to Fundamental Restriction
on Borrowing Money and Issuing
Senior Securities.................. 62,191,461 3,539,461 6,322,375
(4)(c) Change to Fundamental Restriction
on Underwriting Securities......... 63,471,362 2,702,293 5,879,642
(4)(d) Change to Fundamental Restriction
on Industry Concentration.......... 63,583,770 2,670,769 5,798,758
(4)(e) Change to Fundamental Restriction
on Purchasing or Selling Real
Estate............................. 62,652,287 3,322,826 6,078,184
(4)(f) Change to Fundamental Restriction
on Purchasing or Selling
Commodities........................ 62,555,004 3,535,659 5,962,634
(4)(g) Change to Fundamental Restriction
on Making Loans.................... 62,377,925 3,654,650 6,020,722
(4)(h) Elimination of Fundamental
Restriction on Investing for the
Purpose of Control................. 62,190,684 3,602,146 6,260,467
(5) Approval of changing the Investment
Objective and Making it Non-
Fundamental........................ 61,885,484 3,747,177 6,420,636
(6) Ratification of the selection of
Tait, Weller & Baker as Independent
Accountants of the Fund............ 66,486,391 986,590 4,580,316
</TABLE>
------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
178 AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TRUSTEES, OFFICERS, AND BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
OTHER SERVICE PROVIDERS Charles T. Bauer
OF AIM VARIABLE INSURANCE Director and Chairman Charles T. Bauer 11 Greenway Plaza
FUNDS, INC. A I M Management Group Inc. Chairman Suite 100
Houston, TX 77046
Bruce L. Crockett Robert H. Graham (800) 347-1919
Director President
ACE Limited; INVESTMENT ADVISOR
Formerly Director, President, and Carol F. Relihan
Chief Executive Officer Senior Vice President and A I M Advisors, Inc.
COMSAT Corporation Secretary 11 Greenway Plaza
Suite 100
Owen Daly II Gary T. Crum Houston, TX 77046
Formerly Director Senior Vice President
Cortland Trust Inc. TRANSFER AGENT AND CUSTODIAN
Dana R. Sutton
Edward K. Dunn Jr. Vice President and State Street Bank and Trust Company
Chairman, Mercantile Mortgage Corp.; Treasurer 225 Franklin Street
Formerly Vice Chairman, President Boston, MA 02110
and Chief Operating Officer, Robert G. Alley
Mercantile-Safe Deposit & Trust Co.; Vice President COUNSEL TO THE FUNDS
and 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. and Twenty First Melville B. Cox Washington, D.C. 20036
Century Group, Inc.; Vice President
Formerly, Member of the COUNSEL TO THE TRUSTEES
U.S. House of Representatives Karen Dunn Kelley
Vice President Kramer, Levin, Naftalis & Frankel LLP
Carl Frischling 919 Third Avenue
Partner Edgar M. Larsen New York, NY 10022
Kramer, Levin, Naftalis & Frankel LLP Vice President
DISTRIBUTOR
Robert H. Graham Mary J. Benson
Director, President and Chief Assistant Vice President A I M Distributors, Inc.
Executive Officer and Assistant Treasurer 11 Greenway Plaza
A I M Management Group Inc. Suite 100
Sheri Morris Houston, TX 77046
Prema Mathai-Davis Assistant Vice President
Formerly, Chief Executive Officer, and Assistant Treasurer
YMCA of the U.S.A.
Renee A. Friedli
Lewis F. Pennock Assistant Secretary
Attorney
P. Michelle Grace
Louis S. Sklar Assistant Secretary
Executive Vice President, Development
and Operations, Nancy L. Martin
Hines Interests Assistant Secretary
Limited Partnership
Ofelia M. Mayo
Assistant Secretary
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
</TABLE>
