SEMIANNUAL REPORT
June 30, 1996
INVESCO
VARIABLE
INVESTMENT
FUNDS,
INC.
VIF - Industrial Income Portfolio
VIF - Total Return Portfolio
VIF - High Yield Portfolio
VIF - Utilities Portfolio
INVESCO FUNDS
<PAGE>
Economic Overview July 1996
The U.S. economy is growing stronger. There had been a sharp drop-off in
the Gross Domestic Product growth rate during the last quarter of 1995. The
Federal Reserve Board helped kick-start the expansion by cutting short-term
interest rates twice in the winter of 1995-1996. Since then, statistics for
factory orders, inventories, housing sales, and U.S. exports all point to
renewed vigor.
First quarter 1996 growth in GDP was estimated at an annualized rate of
2.2%. During the second quarter, the economy picked up speed; GDP expanded by
4.2%. According to the Bureau of Labor Statistics, about 230,000 new jobs were
created in June 1996. With unemployment running at a relatively modest 5.3%,
inflation is considered a threat by some economists. Hence, there is the
possibility that the central bank will tighten credit by raising short-term
interest rates, in the event the economy does appear to be overheating.
Given this potential for higher rates, securities investors have pulled
back slightly, leading to intensified volatility in the securities markets. The
S&P 500 had advanced by 9.60% for the five months ended 5/31/96, only to turn in
a flat performance in June. Bond prices dropped throughout the first six months
of 1996 in response to the overall uncertainty. For the six months ended
6/30/96, the Lehman Government/Corporate Bond Index had a total return of
- -1.88%.(1,2)
Complicating matters, the past year has seen cyclic market shifts. In
1995, equity investors generally favored large- capitalization companies;
small-cap stocks underperformed the broad market indexes. In early 1996,
however, expectations of a continued moderate economic expansion made the
earnings growth rates of smaller-cap firms more attractive on a relative basis.
More recently, concerns about consumer debt and confidence buffeted the
small-caps, particularly in the technology sector.
Individual performance by equity sectors varied widely over the first half
of 1996. Among the stronger industries were heavy equipment, chemicals,
securities brokers, airlines, and consumer cyclicals such as apparel retailers.
Underperformers included utilities, broadcasting, factory equipment, and
insurance.
The market environment has been even more challenging for bond investors.
Over the past 18 months, the fixed-income markets experienced two distinct
phases. The first began in 1995 with a bond rally that ran through January 1996.
Price advances were fueled by moderate economic growth and low inflation. For
all of 1995, the broad fixed-income market had a total return of 19.24%, as
measured by the Lehman Government/Corporate Bond Index.(1,2)
The second fixed-income market phase was initiated in February of this
year. The environment shifted to one of stronger economic growth, with the
concomitant potential for upward spirals in wages and prices; mild indications
have already appeared. Fixed-income investors responded to the positive economic
news by sending prices tumbling.
<PAGE>
Since 1994 the Federal Reserve Board has actively manipulated short-term
rates, seeking to maintain economic expansion without sparking inflation.
Recently, there has been some indication that the Fed may allow a slightly
higher level of inflation before tightening credit availability; however, their
overall strategy is unlikely to alter in the near-term, given an impending
presidential election and the recent reappointment of Alan Greenspan as Fed
chairman.
In 1995, the fixed-income market advanced, though not as strongly as
equities. Since then, with interest rates rising, bond prices have shown a
corresponding weakness.
INVESCO Variable Investment Funds, Inc.
The line graphs on the following pages illustrate, for the period from
inception through 6/30/96, the value of a $10,000 investment in each of the
INVESCO Variable Investment Funds, plus reinvested dividends and capital gain
distributions. The charts and other total return figures cited reflect the
funds' operating expenses, but the indexes do not have expenses, which would, of
course, have lowered their performance. (Past performance is not a guarantee of
future results.)(1,2)
VIF-Industrial Income Portfolio
For the one-year period ended 6/30/96, VIF-Industrial Income Portfolio
achieved a total return of 26.54%. During the same period, the S&P 500 had a
total return of 25.93%, and the Lehman Government/Corporate Bond index had a
total return of 4.66%. (Of course, past performance is not a guarantee of future
results.)(1,2)
For much of 1995, our equity strategy focused on specific themes: bets on
sectors and individual companies based on their ability to show above average
earnings despite the macro-economic environment, plus fundamental factors such
as leading market positions; quality of management; strong balance sheets; and
high level of liquidity.
Holdings continue to be well-diversified across the various market
sectors. Given the strong economic growth during the first half of 1996, the
fund's equity investments were overweighted on cyclicals. We enjoyed strong
results from industries such as retail and technology. Office services,
pharmaceuticals, and energy stocks also produced gains. (Of course, past
performance is not a guarantee of future results.)
Industrial Income Portfolio
Average Annual Total Return
as of 6/30/96(1)
1 year 26.54%
-----------------------------------
Since Inception (8/94) 21.66%
-----------------------------------
<PAGE>
In managing the fund's fixed-income holdings, our strategy has focused on
interest rate risk management. During the 1995 market advance, we restructured
the portfolio to take advantage of the generally positive market environment, by
lengthening bond duration. Duration is an expression of a bond's volatility --
generally speaking, longer duration reflects greater market risk. However, as
interest rates declined last year, bond prices concurrently rose, and the fund's
holdings appreciated in value. (Of course, past performance is not a guarantee
of future results.)
With evidence of a reviving economic expansion in February
1996, the market cycle shifted and interest rates began to rise. In
response to this change, we began to shorten duration.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in VIF-Industrial Income Portfolio to the value of a $10,000
investment in the S&P 500 Index and Lehman Government/Corporate Bond
Index, assuming in each case reinvestment of all dividends and capital
gain distributions, for the period from inception (8/10/94) through
6/30/96.
As this report was written, we had taken a neutral stance on interest
rates. Our goal is to maintain flexibility so that we may react promptly to the
key variables -- data on the leading economic indicators, corporate earnings,
potential action by the Fed, a shift in market sentiment, and other factors.
The present market environment also demands a heightened sensitivity to
credit quality. In our opinion, corporate bonds are now fully valued. Shifts in
the economy's momentum -- up or down -- will have considerable impact on
fixed-income obligations, particularly high yield corporates. Since 1994, we
have pursued special situations: corporations whose debt may enjoy a credit
upgrade due to improving fundamentals or other factors.
Fund Management
VIF-Industrial Income Portfolio is co-managed by two INVESCO senior vice
presidents. Charles P. Mayer is responsible for the equity side of the
portfolio. An industry veteran with 26 years of professional experience, he
earned an MBA from St. John's University and a BA from St. Peter's College.
Previously, Charlie was with Westinghouse Pension.
Donovan J. "Jerry" Paul serves as co-portfolio manager of the fund,
concentrating on fixed-income securities. Jerry began his investment career in
1976; before joining INVESCO, he worked for Stein, Roe & Farnham Inc. as well as
Quixote Investment Management. He earned an MBA from the University of Northern
Iowa, and a BBA from the University of Iowa. He is a Chartered Financial Analyst
and Certified Public Accountant.
VIF-Total Return Portfolio
While past performance is not a guarantee of future results, for the
one-year period ended 6/30/96, VIF-Total Return Portfolio achieved a total
return of 15.26%. During the same period, the S&P 500 had a total return of
25.93%, and the Lehman Government/Corporate Bond index had a total return of
4.66%.(1,2)
<PAGE>
Total Return Portfolio
Average Annual Total Return
as of 6/30/96(1)
1 year 15.26%
-----------------------------------
Since Inception (6/94) 13.93%
-----------------------------------
The fund's strategy is based on an asset allocation model which monitors
the spread between expected returns on stocks and the yield-to-maturity on
longer-term bonds. While past performance is not a guarantee of future results,
historically expected returns from stocks were about 3% greater than expected
returns from bonds. Therefore, the fund's normal asset mix is 60% stocks/40%
bonds. To the extent that the spread falls above its 3% long-term average,
equity securities become more attractive.
As of 6/30/96, common stocks represented 56% of the portfolio, with 37%
primarily invested in government and government agency bonds.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in VIF-Total Return Portfolio to the value of a $10,000
investment in the S&P 500 Index and Lehman Government/Corporate Bond
Index, assuming in each case reinvestment of all dividends and capital
gain distributions, for the period from inception (6/2/94) through
6/30/96.
Stock holdings generally reflect a high quality, value "bias" as a result
of the fund's relatively conservative stock selection discipline. The equity
profile is usually characterized by lower- than-market price/earnings,
price/book and debt/equity ratios. Stock selection emphasizes a bottom-up
process, focused on relative attractiveness of individual companies based on
factors such as historical versus expected earnings.
Fixed-income holdings are evaluated in light of interest rates relative to
underlying inflation. Extraordinarily high or low yields relative to normalized
inflation triggers adjustments to the duration of the fund's holdings. In
addition to evaluating overall yield levels, the corporate and mortgage sectors
of the fixed-income market are monitored for relative attractiveness. In recent
months, we have shortened duration in response to climbing interest rates.
Fund Management
VIF-Total Return Portfolio is managed by Edward C. Mitchell, president of
INVESCO Capital Management, Inc. He earned his MBA at the University of Colorado
and a BA from the University of Virginia. Mr. Mitchell began his investment
career in 1969. He is a Chartered Financial Analyst.
He is assisted by David S. Griffin, who began his investment career in
1982. Mr. Griffin holds an MBA from the College of William & Mary, as well as a
BA from Ohio Wesleyan University. He is a Chartered Financial Analyst.
<PAGE>
VIF-High Yield Portfolio
For the one-year period ended 6/30/96, VIF-High Yield Portfolio achieved a
total return of 13.42%. During the same period, the Merrill Lynch High Yield
Index had a total return of 9.39%. (Of course, past performance is not a
guarantee of future results.)(1,2)
High Yield Portfolio
Average Annual Total Return
as of 6/30/96(1)
1 year 13.42%
-----------------------------------
Since Inception (5/94) 11.05%
-----------------------------------
In managing the fund's fixed-income holdings, our strategy has focused on
interest rate risk management. During the 1995 market advance, we restructured
the portfolio to take advantage of the generally positive market environment, by
lengthening bond duration. Duration is an expression of a bond's volatility --
generally speaking, longer duration reflects greater market risk. However, as
interest rates declined last year, bond prices concurrently rose, and the fund's
holdings appreciated in value. (Of course, past performance is not a guarantee
of future results.)
Graph:
This line graph represents a comparison of the value of a $10,000
investment in VIF-High Yield Portfolio to the value of a $10,000
investment in the Merrill Lynch High Yield Master Index, assuming in each
case reinvestment of all dividends and capital gain distributions, for the
period from inception (5/27/94) through 6/30/96.
With evidence of a reviving economic expansion in February
1996, the market cycle shifted and interest rates began to rise. In
response to this change, we began to shorten duration.
As this report was written, we had taken a neutral stance on interest
rates. Our goal is to maintain flexibility so that we may react promptly to the
key variables data on the leading economic indicators, corporate earnings,
potential action by the Fed, a shift in market sentiment, and other factors.
The present market environment also demands a heightened sensitivity to
credit quality. In our opinion, corporate bonds are now fully valued. Shifts in
the economy's momentum "up or down" will have considerable impact on
fixed-income obligations, particularly high yield corporates. Since 1994, we
have pursued special situations: corporations whose debt may enjoy a credit
upgrade due to improving fundamentals or other factors.
Fund Management
VIF-High Yield Portfolio is managed by Donovan J. "Jerry" Paul. Jerry began
his investment career in 1976; before joining INVESCO, he worked for Stein, Roe
& Farnham Inc. as well as Quixote Investment Management. He earned an MBA from
the University of Northern Iowa, and a BBA from the University of Iowa. He is a
Chartered Financial Analyst and Certified Public Accountant.
<PAGE>
VIF-Utilities Portfolio
While past performance is not a guarantee of future results, for the
six-month period ended 6/30/96, VIF-Utilities Portfolio achieved a total return
of 8.03%. During the same period, the S&P 500 had a total return of 10.03%.(1,2)
Utilities stocks have been buffeted by the same winds which have rocked
bonds. After a strong year in 1995, the market was roiled by confusion over the
likely direction of economic growth and consequent interest rate moves. Electric
utilities, in particular, performed poorly during the first quarter of 1996.
Utilities Portfolio
Average Annual Total Return
as of 6/30/96(1)
1 year 16.85%
-----------------------------------
Since Inception (1/95) 11.75%
-----------------------------------
Despite the considerable market obstacles over the past six months,
Utilities Portfolio has readily outperformed the Dow Jones Utilities Index
(which declined 2.26% over the six months ended 6/30/96) and its competitors.
(Of course, past performance is not a guarantee of future results.)(1,2)
The fund achieved these results through extremely selective stock picks.
Industry highlights include electric and telephone utilities, which represent
over half of the portfolio, plus a strategic stake in energy stocks.
Graph:
This line graph represents a comparison of the value of a $10,000
investment in VIF-Utilities Portfolio to the value of a $10,000 investment
in the Dow Jones Utilities Index, assuming in each case reinvestment of
all dividends and capital gain distributions, for the period from
inception (1/1/95) through 6/30/96.
On a long-term basis, many of the electric utilities companies are less
attractive in terms of dividend and earnings growth potential. As a result, we
are focusing on low-cost producers with knowledgeable management. Going forward,
we do see appreciation opportunities from the electric utilities area.
Our weightings in telephone utilities and telecommunications firms have
shifted during the period, in response to the Telecommunications Act passed
early this year. Many of the larger firms which have dominated these industries
will see increasing downward pressure on revenue, market share and earnings as a
result of the Act. Smaller, nimbler firms, however, have an excellent
opportunity of rapid earnings growth as the monopolies break up; we are
positioning the fund to seek to benefit from this trend.
Our portfolio has further diversified by placing increased weight in
natural gas stocks, which have done well due to a very hard winter creating low
supply.
<PAGE>
Fund Management
VIF-Utilities Portfolio has been managed by Jeffrey Morris since 1996. He
is a Chartered Financial Analyst, and earned his BSBA from Colorado State
University. Jeff joined INVESCO in 1991.
(1) Total return assumes reinvestment of dividends and capital gain
distributions for the periods indicated. Investment return and principal
value will fluctuate so that, when redeemed, an investor's shares may be
worth more or less than when purchased.
(2) The S&P 500 is an unmanaged index considered representative of the
performance of the broad U.S. stock market. The Dow Jones Utilities Index
is an unmanaged index of utilities stocks. The Lehman Government/Corporate
Bond and Merrill Lynch High Yield Index are unmanaged indexes indicative
of the broad fixed-income and high yield markets, respectively.
<PAGE>
Statement of Investment Securities
June 30, 1996
UNAUDITED
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Country Shares, Units
Code if or Principal
Description Non US Amount Value
- -------------------------------------------------------------------------------------------
HIGH YIELD Portfolio
FIXED INCOME SECURITIES 80.91%
Corporate Bonds 80.91%
AEROSPACE & DEFENSE 2.62%
Greenwich Air Services, Sr Notes, 10.500%, 6/1/2006.... $100,000 $99,250
Howmet Corp, Sr Sub Notes^, 10.000%, 12/1/2003......... 100,000 105,250
----------
204,500
----------
AUTOMOBILE RELATED 1.83%
Collins & Aikman Products, Gtd Sr Sub Notes,
11.500%, 4/15/2006................................ 100,000 101,500
Venture Holdings Trust, Gtd Sr
Sub Notes, 9.750%, 4/1/2004....................... 50,000 41,000
----------
142,500
----------
BROADCASTING 12.83%
Allbritton Communications,
Sr Sub Deb, 11.500%, 8/15/2004.................... 100,000 101,750
Benedek Broadcasting, Sr
Secured Notes, 11.875%, 3/1/2005.................. 100,000 105,500
Benedek Communications, Sr Sub
Discount Step-Up Notes^
Zero Coupon^^, 5/15/2006............................ 250,000 125,625
Chancellor Broadcasting, Sr
Sub Notes, 9.375%, 10/1/2004........................ 100,000 94,250
EZ Communications, Gtd Sr Sub
Notes, 9.750%, 12/1/2005............................ 100,000 95,000
Granite Broadcasting, Sr Sub
Notes, 10.375%, 5/15/2005........................... 100,000 96,750
SFX Broadcasting, Sr Sub Notes^,
10.750%, 5/15/2006.................................. 150,000 149,250
Sullivan Broadcasting, Sr Sub
Notes, 10.250%, 12/15/2005.......................... 150,000 142,875
Telemundo Group, Sr Discount
Step-Up Notes, 7.000%,
2/15/2006........................................... 100,000 90,000
----------
1,001,000
----------
<PAGE>
CABLE TELEVISION 9.75%
Comcast Cable Partners Ltd, Sr
Discount Step-Up Deb
Zero Coupon^^, 11/15/2007........................... UK 200,000 115,500
Continental Cablevision, Sr Sub
Deb, 11.000%, 6/1/2007.............................. 100,000 113,247
Marcus Cable LP/Marcus Cable
Capital III Sr Deb, 11.875%,
10/1/2005........................................... 100,000 103,750
Sr Discount Step-Up Notes,
Zero Coupon^^, 12/15/2005........................... 100,000 61,250
UIH Australia/Pacific, Sr
Discount Step-Up Notes^
Zero Coupon^^, 5/15/2006............................ 250,000 130,625
United International Holdings,
Sr Secured Discount Notes
Zero Coupon, 11/15/1999............................. 100,000 65,500
Videotron Holdings PLC, Sr
Discount Step-Up Notes
Zero Coupon^^, 8/15/2005............................ UK 100,000 65,000
Wireless One, Sr Notes,
13.000%, 10/15/2003................................. 100,000 106,000
----------
760,872
----------
CHEMICALS 3.14%
NL Industries, Sr Secured
Discount Step-Up Notes
Zero Coupon^^, 10/15/2005........................... 50,000 39,000
Rexene Corp, Sr Notes, 11.750%,
12/1/2004........................................... 100,000 104,000
Texas Petrochemicals, Sr Sub
Notes^, 11.125%, 7/1/2006........................... 100,000 101,750
----------
244,750
----------
HEALTH CARE RELATED 1.35%
Tenet Healthcare, Sr Sub Notes,
10.125%, 3/1/2005................................... 100,000 105,500
----------
LEASING COMPANIES 1.32%
Alamo Rent-A-Car, Sr Notes,
11.750%, 1/31/2006.................................. 100,000 103,000
----------
MOTION PICTURES & TELEVISION 1.19%
Viacom Inc, Sub Deb, 8.000%,
7/7/2006............................................ 100,000 92,994
----------
OFFICE EQUIPMENT 1.21%
Dictaphone Corp, Gtd Sr Sub
Notes, 11.750%, 8/1/2005............................ 100,000 94,500
----------
<PAGE>
OIL & GAS RELATED 4.47%
Gulf Canada Resources Ltd,
Sr Sub Deb, 9.250%, 1/15/2004....................... CA 100,000 97,000
Mesa Operating, Gtd Sr Sub Notes,
10.625%, 7/1/2006................................... 150,000 152,438
TransTexas Gas, Gtd Sr Secured
Notes, 11.500%, 6/15/2002........................... 100,000 99,750
----------
349,188
----------
PAPER & PAPER PRODUCTS 9.60%
APP International Finance BV,
Gtd Secured Notes
11.750%, 10/1/2005.................................. SN 100,000 102,250
Buckeye Cellulose, Sr Sub
Notes, 9.250%, 9/15/2008............................ 100,000 99,500
Crown Paper, Sr Sub Notes,
11.000%, 9/1/2005................................... 100,000 95,000
Gaylord Container, Sr Sub
Discount Step-Up Deb
12.750%, 5/15/2005.................................. 100,000 105,250
Repap New Brunswick, 2nd Priority
Sr Secured Notes 10.625%, 4/15/2005.................... CA 50,000 47,125
SD Warren, Sr Sub Notes, Series B,
12.000%, 12/15/2004................................. 100,000 106,000
Stone Container, Sr Notes,
11.500%, 10/1/2004.................................. 100,000 101,000
Tembec Finance, Gtd Sr Notes,
9.875%, 9/30/2005................................... CA 100,000 93,000
----------
749,125
----------
PRINTING & PUBLISHING 1.17%
Hollinger International Publishing,
Gtd Sr Sub Notes 9.250%, 2/1/2006................... CA 100,000 91,750
----------
RECREATION PRODUCTS & SERVICES 4.10%
AMF Group, Sr Sub Discount
Step-Up Notes^ Zero Coupon^^,
3/15/2006........................................... 250,000 134,375
Six Flags Theme Parks, Sr Sub
Discount Step-Up Notes, Series A
Zero Coupon^^, 6/15/2005............................ 100,000 84,750
Trump Atlantic City Associates/
Trump Atlantic City Funding
1st Mortgage Notes, 11.250%,
5/1/2006............................................ 100,000 100,500
----------
319,625
----------
<PAGE>
RETAIL 2.47%
Smith's Food & Drug Centers,
Sr Sub Notes, 11.250%, 5/15/2007.................... 100,000 101,250
TPI Enterprises, Gtd Conv Sub Deb,
8.250%, 7/15/2002................................... 100,000 91,500
----------
192,750
----------
TELECOMMUNICATIONS 18.97%
Arch Communications Group, Sr
Discount Step-Up Notes
Zero Coupon^^, 3/15/2008............................ 250,000 128,750
Centennial Cellular, Sr Notes,
8.875%, 11/1/2001................................... 100,000 93,000
Comcast Cellular, Sr Participating
Notes, Series B Zero Coupon,
3/5/2000............................................ 100,000 68,500
CommNet Cellular, Sr Sub Discount
Step-Up Notes Zero Coupon^^,
9/1/2003............................................ 100,000 78,000
Intermedia Communications of
Florida, Sr Discount Step-Up
Notes Zero Coupon^^, 5/15/2006...................... 250,000 137,500
International CableTel, Sr
Deferred Step-Up Notes,
Series B Zero Coupon^^, 2/1/2006.................... 250,000 140,000
MFS Communications, Sr Discount
Step-Up Notes Zero Coupon^^,
1/15/2006........................................... 200,000 120,500
Millicom International Cellular
SA, Sr Sub Discount Step-Up
Notes^ Zero Coupon^^, 6/1/2006...................... LU 200,000 106,500
NEXTEL Communications, Sr
Redeemable Discount Step-Up
Notes Zero Coupon^^, 8/15/2004...................... 100,000 59,000
Rogers Cantel, Sr Secured Deb,
9.375%, 6/1/2008.................................... CA 200,000 193,500
Teleport Communications Group
Sr Discount Step-Up Notes,
Zero Coupon^^, 7/1/2007............................. 100,000 58,250
Sr Notes, 9.875%, 7/1/2006.......................... 100,000 100,000
Vanguard Cellular Systems,
Sr Deb, 9.375%, 4/15/2006........................... 100,000 97,000
Western Wireless, Sr Sub Notes,
10.500%, 6/1/2006................................... 100,000 99,625
----------
1,480,125
----------
TRANSPORTATION 2.47%
Stena AB, Sr Notes, 10.500%,
12/15/2005.......................................... SW 100,000 99,250
Teekay Shipping, Gtd 1st Pfd
Ship Mortgage Notes
8.320%, 2/1/2008.................................... 100,000 93,250
----------
192,500
----------
<PAGE>
UTILITIES 2.42%
El Paso Electric, 1st
Mortgage Secured Bonds,
Series B 7.750%, 5/1/2001........................... 100,000 97,375
Long Island Lighting, Deb,
9.000%, 11/1/2022................................... 100,000 91,897
----------
189,272
----------
TOTAL FIXED INCOME SECURITIES
(Cost $6,491,992)................................... 6,313,951
----------
PREFERRED STOCKS 5.29%
BROADCASTING 1.30%
Chancellor Radio Broadcasting, Sr Cum Exchangeable Pfd, 12.250%~^ 1,000 101,000
----------
CABLE TELEVISION 1.91%
Cablevision Systems, Cum Exchangeable Pfd, Series H, 11.750%~^ 1,544 148,996
----------
ELECTRICAL EQUIPMENT 0.75%
BCP/Essex Holdings, Cum Redeemable Exchangeable Pfd
Series B, 15.000%~.................................. 2,339 58,768
----------
TELECOMMUNICATIONS 1.33%
IntelCom Group USA, Mandatory Redeemable Exchangeable Pfd~^ 100 104,000
----------
TOTAL PREFERRED STOCKS
(Cost $403,330)..................................... 412,764
----------
OTHER SECURITIES 5.27%
BROADCASTING 1.32%
Park Communications, Units^ (Each unit consists of one
$1,000 face amount Sr Note, 13.750%, 5/15/2004** and
1 wrnt to purchase 10 cmn shrs)..................... 100 103,205
----------
CABLE TELEVISION 1.70%
Australis Media Ltd, Units (Each unit consists of one
$1,000 face amount Sr Sub Discount Step-Up Note,
Zero Coupon^^ 5/15/2003 and 1 wrnt to buy 57.721 shrs
of cmn stock........................................ AS 50 29,750
<PAGE>
CS Wireless Systems, Units^ (Each unit consists of
four $1,000 face amount Sr Discount Step-Up Notes,
Zero Coupon^^ 3/1/2006 and 1.1 shrs of cmn stock)... 200 103,000
----------
132,750
----------
TELECOMMUNICATIONS 2.25%
InterCel Inc, Units (Each unit consists of ten
$1,000 face amount Sr Discount Step-Up Notes,
Zero Coupon^^, 2/1/2006 and 32 wrnts
to buy 1 shr cmn stk)............................... 100 60,250
Occidente y Caribe Celular SA, Units^ (Each unit
consists of one $1,000 face amount Sr Discount
Step-Up Note, Zero Coupon^^ 3/15/2004
and 4 wrnts to purchase 5.709 cmn shrs each)........ CO 225 115,312
----------
175,562
----------
TOTAL OTHER SECURITIES
(Cost $434,446)..................................... 411,517
----------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 8.53%
Repurchase Agreement with State Street Bank & Trust Co
dated 6/28/1996 due 7/1/1996 at 5.150%, repurchased
at $666,286 (Collateralized by US Treasury Notes due
7/31/1997 at 5.875% value $697,316) (Cost $666,000) 666,000 666,000
----------
TOTAL INVESTMENT SECURITIES AT
VALUE 100.00
(Cost $7,995,768#).................................. 7,804,232
==========
INDUSTRIAL INCOME Portfolio
COMMON STOCKS 70.91%
AEROSPACE & DEFENSE 1.48%
Northrop Grumman....................................... 3,000 204,375
----------
AUTOMOBILE RELATED 1.21%
Chrysler Corp.......................................... 1,000 62,000
Eaton Corp............................................. 700 41,037
Ford Motor............................................. 2,000 64,750
----------
167,787
----------
<PAGE>
BANKING 3.30%
BankAmerica Corp....................................... 2,000 151,500
Chase Manhattan........................................ 1,456 102,830
First Chicago NBD...................................... 2,267 88,696
Mellon Bank............................................ 2,000 114,000
----------
457,026
----------
BROADCASTING 0.40%
Belo (A H) Corp Class A................................ 1,500 55,875
----------
BUILDING & CONSTRUCTION RELATED 0.95%
Fluor Corp............................................. 2,000 130,750
----------
CHEMICALS 4.84%
Agrium Inc............................................. 15,000 196,641
Air Products & Chemicals............................... 2,000 115,500
ARCO Chemical.......................................... 2,000 104,000
General Chemical Group................................. 5,000 101,250
Lawter International................................... 5,000 62,500
Olin Corp.............................................. 1,000 89,250
----------
669,141
----------
COMPUTER SOFTWARE 3.36%
Dassault Systemes SA Sponsored ADR*.................... 15,000 465,000
----------
DIVERSIFIED COMPANIES 2.03%
AlliedSignal Inc....................................... 1,000 57,125
General Electric....................................... 1,000 86,500
Kansas City Southern Industries........................ 1,500 64,312
Whitman Corp........................................... 3,000 72,375
----------
280,312
----------
ELECTRICAL EQUIPMENT 1.57%
Emerson Electric....................................... 1,500 135,562
Honeywell Inc.......................................... 1,500 81,750
----------
217,312
----------
ELECTRONICS 0.53%
Intel Corp............................................. 1,000 73,437
----------
FINANCE RELATED 4.24%
Associates First Capital*.............................. 10,000 376,250
Beneficial Corp........................................ 2,000 112,250
Block (H & R) Inc...................................... 3,000 97,875
----------
586,375
----------
<PAGE>
FOOD PRODUCTS & BEVERAGES 2.10%
Anheuser-Busch Cos..................................... 2,000 150,000
General Mills.......................................... 1,000 54,500
Heinz (H J) Co......................................... 1,725 52,397
Quaker Oats............................................ 1,000 34,125
----------
291,022
----------
HOTELS 1.22%
Hilton Hotels.......................................... 1,500 168,750
----------
INSURANCE 5.30%
Allmerica Financial.................................... 8,000 238,000
American States Financial*............................. 5,000 107,500
Ohio Casualty.......................................... 3,000 104,250
Travelers/Aetna Property Casualty*..................... 10,000 283,750
----------
733,500
----------
MEDICAL EQUIPMENT & SUPPLIES 0.58%
Becton Dickinson & Co.................................. 1,000 80,250
----------
MEDICAL RELATED - DRUGS 3.15%
American Home Products................................. 1,600 96,200
Glaxo Wellcome PLC Sponsored ADR....................... 10,000 267,500
Novo-Nordisk A/S ADR................................... 2,000 71,500
----------
435,200
----------
MINING 0.36%
Newmont Mining......................................... 1,000 49,375
----------
MOTION PICTURES & TELEVISION 0.46%
Disney (Walt) Co....................................... 1,000 62,875
----------
OFFICE EQUIPMENT & SUPPLIES 2.51%
Reynolds & Reynolds Class A............................ 2,000 106,500
Xerox Corp............................................. 4,500 240,750
----------
347,250
----------
OIL & GAS RELATED 9.85%
Amoco Corp............................................. 1,000 72,375
Apache Corp............................................ 5,000 164,375
Atlantic Richfield..................................... 700 82,950
Burlington Resources................................... 2,000 86,000
Dresser Industries..................................... 4,000 118,000
Exxon Corp............................................. 1,000 86,875
Halliburton Co......................................... 1,000 55,500
Mobil Corp............................................. 600 67,275
Schlumberger Ltd....................................... 1,000 84,250
Sonat Inc.............................................. 3,000 135,000
USX-Marathon Group..................................... 10,000 201,250
Union Pacific Resources Group.......................... 4,000 107,000
Unocal Corp............................................ 3,000 101,250
----------
1,362,100
----------
<PAGE>
PAPER & PAPER PRODUCTS 1.12%
Albany International Class A........................... 5,000 113,125
Champion International................................. 1,000 41,750
----------
154,875
----------
PHOTO EQUIPMENT & SUPPLIES 0.66%
Polaroid Corp.......................................... 2,000 91,250
----------
PRINTING & PUBLISHING 0.50%
Donnelley (R R) & Sons................................. 2,000 69,750
----------
REAL ESTATE RELATED 1.07%
Patriot American Hospitality........................... 5,000 148,125
----------
RETAIL 6.33%
Dayton Hudson.......................................... 1,000 103,125
May Department Stores.................................. 2,000 87,500
Payless ShoeSource*.................................... 320 10,160
Penney (J C) Co........................................ 2,000 105,000
Saks Holding*.......................................... 15,000 511,875
Sears Roebuck & Co..................................... 1,200 58,350
----------
876,010
----------
SAVINGS & LOAN 1.26%
Charter One Financial.................................. 5,000 174,375
----------
TELECOMMUNICATIONS 3.54%
AT&T Corp.............................................. 2,300 142,600
Lucent Technologies.................................... 7,500 284,063
Motorola Inc........................................... 1,000 62,875
----------
489,538
----------
TOBACCO 0.75%
Philip Morris.......................................... 1,000 104,000
----------
TRANSPORTATION 0.95%
Conrail Inc............................................ 1,500 99,563
KLM Royal Dutch Airlines New York Registered Shrs...... 1,000 31,750
----------
131,313
----------
UTILITIES 5.29%
Bell Atlantic.......................................... 1,000 63,750
GTE Corp............................................... 1,500 67,125
IES Industries......................................... 10,000 298,750
NYNEX Corp............................................. 2,000 95,000
SBC Communications..................................... 2,000 98,500
U S WEST Communications Group.......................... 3,400 108,375
----------
731,500
TOTAL COMMON STOCKS
(Cost $8,448,718)................................... 9,808,448
----------
<PAGE>
PREFERRED STOCKS 0.37%
MINING 0.37%
Amax Gold, $3.75, Conv Pfd,
Series B (Cost $48,795)............................. 1,000 51,250
----------
FIXED INCOME SECURITIES 21.64%
US Government Obligations 5.35%
US Treasury Notes, 6.500%,
5/15/2000 (Cost $782,609)........................... 750,000 739,452
US Government Agency Obligations 5.14%.................
Federal Home Loan Mortgage, Gold,
Participation Certificates
6.500%, 11/1/2010................................... 237,593 230,196
6.500%, 4/1/2011.................................... 496,619 480,315
----------
TOTAL US GOVERNMENT AGENCY
OBLIGATIONS (Cost $724,232)......................... 710,511
----------
Corporate Bonds 11.15%
BROADCASTING 0.75%
SCI Television, Sr Secured Notes,
11.000%, 6/30/2005.................................. 100,000 104,000
----------
BUILDING & CONSTRUCTION RELATED 0.70%
USG Corp, Deb, 8.750%, 3/1/2017........................ 100,000 97,500
----------
CABLE TELEVISION 2.75%
Cablevision Industries, Sr Deb,
Series B, 9.250%, 4/1/2008.......................... 100,000 100,750
Continental Cablevision, Sr Sub
Deb, 11.000%, 6/1/2007.............................. 200,000 226,495
UIH Australia/Pacific, Sr
Discount Step-Up Notes^
Zero Coupon^^, 5/15/2006............................ 100,000 52,250
----------
379,495
----------
CHEMICALS 0.73%
Freeport-McMoRan Resource
Partners LP
Sr Sub Notes, 8.750%, 2/15/2004..................... 100,000 101,030
----------
FOOD PRODUCTS & BEVERAGES 1.15%
Dr Pepper/Seven-Up Cos, Sr Sub
Discount Step-Up Notes
Zero Coupon^^, 11/1/2002............................ 168,000 158,760
----------
HEALTH CARE RELATED 0.76%
Tenet Healthcare, Sr Sub Notes,
10.125%, 3/1/2005................................... 100,000 105,500
----------
<PAGE>
MOTION PICTURES & TELEVISION 0.67%
Viacom Inc, Sub Deb, 8.000%,
7/7/2006............................................ 100,000 92,994
----------
RECREATION PRODUCTS & SERVICES 0.38%
United Artists Theatre Circuit,
Sr Secured Notes, Series B
11.500%, 5/1/2002................................... 50,000 52,812
----------
RETAIL 0.75%
Revco (D S) Inc, Sr Notes,
9.125%, 1/15/2000................................... 100,000 103,500
----------
TELECOMMUNICATIONS 1.48%
Arch Communications Group, Sr
Discount Step-Up Notes
Zero Coupon^^, 3/15/2008............................ 100,000 51,500
International CableTel, Sr
Deferred Step-Up Notes,
Series B
Zero Coupon^^, 2/1/2006............................. 100,000 56,000
Rogers Cantel, Sr Secured Deb,
9.375%, 6/1/2008.................................... 100,000 96,750
----------
204,250
----------
TRANSPORTATION 0.70%
Overseas Shipholding Group,
Deb, 8.750%, 12/1/2013.............................. 50,000 50,371
Teekay Shipping, Gtd 1st Pfd
Ship Mortgage Notes
8.320%, 2/1/2008.................................... 50,000 46,625
----------
96,996
----------
UTILITIES 0.33%
Long Island Lighting, Deb,
9.000%, 11/1/2022................................... 50,000 45,949
----------
TOTAL CORPORATE BONDS
(Cost $1,593,800)................................... 1,542,786
----------
TOTAL FIXED INCOME SECURITIES
(Cost $3,100,641)................................... 2,992,749
----------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 7.08%
Repurchase Agreement with State Street Bank & Trust Co
dated 6/28/1996 due 7/1/1996 at 5.150%, repurchased
at $980,421 (Collateralized by US Treasury Notes due
7/31/1997 at 5.875% value $1,027,624) (Cost $980,000) 980,000 980,000
----------
TOTAL INVESTMENT SECURITIES AT
VALUE 100.00%
(Cost $12,578,154#)................................. 13,832,447
==========
<PAGE>
TOTAL RETURN Portfolio
COMMON STOCKS 56.35%
AEROSPACE & DEFENSE 2.73%
Boeing Co.............................................. 1,100 95,837
Lockheed Martin........................................ 1,200 100,800
Raytheon Co............................................ 1,800 92,925
----------
289,562
----------
AGRICULTURAL 0.88%
Archer-Daniels-Midland Co.............................. 4,900 93,712
----------
AUTOMOBILE RELATED 0.95%
Ford Motor............................................. 3,100 100,362
----------
BANKING 5.18%
Comerica Inc........................................... 1,900 84,787
First Chicago NBD...................................... 2,200 86,075
First of America Bank.................................. 2,200 98,450
First Union............................................ 1,500 91,313
State Street Boston.................................... 2,000 102,000
Wachovia Corp.......................................... 2,000 87,500
----------
550,125
----------
CHEMICALS 1.59%
Akzo Nobel NV Sponsored ADR............................ 1,600 95,600
Imperial Chemical Industries PLC ADR................... 1,500 73,688
----------
169,288
----------
COMPUTER SYSTEMS 1.96%
Compaq Computer*....................................... 2,000 98,500
Hewlett-Packard Co..................................... 1,100 109,588
----------
208,088
----------
DIVERSIFIED COMPANIES 4.60%
du Pont (E I) de Nemours............................... 1,000 79,125
General Electric....................................... 1,200 103,800
Hanson PLC Sponsored ADR............................... 7,000 99,750
Minnesota Mining & Manufacturing....................... 1,600 110,400
Textron Inc............................................ 1,200 95,850
----------
488,925
----------
FINANCE RELATED 0.59%
Dun & Bradstreet....................................... 1,000 62,500
----------
<PAGE>
FOOD PRODUCTS & BEVERAGES 5.70%
Anheuser-Busch Cos..................................... 1,400 105,000
General Mills.......................................... 1,700 92,650
Heinz (H J) Co......................................... 2,750 83,531
Kellogg Co............................................. 1,300 95,225
PepsiCo Inc............................................ 3,200 113,200
Unilever NV New York Shrs.............................. 800 116,100
----------
605,706
----------
HOUSEHOLD APPLIANCES 0.70%
Whirlpool Corp......................................... 1,500 74,438
----------
INSURANCE 1.91%
Marsh & McLennan....................................... 1,000 96,500
SAFECO Corp............................................ 3,000 106,125
----------
202,625
----------
INVESTMENT BROKERS 0.88%
Morgan Stanley Group................................... 1,900 93,338
----------
MEDICAL RELATED - DRUGS 3.96%
Abbott Laboratories.................................... 2,500 108,750
American Home Products................................. 1,800 108,225
Bristol-Myers Squibb................................... 1,100 99,000
Lilly (Eli) & Co....................................... 1,600 104,000
----------
419,975
----------
OFFICE EQUIPMENT & SUPPLIES 0.77%
Deluxe Corp............................................ 2,300 81,650
----------
OIL & GAS RELATED 3.80%
Amoco Corp............................................. 1,300 94,087
Exxon Corp............................................. 1,100 95,563
Repsol SA Sponsored ADR................................ 2,600 90,350
Royal Dutch Petroleum New York Registrry 5 Gldr Shrs... 800 123,000
----------
403,000
----------
PAPER & PAPER PRODUCTS 0.87%
Kimberly-Clark Corp.................................... 1,200 92,700
----------
POLLUTION CONTROL SERVICES 1.08%
WMX Technologies....................................... 3,500 114,625
----------
PRINTING & PUBLISHING 0.93%
Gannett Co............................................. 1,400 99,050
----------
<PAGE>
RETAIL 6.77%
Circuit City Stores.................................... 3,500 126,438
Genuine Parts.......................................... 2,100 96,075
Giant Food Class A..................................... 2,600 93,275
K mart Corp............................................ 8,500 105,187
Melville Corp.......................................... 2,100 85,050
Penney (J C) Co........................................ 2,100 110,250
Sherwin-Williams Co.................................... 2,200 102,300
----------
718,575
----------
TEXTILES & APPAREL MANUFACTURERS 1.28%
Liz Claiborne.......................................... 2,000 69,250
Shaw Industries........................................ 5,100 66,938
----------
136,188
----------
TOBACCO 2.12%
American Brands........................................ 2,200 99,825
Philip Morris.......................................... 1,200 124,800
----------
224,625
----------
TRANSPORTATION 1.71%
Caliber System......................................... 2,200 74,800
Illinois Central Series A.............................. 3,750 106,406
----------
181,206
----------
UTILITIES 5.39%
CINergy Corp........................................... 3,000 96,000
Edison International................................... 6,000 105,750
NYNEX Corp............................................. 1,300 61,750
Telefonica de Espana SA
Sponsored ADR....................................... 2,000 110,250
Telefonos de Mexico SA de
CV Sponsored ADR Representing
Ord Series L Shrs................................... 3,000 100,500
Texas Utilities........................................ 2,300 98,325
----------
572,575
----------
TOTAL COMMON STOCKS
(Cost $5,139,039)................................... 5,982,838
----------
FIXED INCOME SECURITIES 34.51%
US Government Obligations 30.22%
US Treasury Bonds
9.375%, 2/15/2006................................... 500,000 593,281
9.250%, 2/15/2016................................... 250,000 309,219
US Treasury Notes
7.500%, 11/15/2001.................................. 450,000 469,687
7.250%, 8/15/2004................................... 400,000 414,124
6.375%, 7/15/1999................................... 225,000 225,492
<PAGE>
6.375%, 1/15/2000................................... 300,000 299,906
6.375%, 8/15/2002................................... 400,000 396,250
6.125%, 3/31/1998................................... 500,000 500,312
----------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $3,233,398)................................... 3,208,271
----------
US Government Agency Obligations 2.49%
Federal Home Loan Mortgage, Gold,
Participation Certificates
8.000%, 10/1/2010................................... 80,783 82,423
6.500%, 7/1/2001.................................... 100,000 99,093
Government National Mortgage
Association I
Pass-Through Certificates
7.500%, 3/15/2026................................... 84,589 83,320
----------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $267,133)..................................... 264,836
----------
Corporate Bonds 1.80%
BANKING 0.88%
NationsBank Corp, Sub Notes,
6.500%, 3/15/2006................................... 100,000 93,714
----------
FOOD PRODUCTS & BEVERAGES 0.92%
PepsiCo Inc, Medium-Term Notes,
5.875%, 6/1/2000.................................... 100,000 97,054
----------
TOTAL CORPORATE BONDS
(Cost $189,129)..................................... 190,768
----------
TOTAL FIXED INCOME SECURITIES
(Cost $3,689,660)................................... 3,663,875
----------
SHORT-TERM INVESTMENTS 9.14%
US Government Obligations 3.82%
US Treasury Notes, 8.000%,
1/15/1997 (Cost $408,414)........................... 400,000 405,124
----------
Repurchase Agreements 5.32%
Repurchase Agreement with
State Street Bank & Trust Co
dated 6/28/1996 due 7/1/1996
at 4.750%, repurchased at $565,224
(Collateralized by US Treasury Bills
due 10/3/1996 at 5.050%
value $577,109) (Cost $565,000)..................... 565,000 565,000
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $973,414)..................................... 970,124
----------
TOTAL INVESTMENT SECURITIES AT
VALUE 100.00%
(Cost $9,802,113#).................................. 10,616,837
==========
<PAGE>
UTILITIES Portfolio
COMMON STOCKS 91.68%
ELECTRICAL EQUIPMENT 0.56%
TII Industries*........................................ 700 4,812
----------
OIL & GAS RELATED 11.65%
Coastal Corp........................................... 300 12,525
Enron Corp............................................. 400 16,350
ENSERCH Corp........................................... 600 13,050
Equitable Resources.................................... 400 11,300
Flores & Rucks*........................................ 400 13,800
Key Production*........................................ 800 6,200
Louis Dreyfus Natural Gas*............................. 550 8,250
Sonat Inc.............................................. 250 11,250
Union Pacific Resources Group.......................... 300 8,025
----------
100,750
----------
TELECOMMUNICATIONS 20.42%
AT&T Corp.............................................. 200 12,400
Allen Group............................................ 300 6,525
Asia Satellite Telecommunications
Holdings Ltd Sponsored ADR*......................... 600 17,850
Brooks Fiber Properties*............................... 300 9,900
Clearnet Communications Class A*....................... 700 11,725
Frontier Corp.......................................... 850 26,031
Lincoln Telecommunications............................. 800 13,100
Lucent Technologies.................................... 500 18,937
MFS Communications*.................................... 300 11,287
McLeod Inc Class A Shrs*............................... 750 18,000
Nokia Corp Sponsored ADR...............................
Representing 1 Ord A Shr........................... 100 3,700
Orange PLC ADR*........................................ 1,000 17,500
Portugal Telecom SA Sponsored ADR...................... 200 5,250
Western Wireless Class A*.............................. 200 4,275
----------
176,480
----------
Utilities 59.05%
ELECTRIC 26.04%
Central & South West................................... 330 9,570
Central Louisiana Electric............................. 350 9,319
CILCORP Inc............................................ 200 8,550
Commonwealth Energy Systems SBI........................ 300 7,725
Eastern Utilities Associates........................... 300 5,887
Empire District Electric............................... 400 6,900
Florida Public Utilities............................... 500 9,937
Hawaiian Electric Industries........................... 200 7,100
IES Industries......................................... 1,200 35,850
Idaho Power............................................ 650 20,231
Interstate Power....................................... 300 9,637
MidAmerican Energy..................................... 500 8,625
Nevada Power........................................... 400 8,800
Northwestern Public Service............................ 300 8,063
<PAGE>
Oklahoma Gas & Electric................................ 240 9,510
PacifiCorp............................................. 700 15,575
Portland General....................................... 260 8,028
Public Service of Colorado............................. 400 14,700
Public Service of New Mexico........................... 400 8,200
Rochester Gas & Electric............................... 600 12,900
----------
225,107
----------
GAS 5.00%
Chesapeake Utilities................................... 550 8,800
Columbia Gas System.................................... 200 10,425
Connecticut Energy..................................... 200 3,800
New Jersey Resources................................... 400 11,500
ONEOK Inc.............................................. 350 8,750
----------
43,275
----------
TELEPHONE 28.01%
ALLTEL Corp............................................ 700 21,525
Ameritech Corp......................................... 370 21,969
Bell Atlantic.......................................... 350 22,313
BellSouth Corp......................................... 470 19,916
Century Telephone Enterprises.......................... 600 19,125
Cincinnati Bell........................................ 500 26,063
GTE Corp............................................... 250 11,188
NYNEX Corp............................................. 410 19,475
SBC Communications..................................... 500 24,625
Southern New England Telecommunications................ 400 16,800
Sprint Corp............................................ 400 16,800
U S WEST Communications Group.......................... 700 22,313
----------
242,112
----------
TOTAL UTILITIES..................................... 510,494
----------
TOTAL COMMON STOCKS
(Cost $747,208)..................................... 792,536
----------
PREFERRED STOCKS 2.54%
Utilities 2.54%
ELECTRIC 0.77%
Niagara Mohawk Power, 9.500%,
Series M Pfd........................................ 300 6,600
----------
GAS 1.77%
MCN Corp, Conv Pfd* (Each shr
consists of five-sixths interest
in a shr of 8.750% Conv Pfd)........................ 600 15,300
----------
TOTAL PREFERRED STOCKS
(Cost $20,531)...................................... 21,900
----------
<PAGE>
SHORT-TERM INVESTMENTS -
US GOVERNMENT AGENCY
OBLIGATIONS 5.78%
Federal Home Loan Mortgage,
5.240%, 7/2/1996
(Cost $49,993)...................................... 50,000 49,993
----------
TOTAL INVESTMENT SECURITIES AT
VALUE 100.00%
(Cost $817,732#).................................... 864,429
==========
</TABLE>
^^ Step up bonds are obligations which increase the interest payment rate at
a specific point in time. Rate shown reflects current rate which may step
up at a future date.
~ Security may make interest payments in other types of
securities or cash.
** Security is a payment-in-kind (PIK) bond. PIK bonds may make
interest payments in additional securities.
# Also represents cost for income tax purposes.
* Security is non-income producing.
^ The following are restricted securities at June 30, 1996:
Value as
Acquisition Acquisition % of Net
Description Date(s) Cost Assets
- --------------------------------------------------------------------------------
High Yield Portfolio
AMF Group, Sr Sub Discount
Step-Up Notes Zero Coupon,
3/15/2006 3/7/96 142,929 1.78%
Benedek Communications,
Sr Sub Discount Step-Up
Notes, Zero Coupon, 5/15/2006 5/30/96 133,815 1.67
CS Wireless Systems, Units 2/16/96 119,368 1.37
Cablevision Systems, Cum
Exchangeable Pfd
Series H, 11.750% 5/16/96 150,750 1.98
Chancellor Radio Broadcasting,
Sr Cum Exchangeable Pfd,
12.250% 2/21/96 100,000 1.34
Howmet Corp, Sr Sub Notes
10.000%, 12/1/2003 11/22/95 100,000 1.40
IntelCom Group USA, Mandatory
Redeemable Exchangeable Pfd 4/25/96 100,000 1.38
<PAGE>
Millicom International
Cellular SA, Sr Sub
Discount Step-Up Notes,
Zero Coupon 6/1/2006 5/24/96 105,226 1.41
Occidente y Caribe Celular
SA, Units 5/31/96 119,041 1.53
Park Communications, Units 5/6/96 100,000 1.37
SFX Broadcasting, Sr Sub Notes
10.750%, 5/15/2006 5/23/96 150,000 1.98
High Yield Portfolio
(Continued)
Texas Petrochemicals,
Sr Sub Notes
11.125%, 7/1/2006 6/25/96 100,000 1.35%
UIH Australia/Pacific, Sr
Discount Step-Up Notes,
Zero Coupon, 5/15/2006 5/8/96 129,360 1.73
----------
20.29%
==========
Industrial Income Portfolio
UIH Australia/Pacific,
Sr Discount Step-Up Notes,
Zero Coupon, 5/15/2006 5/8/96 51,744 0.39%
==========
Summary of Investments by Country
% of
Country Investment
Country Code Securities Value
- ------------------------------------------------------------------------------
High Yield Portfolio
Australia AS 0.38% 29,750
Canada CA 6.69 522,375
Columbia CO 1.48 115,312
Luxembourg LU 1.37 106,500
Singapore SN 1.31 102,250
Switzerland SW 1.27 99,250
United Kingdom UK 2.31 180,500
United States US 85.19 6,648,295
--------------------
100.00% 7,804,232
====================
See Notes to Financial Statements
<PAGE>
INVESCO Variable Investment Funds, Inc.
Statement of Assets and Liabilities
June 30, 1996
UNAUDITED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
High Industrial Total
Yield Income Return Utilities
Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost~ $7,995,768 $12,578,154 $9,802,113 $817,732
=========================================================
At Value~ 7,804,232 13,832,447 10,616,837 864,429
Cash 0 0 2,496 37,226
Receivables:
Fund Shares Sold 160,598 1,954 0 26,004
Dividends and Interest 90,862 59,809 103,538 2,535
Organization Costs 9,205 9,205 9,205 9,205
Prepaid Expenses and
Other Assets 20,698 19,602 20,125 20,949
---------------------------------------------------------
TOTAL ASSETS 8,085,595 13,923,017 10,752,201 960,348
LIABILITIES
Payables:
Custodian 17,364 20,528 0 0
Investment Securities
Purchased 507,664 345,000 0 0
Fund Shares Repurchased 1,699 61,264 2,247 928
Accrued Expenses and
Other Payables 17,184 17,181 17,167 16,634
---------------------------------------------------------
TOTAL LIABILITIES 543,911 443,973 19,414 17,562
---------------------------------------------------------
Net Assets at Value 7,541,684 13,479,044 10,732,787 942,786
=========================================================
NET ASSETS
Paid-in Capital* 7,260,619 11,637,978 9,765,512 872,367
Accumulated Undistributed
Net Investment Income 279,536 162,539 149,698 8,512
Accumulated Undistributed
Net Realized Gain on
Investment Securities and
Foreign Currency
Transactions 193,065 424,234 2,853 15,210
Net Appreciation (Depreciation)
of Investment Securities
and Foreign Currency
Transactions (191,536) 1,254,293 814,724 46,697
---------------------------------------------------------
Net Assets at Value 7,541,684 13,479,044 10,732,787 942,786
=========================================================
<PAGE>
Shares Outstanding 655,866 962,751 841,588 80,296
Net Asset Value, Offering
and Redemption Price
per Share 11.50 14.00 12.75 11.74
=========================================================
<FN>
~ Investment securities at cost and value at June 30, 1996 include repurchase
agreements of $666,000, $980,000 and $565,000 for High Yield, Industrial
Income and Total Return Portfolios, respectively.
* The Fund has 500 million authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to each
individual Portfolio.
</FN>
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
Statement of Operations
Six Months Ended June 30, 1996
UNAUDITED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
High Industrial Total
Yield Income Return Utilities
Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $0 $92,942 $84,336 $10,236
Interest 304,376 118,091 103,643 765
Foreign Taxes Withheld 0 (982) (3,625) (35)
---------------------------------------------------------
TOTAL INCOME 304,376 210,051 184,354 10,966
---------------------------------------------------------
EXPENSES
Investment Advisory Fees 18,522 39,426 32,588 1,714
Transfer Agent Fees 2,500 2,500 2,500 2,500
Administrative Fees 5,463 5,789 5,652 5,043
Custodian Fees and Expenses 3,756 5,743 4,694 1,497
Directors' Fees and Expenses 4,103 4,149 4,126 4,005
Organization Expenses 1,841 1,841 1,841 1,841
Professional Fees and Expenses 8,846 9,430 9,198 7,766
Registration Fees and Expenses 95 85 134 41
Other Expenses 2,806 2,205 1,392 198
---------------------------------------------------------
TOTAL EXPENSES 47,932 71,168 62,125 24,605
Fees and Expenses Absorbed
by Investment Adviser (20,645) (19,555) (20,079) (20,866)
Fees and Expenses
Paid Indirectly (2,590) (4,301) (2,941) (1,168)
---------------------------------------------------------
NET EXPENSES 24,697 47,312 39,105 2,571
---------------------------------------------------------
NET INVESTMENT INCOME 279,679 162,739 145,249 8,395
---------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENT SECURITIES
Net Realized Gain on
Investment Securities
and Foreign Currency
Transactions 192,983 424,234 2,853 15,385
Change in Net Appreciation
(Depreciation) of
Investment Securities and
Foreign Currency
Transactions (247,208) 590,058 286,184 32,222
---------------------------------------------------------
NET GAIN (LOSS) ON
INVESTMENT SECURITIES (54,225) 1,014,292 289,037 47,607
---------------------------------------------------------
Net Increase in Net Assets
from Operations 225,454 1,177,031 434,286 56,002
=========================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
High Yield Industrial Income
Portfolio Portfolio
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30 December 31 June 30 December 31
-------------------------- -------------------------
1996 1995 1996 1995
UNAUDITED UNAUDITED
OPERATIONS
Net Investment Income $279,679 $238,738 $162,739 $126,346
Net Realized Gain on
Investment Securities
and Foreign Currency
Transactions 192,983 171,439 424,234 170,187
Change in Net Appreciation
(Depreciation) of
Investment Securities
and Foreign Currency
Transactions (247,208) 55,093 590,058 660,022
-------------------------- -------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 225,454 465,270 1,177,031 956,555
-------------------------- -------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (239,112) 0 (126,762)
Net Realized Gain on
Investment Securities 0 (171,439) 0 (170,179)
-------------------------- -------------------------
TOTAL DISTRIBUTIONS 0 (410,551) 0 (296,941)
-------------------------- -------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales
of Shares 4,325,136 7,336,473 5,740,040 8,978,068
Reinvestment of
Distributions 0 410,551 0 296,941
-------------------------- -------------------------
4,325,136 7,747,024 5,740,040 9,275,009
Amounts Paid for
Repurchases of Shares (2,241,953) (3,192,335) (1,800,325) (2,096,909)
-------------------------- -------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE
TRANSACTIONS 2,083,183 4,554,689 3,939,715 7,178,100
-------------------------- -------------------------
Total Increase in Net Assets 2,308,637 4,609,408 5,116,746 7,837,714
NET ASSETS
Beginning of Period 5,233,047 623,639 8,362,298 524,584
-------------------------- -------------------------
End of Period 7,541,684 5,233,047 13,479,044 8,362,298
========================== =========================
<PAGE>
Accumulated Undistributed Net
Investment Income (Loss)
Included in Net Assets
at End of Period 279,536 (143) 162,539 (200)
FUND SHARE TRANSACTIONS
Shares Sold 379,183 657,306 436,257 764,485
Shares Issued from Reinvestment
of Distributions 0 37,188 0 23,604
-------------------------- -------------------------
379,183 694,494 436,257 788,089
Shares Repurchased (197,252) (282,878) (138,228) (175,375)
-------------------------- -------------------------
Net Increase in Fund Shares 181,931 411,616 298,029 612,714
========================== =========================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total Return Utilities
Portfolio Portfolio
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30 December 31 June 30 December 31
-------------------------- -------------------------
1996 1995 1996 1995
UNAUDITED UNAUDITED
OPERATIONS
Net Investment Income $145,249 $128,352 $8,395 $1,924
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency
Transactions 2,853 2,985 15,385 (175)
Change in Net Appreciation
of Investment Securities
and Foreign Currency
Transactions 286,184 529,556 32,222 14,475
-------------------------- -------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 434,286 660,893 56,002 16,224
-------------------------- -------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (124,147) 0 (1,807)
Net Realized Gain on
Investment Securities 0 (2,985) 0 0
-------------------------- -------------------------
TOTAL DISTRIBUTIONS 0 (127,132) 0 (1,807)
-------------------------- -------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales
of Shares 4,635,140 7,764,103 633,330 282,916
Reinvestment of
Distributions 0 127,132 0 1,807
-------------------------- -------------------------
4,635,140 7,891,235 633,330 284,723
Amounts Paid for
Repurchases of Shares (889,636) (2,926,643) (36,338) (34,348)
-------------------------- -------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE
TRANSACTIONS 3,745,504 4,964,592 596,992 250,375
-------------------------- -------------------------
Total Increase in Net Assets 4,179,790 5,498,353 652,994 264,792
NET ASSETS
Beginning of Period 6,552,997 1,054,644 289,792 25,000
End of Period 10,732,787 6,552,997 942,786 289,792
========================== =========================
Accumulated Undistributed
Net Investment Income
<PAGE>
Included in Net Assets
at End of Period 149,698 4,449 8,512 117
FUND SHARE TRANSACTIONS
Shares Sold 373,506 684,722 56,889 27,466
Shares Issued from
Reinvestment of
Distributions 0 10,470 0 167
-------------------------- -------------------------
373,506 695,192 56,889 27,633
Shares Repurchased (71,580) (260,017) (3,337) (3,389)
-------------------------- -------------------------
Net Increase in Fund Shares 301,926 435,175 53,552 24,244
========================== =========================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
Notes to Financial Statements
UNAUDITED
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Variable
Investment Funds, Inc. (the "Fund"), was incorporated in Maryland and presently
consists of four separate Portfolios: High Yield Portfolio, Industrial Income
Portfolio, Total Return Portfolio and Utilities Portfolio (the "Portfolios").
The investment objectives of the Portfolios are: to seek the best possible
current income for the Industrial Income Portfolio; to seek a high total return
on investment through capital appreciation and current income for the Total
Return Portfolio; to seek a high level of current income by investing
principally in lower rated bonds and other debt securities and in preferred
stock for the High Yield Portfolio; and to seek capital appreciation and income
on securities of companies principally engaged in public utilities for the
Utilities Portfolio. The Fund is registered under the Investment Company Act of
1940 (the "Act") as a diversified, open-end management investment company. The
Fund's shares are not offered directly to the public but are sold exclusively to
life insurance companies ("Participating Insurance Companies") as a pooled
funding vehicle for variable annuity and variable life insurance contracts
issued by separate accounts of the Participating Insurance Companies.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION - Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last
sales prices are not available, securities are valued at the highest
closing bid price obtained from one or more dealers making a market for
such securities or by a pricing service approved by the Fund's board of
directors.
Debt securities are valued at evaluated bid prices as determined by
a pricing service approved by the Fund's board of directors. If evaluated
bid prices are not available, debt securities are valued by averaging the
bid prices obtained from one or more dealers making a market for such
securities.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event that closing prices
are not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange. Foreign currency exchange rates are determined daily prior to
the close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
by the Fund's board of directors. Restricted securities are valued in
accordance with procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which
approximates market value) if maturity is 60 days or less at the time of
purchase, or market value if maturity is greater than 60 days.
<PAGE>
B. REPURCHASE AGREEMENTS - Repurchase agreements held by the Fund are fully
collateralized by U.S. Government securities and such collateral is in the
possession of the Fund's custodian. The collateral is evaluated daily to
ensure its market value exceeds the current market value of the repurchase
agreements including accrued interest.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security
transactions are accounted for on the trade date and dividend income is
recorded on the ex dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the
dividend if such information is obtained subsequent to the ex dividend
date. Interest income, which may be comprised of stated coupon rate,
market discount and original issue discount, is recorded on the accrual
basis. Discounts on debt securities purchased are amortized over the life
of the respective security as adjustments to interest income. Cost is
determined on the specific identification basis.
The Fund may have elements of risk due to concentrated investments
in foreign issuers located in a specific country. Such concentrations may
subject the Fund to additional risks resulting from future political or
economic conditions and/or possible impositions of adverse foreign
governmental laws or currency exchange restrictions. Net realized and
unrealized gain or loss from investments includes fluctuations from
currency exchange rates and fluctuations in market value.
The High Yield Portfolio invests primarily in high yield bonds, some
of which may be rated below investment grade. These high yield bonds may
be more susceptible than higher grade bonds to real or perceived adverse
economic or industry conditions. The secondary market, on which high yield
bonds are traded, may also be less liquid than the market for higher grade
bonds.
Restricted securities held by the Fund may not be sold except in
exempt transactions or in a public offering registered under the
Securities Act of 1933. The risk of investing in such securities is
generally greater than the risk of investing in the securities of widely
held, publicly traded companies. Lack of a secondary market and resale
restrictions may result in the inability of each Portfolio to sell a
security at a fair price and may substantially delay the sale of the
security which each Portfolio seeks to sell. In addition, these securities
may exhibit greater price volatility than securities for which secondary
markets exist.
Investments in securities of governmental agencies may only be
guaranteed by the respective agency's limited authority to borrow from the
U.S. Government and may not be guaranteed by the full faith and credit of
the United States.
D. FEDERAL AND STATE TAXES - The Fund has complied and continues to comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make
sufficient distributions of net investment income and net realized capital
gains, if any, to relieve it from all federal and state income taxes and
federal excise taxes. At December 31, 1995, the Utilities Portfolio had
$175 in net capital loss carryovers which expire in the year 2003. To the
extent future capital gains are offset by capital loss carryovers, such
gains will not be distributed to shareholders. Therefore, no federal
income tax provision is required.
Dividends paid by the Fund from net investment income and
distributions of net realized short-term capital gains are, for federal
income tax purposes, taxable as ordinary income to shareholders.
Investment income received from foreign sources may be subject to
foreign withholding taxes. Dividend and interest income is shown gross of
foreign withholding taxes in the accompanying financial statements.
<PAGE>
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions
to shareholders are recorded by the Fund on the ex dividend/distribution
date. The Fund distributes net realized capital gains, if any, to its
shareholders at least annually, if not offset by capital loss carryovers.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to
differing treatments for mortgage-backed securities, market discounts,
foreign currency transactions, nontaxable dividends, net operating losses
and expired capital loss carryforwards. As of June 30, 1996, there were no
such differences.
F. ORGANIZATION COSTS - Organization costs of $73,640 advanced by IFG are
amortized and are payable on a straight-line basis over a sixty-month
period from the date the Fund commenced operations. IFG has agreed that if
it redeems any of its initially acquired shares of the Fund during the
five years from the date the Fund commenced operations, the proceeds
payable to it in respect of such shares will be reduced by a pro rata
share of the Fund's unamortized organization costs.
G. EXPENSES - Each of the Portfolios bears expenses incurred specifically on
its behalf and, in addition, each Portfolio bears a portion of general
expenses, based on the relative net assets of each Portfolio.
Under an agreement between each Portfolio and the Fund's Custodian,
agreed upon Custodian Fees and Expenses are reduced by credits granted by
the Custodian from any temporarily uninvested cash. Similarly, Other
Expenses, which include Pricing Expenses, are reduced by credits earned by
each Portfolio from security brokerage transactions under certain
broker/service arrangements with third parties. Such credits are included
in Fees and Expenses Paid Indirectly in the Statement of Operations.
For the six months ended June 30, 1996, Fees and Expenses Paid
Indirectly consisted of the following:
Custodian Fees Other
Portfolio and Expenses Expenses
- --------------------------------------------------------------------------------
High Yield Portfolio $2,562 $28
Industrial Income Portfolio 3,497 804
Total Return Portfolio 2,377 564
Utilities Portfolio 1,168 0
NOTE 2 - INVESTMENT ADVISORY AND OTHER AGREEMENTS. IFG serves as the Fund's
investment adviser. As compensation for its services to the Fund, IFG receives
an investment advisory fee which is accrued daily at the applicable rate and
paid monthly. The fee is based on the annual rate of each Portfolio's average
net assets as follows:
AVERAGE NET ASSETS
----------------------------------------------
$0 to $500 Million Over
$500 to $1 $1
Portfolio Million Billion Billion
- --------------------------------------------------------------------------------
High Yield Portfolio 0.60% 0.55% 0.45%
Industrial Income Portfolio 0.75% 0.65% 0.55%
Total Return Portfolio 0.75% 0.65% 0.55%
Utilities Portfolio 0.60% 0.55% 0.45%
<PAGE>
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of the
High Yield, Industrial Income and Utilities Portfolios are made by ITC. A
separate Sub-Advisory Agreement between IFG and INVESCO Capital Management, Inc.
("ICM"), an affiliate of IFG, provides that investment decisions of the Total
Return Portfolio are made by ICM. Fees for such sub-advisory services are paid
by IFG.
In accordance with an Administrative Agreement, each Portfolio pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee of $5,000 per Portfolio per year. The
fee is paid monthly at one-twelfth of the annual fee.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by each Portfolio.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended
June 30, 1996, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were as follows:
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
High Yield Portfolio $10,323,637 $7,831,140
Industrial Income Portfolio 8,009,568 3,980,692
Total Return Portfolio 1,384,153 13,141
Utilities Portfolio 734,519 193,290
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities were as follows:
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
Industrial Income Portfolio $756,094 $273,332
Total Return Portfolio 2,650,219 345,437
NOTE 4 - APPRECIATION AND DEPRECIATION. At June 30, 1996, the gross appreciation
of securities in which there was an excess of value over tax cost, the gross
depreciation of securities in which there was an excess of tax cost over value
and the resulting net appreciation (depreciation) by Portfolio were as follows:
Net
Gross Gross Appreciation
Portfolio Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------
High Yield Portfolio $54,713 $246,249 $(191,536)
Industrial Income Portfolio 1,495,886 241,593 1,254,293
Total Return Portfolio 901,386 86,662 814,724
Utilites Portfolio 62,266 15,569 46,697
<PAGE>
NOTE 5 - TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG, ITC or ICM.
The Fund has adopted an unfunded noncontributory defined benefit pension plan
covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 25% of the retainer fee at
the time of retirement. As of July 1, 1996, benefits will be based on an annual
rate of 40% of the retainer fee at the time of retirement. Pension expenses for
the six months ended June 30, 1996, included in Directors' Fees and Expenses in
the Statement of Operations, and unfunded accrued pension costs and pension
liability included in Prepaid Expenses and Accrued Expenses, respectively, in
the Statement of Assets and Liabilities were as follows:
Unfunded
Pension Accrued Pension
Portfolio Expenses Pension Costs Liability
- --------------------------------------------------------------------------------
High Yield Portfolio $22 $(31) $(3)
Industrial Income Portfolio 26 (38) (3)
Total Return Portfolio 26 (38) (3)
Utilities Portfolio 1 (1) 0
NOTE 6 - LINE OF CREDIT. The Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 10% of the Net Assets at Value of each respective
Portfolio. Each Portfolio agrees to pay annual fees and interest on the unpaid
principal balance based on prevailing market rates as defined in the agreement.
For the six months ended June 30, 1996, there were no such borrowings.
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights
(For a Fund Share Outstanding Throughout Each Period)
Six Months Year Period
Ended Ended Ended
June 30 December 31 December 31
--------------------------------------------------
1996 1995 1994^
UNAUDITED
High Yield Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $11.04 $10.01 $10.00
--------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.43 0.55 0.05
Net Gains on Securities
(Both Realized and Unrealized) 0.03 1.43 0.01
---------------------------------------------------
Total from Investment
Operations 0.46 1.98 0.06
---------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.55 0.05
Distributions from Capital
Gains 0.00 0.40 0.00
---------------------------------------------------
Total Distributions 0.00 0.95 0.05
---------------------------------------------------
Net Asset Value -
End of Period 11.50 11.04 10.01
===================================================
TOTAL RETURN>> 4.17%* 19.76% 0.60%*
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) 7,542 5,233 624
Ratio of Expenses to Average
Net Assets# 0.44%*@ 0.97%@ 0.74%~
Ratio of Net Investment Income
to Average Net Assets# 4.50%* 8.79% 2.72%~
Portfolio Turnover Rate 137%* 310% 23%*
^ From May 27, 1994, commencement of operations, to December 31, 1994.
>> Total return does not reflect expenses that apply to the related insurance
policies, and inclusion of these charges would reduce the total return for
the periods shown.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
six months ended June 30, 1996, the year ended December 31, 1995 and the
period ended December 31, 1994. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 0.77%
(not annualized), 2.71% and 30.38%, respectively, and ratio of net
investment income to average net assets would have been 4.17% (not
annualized), 7.05% and (26.92%), respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed
by Investment Adviser, which is before any expense offset arrangements.
~ Annualized
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Six Months Year Period
Ended Ended Ended
June 30 December 31 December 31
--------------------------------------------------
1996 1995 1994^
UNAUDITED
Industrial Income Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.58 $10.09 $10.00
--------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.17 0.19 0.03
Net Gains on Securities
(Both Realized and Unrealized) 1.25 2.76 0.09
---------------------------------------------------
Total from Investment
Operations 1.42 2.95 0.12
---------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.20 0.03
Distributions from Capital Gains 0.00 0.26 0.00
---------------------------------------------------
Total Distributions 0.00 0.46 0.03
---------------------------------------------------
Net Asset Value -
End of Period 14.00 12.58 10.09
===================================================
TOTAL RETURN>> 11.29%* 29.25% 1.23%*
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) 13,479 8,362 525
Ratio of Expenses to Average
Net Assets# 0.49%*@ 1.03%@ 0.79%~
Ratio of Net Investment Income
to Average Net Assets# 1.54%* 3.50% 1.69%~
Portfolio Turnover Rate 43%* 97% 0%*
^ From August 10, 1994, commencement of operations, to December 31, 1994.
>> Total return does not reflect expenses that apply to the related insurance
policies, and inclusion of these charges would reduce the total return for
the periods shown.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
six months ended June 30, 1996, the year ended December 31, 1995 and the
period ended December 31, 1994. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 0.67%
(not annualized), 2.31% and 32.55%, respectively, and ratio of net
investment income to average net assets would have been 1.35% (not
annualized), 2.22% and (30.07%), respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed
by Investment Adviser, which is before any expense offset arrangements.
~ Annualized
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Six Months Year Period
Ended Ended Ended
June 30 December 31 December 31
---------------------------------------------------
1996 1995 1994^
UNAUDITED
Total Return Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.14 $10.09 $10.00
---------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.17 0.25 0.09
Net Gains on Securities
(Both Realized and Unrealized) 0.44 2.05 0.09
---------------------------------------------------
Total from Investment
Operations 0.61 2.30 0.18
---------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.24 0.09
Distributions from
Capital Gains 0.00 0.01 0.00
---------------------------------------------------
Total Distributions 0.00 0.25 0.09
---------------------------------------------------
Net Asset Value -
End of Period 12.75 12.14 10.09
===================================================
TOTAL RETURN>> 5.02%* 22.79% 1.75%*
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) 10,733 6,553 1,055
Ratio of Expenses to Average
Net Assets# 0.48%*@ 1.01%@ 0.86%~
Ratio of Net Investment Income to
Average Net Assets# 1.66%* 3.91% 3.86%~
Portfolio Turnover Rate 4%* 5% 0%*
^ From June 2, 1994, commencement of operations, to December 31, 1994.
>> Total return does not reflect expenses that apply to the related insurance
policies, and inclusion of these charges would reduce the total return for
the periods shown.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
six months ended June 30, 1996, the year ended December 31, 1995 and the
period ended December 31, 1994. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 0.71%
(not annualized), 2.51% and 16.44%, respectively, and ratio of net
investment income to average net assets would have been 1.43% (not
annualized), 2.41% and (11.72%), respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed
by Investment Adviser, which is before any expense offset arrangements.
~ Annualized
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Six Months Year Period
Ended Ended Ended
June 30 December 31 December 31
---------------------------------------------------
1996 1995 1994+
UNAUDITED
Utilities Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $10.84 $10.00 $10.00
---------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.10 0.07 0.00
Net Gains on Securities
(Both Realized and Unrealized) 0.80 0.84 0.00
---------------------------------------------------
Total from Investment
Operations 0.90 0.91 0.00
---------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.07 0.00
---------------------------------------------------
Net Asset Value -
End of Period 11.74 10.84 10.00
===================================================
TOTAL RETURN>> 8.30%* 9.08% 0.00%
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) 943 290 25
Ratio of Expenses to
Average Net Assets# 0.65%*@ 1.80%@ 0.00%
Ratio of Net Investment Income
to Average Net Assets# 1.46%* 2.47% 0.00%
Portfolio Turnover Rate 38%* 24% 0%
+ All of the expenses for the Portfolio were voluntarily absorbed by IFG for
the period ended December 31, 1994, since investment operations did not
commence during 1994.
>> Total return does not reflect expenses that apply to the related insurance
policies, and inclusion of these charges would reduce the total return for
the periods shown.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
six months ended June 30, 1996 and for the year ended December 31, 1995.
If such expenses had not been voluntarily absorbed, ratio of expenses to
average net assets would have been 4.28% (not annualized) and 57.13%,
respectively, and ratio of net investment income to average net assets
would have been (2.17%) (not annualized) and (52.86%), respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed
by Investment Adviser, which is before any expense offset arrangements.
<PAGE>
INVESCO FUNDS
INVESCO Funds Group, Inc.,(SM) Distributor
7800 E. Union Avenue
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
This information must be preceded or
accompanied by a current prospectus.
