SEMIANNUAL REPORT
June 30, 1997
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 1997
We are currently in the greatest bull market of all time, and wealth has
been created on a scale that has never been seen before. The strength and
longevity of this market have surprised even the staunchest market advocates. A
preemptive strike against inflation by the Federal Reserve Board in March - a 25
basis point increase in the Fed Fund's Rate - produced a pullback in the stock
market. However, since that minor correction, the broad equity market has
produced approximately 20% returns in several large-capitalization stock
indexes. This has left many investment professionals wondering if we have
reached a nearly perfect investment environment - and how long it might last.
The driving forces behind the strength of the market during the last 10
years are low inflation, strong economic growth, and increased worker
productivity. These factors have led to above-average increases in corporate
profits and earnings, sending stock prices higher. Meanwhile, prices across the
economy (as measured by the Gross Domestic Product price deflator) rose only
1.8% in 1996 -- the smallest gain since 1964. Currently, the inflation rate for
the U.S. economy is at 2.2%, and producer prices actually declined over the
first six months in 1997.
Gains in worker productivity have helped curb inflation. Over the last 10
years, corporate restructuring, downsizing, and investments in technology have
increased the efficiency of American companies and workers. These gains have
outpaced wage increases. Coupled with increased international competition,
improved productivity has put downward pressure on prices - which is beneficial
for the economy as it stimulates consumer demand.
As a result, the U.S. economy has re-established itself as the global
leader. In turn, the demand for skilled labor has risen, and unemployment in May
1997 was at 4.8% (the lowest level since 1973). Some naysayers suggest that the
tight labor market will eventually lead to increased wages and inflation, which
may have negative consequences for corporate stock prices.
The fixed-income market, although producing gains over the last six months,
has not enjoyed the jubilance experienced in the equity markets. Concerns over
potential wage inflation, a slowing economy, and an increase in the Fed Funds
Rate have kept fixed-income securities in what appears to be a consolidated
trading range.
<PAGE>
INVESCO Variable Investment
Funds, Inc.
The line graphs on the following pages illustrate, for the period from
inception through 6/30/97, 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 Fund
For the six-month period ended 6/30/97, VIF-Industrial Income Fund achieved
a total return of 14.10%. During the same period, the S&P 500 had a total return
of 20.58%, and the Lehman Government/Corporate Bond index had a total return of
2.74%. (Of course, past performance is not a guarantee of future results.)(1),
(2)
VIF--Industrial Income Portfolio
Average Annual Total Return
as of 6/30/97 (1)
1 Year 25.36%
---------------------------
Since inception(8/94)22.92%
---------------------------
Equity Strategy
The last year proved rewarding for domestic equity investors and
shareholders of VIF-Industrial Income Fund. However, rewards were not produced
without increased volatility as the general market suffered two corrections, and
sector rotation was quick and severe. Within this environment, we have remained
true to our investment philosophy: first, examining economic variables to
determine sectors of the economy that might outperform the market, and then
selecting stocks within those sectors. After determining the appropriate
sectors, we look for companies with attributes that we call the "Mile High
Five": strong balance sheets, positive cash flows, excellent management, market
leadership positions, and the ability to grow earnings.
Graph:
This line graph compares the value of a $10,000 investment in
VIF--Industrial Income Fund to the value of a $10,000 investment in the S&P
500 Index and the Lehman Government/Corporate Bond Index, assuming in each
case reinvestment of all dividends and capital gain distributions, for the
period from inception (8/94) through 6/30/97.
By buying companies on fundamentals rather than market momentum, we seek to
select stocks that will perform well today and in the future. This keeps the
fund's portfolio turnover relatively low and reduces expenses -- a bonus for
shareholders. Over the last six months, we have also kept the fund well-balanced
between sectors. This has allowed us to participate in market appreciation while
helping limit volatility.
Over the last six months, many high-growth, large-capitalization companies
have provided substantial returns for the fund. Stocks in the health care and
technology sectors such as Intel Corp, International Busienss Machines, Lucent
Technologies, and Warner-Lambert Co. have seen phenomenal price appreciation.
Recently, we have started to trim our exposure to several large-cap,
higher-growth companies, as we feel many may be fully valued. In the technology
<PAGE>
sector, our analysis has led us to reduce our exposure to companies like
Intel Corp and International Busienss Machines, and increase our focus on more
reasonably valued companies like Motorola Inc. and Texas Instruments.
Our sector analysis has also led us to favor more conservative, reasonably
valued sectors such as capital goods and telecommunications. The former sector
continues to benefit from strong earnings growth, corporate restructuring, and
industry consolidation. This has improved the long-term profitability of many
capital goods companies.
In the telecommunications sector, our analysis shows an industry that has
benefited from consolidation and increased consumer demand for new products
(e.g. second phone lines, call waiting). Increased demand for ancillary products
should translate into accelerating earnings for many companies. When investing
in this sector, an added bonus is that many of these stocks are presently
selling at substantial discounts compared to the broad market multiple - despite
growing earnings in the 10% to 12% range while providing a 4% to 5% dividend
yield.
Fixed-Income Strategy
The fixed-income market experienced a tightening in credit and interest rate
spreads over the last year. This compression of spreads altered the risk/reward
relationship for the market, and it presently appears that fixed-income
securities may be trading in a consolidated range. Within this environment, we
have been successful by using our value-oriented bond management style to
identify corporate issuers who may experience fundamental credit quality
improvement or be acquired by a better-quality issuer. Many of these credit
improvements or special situations occurred in communications and electric
utility industries.
Finally, we have reduced our exposure to mortgage-backed securities after a
year of strong performance and tightening spreads. Concurrently, we have
increased our use of putable and yield-to-call bonds, which should help to
provide performance and stability in a potential volatile market. (Putable bonds
are debt obligations that allow holders to redeem the issue at specified
intervals before maturity and receive full face value.)
Looking Forward
The fund is designed for the patient long-term investor, and may be
appropriate as a core holding in a well-diversified portfolio. Presently, the
fund is invested in approximately 80% equities and 20% bonds. However, the
fund's investment flexibility allows the managers to reduce equity exposure to
65% (or increase it to 85%) of the fund's total net assets, depending upon
market conditions. This type of investment freedom produces a fund that
historically has participated in market rallies, but has limited shareholders'
exposure to market declines.
Fund Management
Senior Vice President and Director of Investments Charles P. Mayer is
responsible for the equity side of the portfolio. An industry veteran with 28
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 Investment Corp.
Charlie is assisted by Vice President Albert M. Grossi. Al began his
investment career as a securities analyst in 1974. Previously, he served as a
portfolio manager/senior analyst with Westinghouse Pension Investments
Corporation. He holds both an MBA and BA from Rutgers University. Senior Vice
President Donovan J. "Jerry" Paul serves as co-portfolio manager of the fund,
<PAGE>
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 Fund
For the six-month period ended 6/30/97, VIF-Total Return Fund achieved a
total return of 13.25%. During the same period, the S&P 500 had a total return
of 20.58%, and the Lehman Government/Corporate Bond index had a total return of
2.74%. (Of course, past performance is not a guarantee of future results.)(1),
(2)
Total Return Fund seeks to add value in three ways: through asset
allocation, stock selection, and bond strategy. For example, the average
historical spread of returns between bonds and stocks is three percent. If the
spread is out-of-line with this historical relationship, then the fund's asset
mix is adjusted to reflect the current environment. A mix of 60% stocks and 40%
bonds is considered a neutral position. Presently, our asset mix slightly favors
equities, with an approximate allocation between bonds and stocks of 34% and
66%, respectively.
VIF--Total Return Portfolio
Average Annual Total Return
as of 6/30/97 (1)
1 Year 20.97%
---------------------------
Since inception(6/94)16.17%
---------------------------
Over the last six months, the market has been infatuated with
lower-yielding, large-capitalization high-growth companies. Although many of
these companies are solid fundamentally, it appears that a significant portion
may be over-valued. With this in mind, we have steered our investments away from
higher growth sectors to more conservative, reasonably valued industry groups
such as consumer cyclicals, consumer staples, and capital goods.
Graph:
This line graph compares the value of a $10,000 investment in VIF--Total
Return Fund to the value of a $10,000 investment in the S&P 500 Index and
the Lehman Government/Corporate Bond Index, assuming in each case
reinvestment of all dividends and capital gain distributions, for the period
from inception (6/94) through 6/30/97.
Looking Forward
We will continue to monitor the relationship between the returns on bonds
and stocks, and adjust the portfolio accordingly. Within this volatile
environment, we will stay with our disciplined investment approach: selecting
stocks using a "bottom up" value process, while examining bonds on fundamentals
and analysis of Federal Reserve Board policy.
Fund Management
VIF-Total Return Fund 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. Ed began his investment career in 1969.
<PAGE>
He is assisted by David S. Griffin, who began his investment career in 1982.
David holds an MBA from the College of William & Mary, as well as a BA from Ohio
Wesleyan University. He is a Chartered Financial Analyst.
VIF-High Yield Fund
For the six-month period ended 6/30/97, VIF-High Yield Fund achieved a total
return of 7.47%, easily outperforming the Merrill Lynch High Yield Index, which
over the same period had a total return of 5.86%. (Of course, past performance
is not a guarantee of future results.)(1),(2)
During the last six months, the high-yield sector again led the fixed-income
market. However, tightening credit and interest rate spreads have changed the
risk/reward relationship in the bond market, demanding a greater emphasis on
fundamental analysis when evaluating high-yield securities. Within this
environment, our in-depth research has been crucial in identifying undervalued
high-yield securities whose fundamentals may be improving, as well as helping
limit our risk exposure.
VIF--High Yield Portfolio
Average Annual Total Return
as of 6/30/97 (1)
1 Year 20.29%
---------------------------
Since inception(5/94)13.89%
---------------------------
Our thorough research has continued to favor the communications industry --
especially the competitive local exchange market. This industry continues to
experience consolidation and improving fundamentals. Recently, the fund's
performance has been enhanced by companies like McLeod Inc. and Brooks Fiber
Properties. These firms have been improving fundamentally, and are active in
acquiring local communications companies.
Looking Forward
Tightening spreads in high-yield securities have created a more difficult
investment landscape. However, despite narrow spreads, we continue to identify
opportunities for capital appreciation and/or credit improvement. High-yield
securities trade primarily on creditworthiness and less on interest rates. Thus,
a substantial increase in interest rates may have a minimal effect on high-yield
bonds compared to the broad fixed-income market.
Graph:
This line graph compares the value of a $10,000 investment in VIF--High
Yield Fund 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 (5/94)
through 6/30/97.
Fund Management
VIF-High Yield Fund 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
For the six-month period ended 6/30/97, VIF-Utilities Fund achieved a total
return of 6.44%. During the same period, the Dow Jones Utilities Index had a
total return of -2.47%. (Of course, past performance is not a guarantee of
future results.)(1,2)
A changing regulatory environment has made the utility sector more
challenging. Within the electric utility industry, deregulation and securitizing
of debt by selected companies has had a major influence on stock prices. For the
telecommunications industry, consolidation, regulatory reform, and increased
competition in the local and long distance markets have affected value. The
natural gas industry is also influenced by changes in the regulatory and
political environment.
Graph:
This line graph compares the value of a $10,000 investment in VIF--Utilities
Fund to the value of a $10,000 investment in the Dow Jones Utilities Index,
assuming in each cash reinvestment of all dividends and capital gain
distributions, for the period from inception (1/95) through 6/30/97.
Within this investment environment, we continue to overweight the portfolio
with natural gas companies. This particular stock group has benefited from
consolidation, a trend that should continue as companies become more efficient
and profitable through acquisitions.
In the telecommunication industry, RBOCs (Regional Bell Operating Companies)
remain among our favorites. Companies like Bell Atlantic, NYNEX Corp, and SBC
Communications should benefit from increased demand for ancillary products (e.g.
second phone lines, call waiting) and industry consolidation.
VIF--Utilities Portfolio
Average Annual Total Return
as of 6/30/97 (1)
1 Year 10.82%
---------------------------
Since inception(1/95)11.38%
---------------------------
Deregulation in the electric utility industry will allow low-cost providers
of electricity to continue to increase their market share and profitability.
Public Service of Colorado is an example of a low-cost provider that has
enhanced the fund's returns over the last six months.
Looking Forward
The utility sector continues to benefit from positive structural changes.
These changes may increase the profitability of selected firms. In addition to
offering this potential for capital appreciation, utility stocks are typically
defensive in nature, producing a high dividend yield. These stocks may add a
degree of stability to a portfolio exposed to the broad equity market.
Fund Management
Effective July 1, 1997, Brian B. Hayward assumed the responsibilities of
portfolio manager of VIF-Utilities Fund. Previously, he was a senior equity
analyst for Mississippi Valley Advisors in St. Louis, Missouri and began his
investment career in 1985. Brian earned a BA in Mathematics and MA in Economics
<PAGE>
from the University of Missouri. He is a Chartered Financial Analyst.
(1)Total return assumes reinvestment of dividends and capital gain distributions
for the periods indicated. Past performance is not a guarantee of future
results. 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>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Investment Securities
June 30, 1997
UNAUDITED
- -----------------------------------------------------------------------------------------------
Country Shares, Units
Code if or Principal
Description Non US Amount Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HIGH YIELD Portfolio
FIXED INCOME SECURITIES 91.99%
Corporate Bonds 91.99%
AIR FREIGHT 2.82%
Coach USA, Sr Sub Notes^, 9.375%,
7/1/2007 $100,000 $ 99,000
Statia Terminals International/
Statia Terminals Canada
1st Mortgage Notes, Series B,
11.750%, 11/15/2003 250,000 263,750
Viking Star Shipping, 1st Pfd Ship
Mortgage Notes
9.625%, 7/15/2003 100,000 105,500
----------
468,250
----------
ALUMINUM 3.27%
Kaiser Aluminum & Chemical,
Sr Sub Notes, 12.750%, 2/1/2003 500,000 542,500
----------
AUTO PARTS 0.90%
Oxford Automotive, Sr Sub Notes^,
10.125%, 6/15/2007 150,000 150,000
----------
BROADCASTING 6.93%
Allbritton Communications, Sr Sub Deb,
Series B 9.750%, 11/30/2007 300,000 292,500
Benedek Communications, Sr Sub
Discount Step-Up Notes
Zero Coupon^^, 5/15/2006 150,000 91,125
Capstar Radio Broadcasting Partners,
Sr Sub Notes^
9.250%, 7/1/2007 100,000 96,750
Commodore Media, Sr Sub Step-Up Notes,
7.500%^^, 5/1/2003 415,000 452,350
Paxson Communications, Sr Sub Notes,
11.625%, 10/1/2002 100,000 108,250
11.750%, 11/15/2004 100,000 110,250
----------
1,151,225
----------
BUILDING MATERIALS 1.56%
USG Corp, Sr Notes, 8.500%, 8/1/2005 250,000 258,437
----------
<PAGE>
CABLE 12.82%
Century Communications, Sr Notes,
8.875%, 1/15/2007 100,000 97,750
Diamond Cable Communications PLC,
Sr Discount Step-Up Notes^
Zero Coupon^^, 2/15/2007 UK 500,000 287,500
Galaxy Telecom LP/Galaxy Telecom
Capital, Sr Sub Notes
12.375%, 10/1/2005 250,000 265,000
International CableTel, Sr Deferred
Step-Up Notes, Series B
Zero Coupon^^, 2/1/2006 UK 750,000 519,375
Kabelmedia Holding GmbH, Sr Discount
Step-Up Notes
Zero Coupon^^, 8/1/2006 GM 250,000 152,500
Marcus Cable LP/Marcus Cable
Captial III, Sr Deb
11.875%, 10/1/2005 100,000 108,500
Multicanal SA, Notes^,
10.500%, 2/1/2007 AR 100,000 107,750
TCI Satellite Entertainment,
Sr Sub Discount Step-Up Notes^
Zero Coupon^^, 2/15/2007 1,000,000 590,000
----------
2,128,375
----------
COMMUNICATIONS - EQUIPMENT &
MANUFACTURING 1.48%
WinStar Equipment, Gtd Sr Secured
Notes^, 12.500%, 3/15/2004 250,000 245,000
----------
COMPUTER RELATED 1.63%
Unisys Corp, Sr Notes, Series B,
12.000%, 4/15/2003 250,000 270,625
----------
CONTAINERS 1.50%
Gaylord Container, Sr Notes^,
9.750%, 6/15/2007 250,000 249,375
----------
DISTRIBUTION 1.47%
Di Giorgio Corp, Sr Notes^,
10.000%, 6/15/2007 250,000 243,125
----------
ELECTRIC UTILITIES 1.57%
Westmin Resources Ltd, Sr Secured
Notes, 11.000%, 3/15/2007 CA 250,000 261,250
----------
ENTERTAINMENT 1.58%
All American Communications,
Sr Sub Notes, Series B
10.875%, 10/15/2001 250,000 261,562
----------
FINANCIAL 1.75%
HomeSide Inc, Sr Secured Priority
Notes, Series B
11.250%, 5/15/2003 250,000 290,625
----------
<PAGE>
GAMING 5.38%
Aztar Corp, Sr Sub Notes,
13.750%, 10/1/2004 350,000 399,000
Mohegan Tribal Gaming Authority,
Sr Secured Notes, Series B
13.500%, 11/15/2002 200,000 262,000
Trump Hotels & Casino Resorts
Holdings LP/Trump Hotels & Casino
Resorts Funding, Sr Secured Notes,
15.500%, 6/15/2005 200,000 232,000
----------
893,000
----------
HEALTH CARE RELATED 1.50%
Healthsource Inc, Conv Sub Notes,
5.000%, 3/1/2003 250,000 249,688
----------
LEISURE TIME 1.91%
Coleman Escrow, Sr Discount Notes^,
Zero Coupon, 5/15/2001 500,000 316,250
----------
MANUFACTURING 1.63%
International Wire Group, Sr Sub
Notes, Series B^
11.750%, 6/1/2005 250,000 271,250
----------
METALS MINING 1.33%
Haynes International, Sr Notes,
11.625%, 9/1/2004 200,000 221,000
----------
NATURAL GAS 0.63%
Ferrellgas LP/Ferrellgas Finance,
Sr Notes, Series A
10.000%, 8/1/2001 100,000 105,000
----------
OFFICE EQUIPMENT & SUPPLIES 1.38% Bell & Howell,
Sr Discount Step-Up Deb,
Series B Zero Coupon^^, 3/1/2005 285,000 229,425
----------
OIL & GAS RELATED 8.71%
Chesapeake Energy, Sr Notes, Series B,
8.500%, 3/15/2012 150,000 136,500
Dual Drilling, Sr Sub Notes,
9.875%, 1/15/2004 300,000 321,000
Energy Corp of America, Sr Sub Notes^,
9.500%, 5/15/2007 250,000 247,500
Forcenergy Inc, Sr Sub Notes, Series A,
8.500%, 2/15/2007 250,000 244,375
Magnum Hunter Resources, Sr Sub Notes^,
10.000%, 6/1/2007 250,000 246,875
Ocean Energy, Sr Notes^,
8.875%, 7/15/2007 250,000 250,000
----------
<PAGE>
1,446,250
----------
PAPER & FOREST PRODUCTS 3.11%
Tembec Finance, Gtd Sr Notes,
9.875%, 9/30/2005 CA 500,000 515,625
----------
PUBLISHING 2.71%
Affiliated Newspaper Investments,
Sr Discount Step-Up Deb
Zero Coupon^^, 7/1/2006 500,000 450,000
----------
REAL ESTATE INVESTMENT TRUST 2.62%
Rockefeller Center Properties, Conv Deb,
Zero Coupon, 12/31/2000 250,000 170,625
Saul (B F) REIT, Sr Secured Notes,
11.625%, 4/1/2002 250,000 265,000
----------
435,625
----------
RETAIL 0.27%
InterAct Systems, Sr Discount
Step-Up Notes
Zero Coupon^^, 8/1/2003 100,000 45,500
----------
SERVICES 1.51%
Williams Scotsman, Sr Notes^,
9.875%, 6/1/2007 250,000 250,000
----------
SPECIALTY PRINTING 0.64%
MDC Communications, Sr Sub Notes,
10.500%, 12/1/2006 CA 100,000 106,250
----------
TELECOMMUNICATIONS - CELLULAR &
WIRELESS 12.32%
Centennial Cellular, Sr Notes,
8.875%, 11/1/2001 250,000 248,125
Comcast Cellular Holdings, Sr Notes^,
9.500%, 5/1/2007 250,000 250,625
CommNet Cellular, Sr Sub Discount
Step-Up Notes
Zero Coupon^^, 9/1/2003 200,000 194,000
Globalstar LP/Globalstar Capital,
Sr Notes^, 11.250%, 6/15/2004 250,000 234,375
Microcell Telecommunications, Sr Discount
Step-Up Notes Series B, Zero
Coupon^^, 6/1/2006 500,000 277,500
NEXTEL Communications, Sr Discount
Step-Up Notes, Zero Coupon^^
9/1/2003 250,000 217,500
8/15/2004 200,000 154,000
PriCellular Wireless, Sr Sub
Discount Step-Up Notes
Zero Coupon^^, 10/1/2003 500,000 470,000
----------
<PAGE>
2,046,125
----------
TELECOMMUNICATIONS - LONG DISTANCE 7.06%
Brooks Fiber Properties
Sr Discount Step-Up Notes, Zero Coupon^^
3/1/2006 200,000 136,250
11/1/2006 150,000 97,500
Sr Notes^, 10.000%, 6/1/2007 250,000 253,125
EchoStar DBS, Sr Secured Notes^,
12.500%, 7/1/2002 100,000 99,000
McLeodUSA Inc, Sr Discount
Step-Up Notes^
Zero Coupon^^, 3/1/2007 500,000 318,750
NextLink Communications, Sr Notes,
12.500%, 4/15/2006 250,000 267,500
----------
1,172,125
----------
TOTAL FIXED INCOME SECURITIES
(Cost $15,286,903) 15,273,462
----------
PREFERRED STOCKS & WARRANTS 3.41%
BROADCASTING 1.52%
Capstar Broadcasting Partners, Sr
Exchangeable Pfd^, 12.000% 2,500 252,500
----------
RETAIL 0.00%
InterAct Systems, Warrants^ (Exp 2003)* 100 13
----------
TELECOMMUNICATIONS - CELLULAR
& WIRELESS 1.16%
Microcell Telecommunications
Conditional Warrants^ (Exp 2006)* 2,000 1,250
Warrants^ (Exp 2006)* 2,000 25,000
Nextlink Communications
Sr Exchangeable Pfd**, 14.000% 3,176 166,740
Warrants^ (Exp 2009)* 3,000 31
----------
193,021
----------
TELECOMMUNICATIONS -
LONG DISTANCE 0.73%
ICG Holdings, Exchangeable Pfd, 14.250% 115 121,272
----------
TOTAL PREFERRED STOCKS & WARRANTS
(Cost $523,213) 566,806
----------
OTHER SECURITIES 4.60%
CABLE 2.87%
OpTel Inc, Units^ (Each unit consists
of one $1,000 face amount Sr Note,
13.000%, 2/15/2005 and 1 shr of
non-voting cmn stock) 500 477,500
----------
<PAGE>
SERVICES 0.61%
Verio Inc, Units^ (Each unit consists
of one $1,000 face amount Sr Note,
13.500%, 6/15/2004 and 8 wrnts to
purchase 1.7604 shrs of cmn stock) 100 100,750
----------
TELEPHONE 1.12%
Ionica PLC, Units^ (Each unit consists
of one $1,000 face amount Sr Discount
Note, 13.500%^^, 5/1/2007 and 1 wrnt
to purchase 19.619 shrs of cmn stock) UK 350 185,500
----------
TOTAL OTHER SECURITIES
(Cost $773,960) 763,750
----------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $16,584,076#) $16,604,018
==========
INDUSTRIAL INCOME Portfolio
COMMON STOCKS 79.16%
AEROSPACE & DEFENSE 3.11%
Northrop Grumman 6,000 526,875
Sundstrand Corp 7,000 378,000
----------
904,875
----------
AUTOMOBILES 1.06%
Chrysler Corp 2,000 65,625
Ford Motor 2,000 75,500
General Motors 3,000 167,063
----------
308,188
----------
BANKS 5.36%
Bank of New York 10,000 435,000
CoreStates Financial 4,000 215,000
First Tennessee National 5,000 240,000
Fleet Financial Group 5,000 316,250
Summit Bancorp 7,000 350,875
----------
1,557,125
----------
BEVERAGES 1.16%
Anheuser-Busch Cos 8,000 335,500
----------
CHEMICALS 1.68%
Agrium Inc 15,000 172,500
ARCO Chemical 2,000 95,125
Lawter International 5,000 63,125
Olin Corp 4,000 156,250
<PAGE>
----------
487,000
----------
COMMUNICATIONS - EQUIPMENT &
MANUFACTURING 2.09%
Motorola Inc 8,000 608,000
----------
COMPUTER RELATED 0.65%
SABRE Group Holdings Class A* 7,000 189,875
----------
CONGLOMERATES 1.24%
Tenneco Inc 8,000 361,500
----------
ELECTRIC UTILITIES 1.88%
Electricidade de Portugal SA
Sponsored ADR* 7,000 252,000
IES Industries 10,000 295,000
----------
547,000
----------
ELECTRICAL EQUIPMENT 2.43%
Emerson Electric 6,000 330,375
General Electric 4,000 261,500
Honeywell Inc 1,500 113,813
----------
705,688
----------
ELECTRONICS 0.60%
General Motors Class H 3,000 173,250
----------
340,313
----------
ELECTRONICS - SEMICONDUCTORS 3.39%
Analog Devices* 16,000 425,000
Maxim Integrated Products* 1,000 56,875
Texas Instruments 6,000 504,375
----------
986,250
----------
ENGINEERING & CONSTRUCTION 1.14%
Fluor Corp 6,000 331,125
----------
FINANCIAL 0.76%
Associates First Capital Class A 4,000 222,000
----------
FOODS 4.07%
General Mills 2,000 130,250
Heinz (H J) Co 9,725 448,566
Kellogg Co 5,000 428,125
Tasty Baking 10,000 175,000
----------
1,181,941
----------
<PAGE>
GOLD & PRECIOUS METALS MINING 0.94%
Newmont Mining 7,000 273,000
----------
HEALTH CARE DRUGS - PHARMACEUTICALS 3.78%
Novo-Nordisk A/S ADR 2,000 109,750
SmithKline Beecham PLC ADR
Representing Ord A Shrs 4,000 366,500
Warner-Lambert Co 5,000 621,250
----------
1,097,500
----------
HEALTH CARE RELATED 2.12%
Becton Dickinson & Co 4,000 202,500
Tenet Healthcare* 14,000 413,875
----------
616,375
----------
HOUSEHOLD PRODUCTS 1.46%
Procter & Gamble 3,000 423,750
----------
INSURANCE 5.06%
Allmerica Financial 6,000 239,250
American States Financial 8,000 368,000
Lincoln National 3,000 193,125
Ohio Casualty 8,000 352,000
Travelers Property Casualty Class A 8,000 319,000
----------
1,471,375
----------
INVESTMENT BANK/BROKER FIRM 0.89%
Morgan Stanley Dean Witter Discover & Co 6,000 258,375
----------
LODGING - HOTELS 0.91%
Hilton Hotels 10,000 265,625
----------
MANUFACTURING 1.16%
Allied Signal 4,000 336,000
----------
NATURAL GAS 0.72%
K N Energy 5,000 210,625
----------
OIL & GAS RELATED 11.49%
Amoco Corp 2,000 173,875
Apache Corp 10,000 325,000
Chevron Corp 5,000 369,687
Dresser Industries 4,000 149,000
Enron Oil & Gas 10,000 181,250
Exxon Corp 6,000 369,000
Noble Drilling* 10,000 225,625
Phillips Petroleum 5,000 218,750
Santa Fe International* 7,000 238,000
Schlumberger Ltd 2,000 250,000
Sonat Inc 6,000 307,500
USX-Marathon Group 10,000 288,750
<PAGE>
Union Pacific Resources Group 5,000 124,375
Unocal Corp 3,000 116,438
----------
3,337,250
----------
PAPER & FOREST PRODUCTS 1.15%
Albany International Class A 5,000 112,500
Champion International 4,000 221,000
----------
333,500
----------
PERSONAL CARE 0.73%
Avon Products 3,000 211,687
----------
PHOTOGRAPH & IMAGING 0.38%
Polaroid Corp 2,000 111,000
----------
POLLUTION CONTROL 1.11%
Waste Management 10,000 321,250
----------
PUBLISHING 0.79%
Belo (A H) Corp Class A 5,500 228,937
----------
RAILROADS 1.00%
Kansas City Southern Industries 4,500 290,250
----------
REAL ESTATE INVESTMENT TRUST 0.44%
Patriot American Hospitality 5,000 127,500
----------
RETAIL 4.65%
Dayton Hudson 5,000 265,937
May Department Stores 3,000 141,750
Penney (J C) Co 4,000 208,750
Tandy Corp 10,000 560,000
Toys "R" Us* 5,000 175,000
----------
1,351,437
----------
SAVINGS & LOAN 0.93%
Charter One Financial 5,000 269,375
----------
TELECOMMUNICATIONS - LONG DISTANCE 1.66%
Deutsche Telekom AG Sponsored ADR 20,000 482,500
---------
TELEPHONE 6.27%
Ameritech Corp 3,000 203,813
Bell Atlantic 5,000 379,375
BellSouth Corp 5,000 231,875
GTE Corp 5,500 241,312
NYNEX Corp 4,000 230,500
SBC Communications 5,000 309,375
US WEST Communications Group 6,000 226,125
----------
1,822,375
----------
<PAGE>
TOBACCO 0.90%
Fortune Brands 7,000 261,187
----------
TOTAL COMMON STOCKS
(Cost $18,964,532) 23,000,190
----------
PREFERRED STOCKS 0.18%
GOLD & PRECIOUS METALS MINING 0.18%
Amax Gold, Conv Pfd, Series B, $3.75
(Cost $48,795) 1,000 53,000
----------
FIXED INCOME SECURITIES 16.47%
US Government Obligations 2.57%
US Treasury Notes, 6.500%, 5/15/2005
(Cost $778,357) 750,000 748,829
----------
US Government Agency Obligations 4.84%
Federal Home Loan Mortgage, Gold,
Participation Certificates
6.500%, 8/1/2011 (Cost $1,398,746) 1,432,672 1,405,953
----------
Corporate Bonds 9.06%
AUTOMOBILES 0.34%
General Motors Acceptance,
Medium-Term Notes
6.700%, 4/25/2001 100,000 99,770
----------
BROADCASTING 0.34%
Allbritton Communications,
Sr Sub Deb, Series B
9.750%, 11/30/2007 100,000 97,500
----------
BUILDING MATERIALS 0.71%
USG Corp, Deb, 8.750%, 3/1/2017 200,000 206,000
----------
ELECTRIC UTILITIES 2.30%
DQU-II Funding, Collateral Lease,
8.700%, 6/1/2016 200,000 216,827
Long Island Lighting, Deb,
8.200%, 3/15/2023 200,000 204,913
PSI Energy, Deb, 6.350%, 11/15/2006 250,000 247,523
----------
669,263
----------
ENTERTAINMENT 0.88%
Time Warner Entertainment LP, Sr Deb,
8.375%, 3/15/2023 250,000 256,238
----------
HEALTH CARE DRUGS - PHARMACEUTICALS 0.75%
McKesson Corp, Sub Deb, 4.500%, 3/1/2004 250,000 218,342
----------
<PAGE>
HEALTH CARE RELATED 0.86%
Healthsource Inc, Conv Sub Notes^,
5.000%, 3/1/2003 250,000 249,687
----------
OFFICE EQUIPMENT & SUPPLIES 0.84%
Xerox Corp, Medium-Term Notes, Series D,
6.250%, 11/15/2026 250,000 244,005
----------
PUBLISHING 0.31%
Affiliated Newspaper Investments,
Sr Discount Step-Up Deb
Zero Coupon^^, 7/1/2006 100,000 90,000
----------
RETAIL 0.87%
Penney (J C) Co, Deb, 6.900%, 8/15/2026 250,000 251,332
----------
SAVINGS & LOAN 0.86%
Long Island Savings Bank,
Medium-Term Notes
7.000%, 6/13/2002 250,000 249,867
----------
TOTAL CORPORATE BONDS
(Cost $2,626,232) 2,632,004
----------
TOTAL FIXED INCOME SECURITIES
(Cost $4,803,335) 4,786,786
----------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 4.19%
FINANCIAL 4.19%
Associates Corp of North America,
6.130%, 7/1/1997
(Cost $1,216,000) 1,216,000 1,216,000
----------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $25,032,662)
(Cost for Income Tax Purposes $25,036,302) $29,055,976
==========
TOTAL RETURN Portfolio
COMMON STOCKS 62.61%
AEROSPACE & DEFENSE 2.36%
Boeing Co 2,200 116,737
Lockheed Martin 1,300 134,631
Raytheon Co 2,200 112,200
----------
363,568
----------
AUTO PARTS 1.29%
Genuine Parts 5,850 198,169
----------
<PAGE>
AUTOMOBILES 1.23%
Ford Motor 5,000 188,750
----------
BANKS 5.76%
Comerica Inc 1,900 129,200
First Chicago NBD 2,600 157,300
First of America Bank 3,300 150,975
First Union 1,500 138,750
State Street Boston 4,200 194,250
Wachovia Corp 2,000 116,625
----------
887,100
----------
BEVERAGES 1.77%
Anheuser-Busch Cos 3,000 125,813
PepsiCo Inc 3,900 146,494
----------
272,307
----------
BUILDING MATERIALS 0.88%
Sherwin-Williams Co 4,400 135,850
----------
CHEMICALS 2.21%
Akzo Nobel NV Sponsored ADR 1,600 110,600
Dow Chemical 1,500 130,688
Great Lakes Chemical 1,900 99,513
----------
340,801
----------
COMPUTER RELATED 2.20%
Compaq Computer* 2,000 198,500
Hewlett-Packard Co 2,500 140,000
----------
338,500
----------
CONGLOMERATES 1.03%
Textron Inc 2,400 159,300
----------
DISTRIBUTION 1.12%
SuperValu Inc 5,000 172,500
----------
ELECTRIC UTILITIES 3.69%
CINergy Corp 3,700 128,806
Edison International 6,300 156,713
Energy Group PLC Sponsored ADR 1,125 47,672
Texas Utilities 2,300 79,206
Unicom Corp 7,000 155,750
----------
568,147
----------
ELECTRICAL EQUIPMENT 1.10%
General Electric 2,600 169,975
----------
FOODS 4.58%
<PAGE>
Archer-Daniels-Midland Co 6,145 144,408
General Mills 1,700 110,713
Heinz (H J) Co 3,550 163,744
Kellogg Co 1,300 111,313
Unilever NV New York Shrs 800 174,400
----------
704,578
----------
HEALTH CARE DRUGS -
PHARMACEUTICALS 4.27%
Abbott Laboratories 2,500 166,875
American Home Products 1,800 137,700
Bristol-Myers Squibb 2,200 178,200
Lilly (Eli) & Co 1,600 174,900
----------
657,675
----------
HOUSEHOLD FURNITURE & APPLIANCES 1.42%
Whirlpool Corp 4,000 218,250
----------
INSURANCE 2.46%
Ohio Casualty 5,000 220,000
SAFECO Corp 3,400 158,738
----------
378,738
----------
INSURANCE BROKERS 1.11%
Marsh & McLennan 2,400 171,300
----------
INVESTMENT BANK/BROKER FIRM 0.88%
Morgan Stanley Dean Witter Discovery & Co 3,135 135,001
----------
MANUFACTURING 2.64%
Minnesota Mining & Manufacturing 1,600 163,200
National Service Industries 5,000 243,438
----------
406,638
----------
OIL & GAS RELATED 4.36%
Amoco Corp 1,300 113,019
Exxon Corp 2,800 172,200
Repsol SA Sponsored ADR 5,000 212,188
Royal Dutch Petroleum New York
Registry 5 Gldr Shrs 3,200 174,000
----------
671,407
----------
PAPER & FOREST PRODUCTS 1.53%
Hanson PLC Sponsored ADR 1,125 28,125
Imperial Chemical Industries PLC ADR 1,500 85,313
Westvaco Corp 3,900 122,606
----------
236,044
----------
<PAGE>
POLLUTION CONTROL 0.73%
Waste Management 3,500 112,438
----------
PUBLISHING 1.92%
Dun & Bradstreet 6,000 157,500
Gannett Co 1,400 138,250
----------
295,750
----------
RAILROADS 0.85%
Illinois Central Series A 3,750 131,016
----------
RETAIL 3.59%
CVS Corp 2,100 107,625
Circuit City Stores 3,500 124,468
Giant Food Class A 3,300 107,662
K mart Corp* 8,500 104,124
Penney (J C) Co 2,100 109,593
----------
553,472
----------
SPECIALTY PRINTING 1.11%
Deluxe Corp 5,000 170,625
----------
TELEPHONE 2.66%
NYNEX Corp 1,300 74,912
Telefonica de Espana SA Sponsored ADR 2,000 172,500
Telefonos de Mexico SA de CV
Sponsored ADR Representing Ord
Series L Shrs 3,400 162,350
----------
409,762
----------
TEXTILE - APPAREL MANUFACTURING 0.61%
Liz Claiborne 2,000 93,250
----------
TEXTILE - HOME FURNISHING 0.52%
Shaw Industries 7,500 79,687
----------
TOBACCO 2.20%
Fortune Brands 2,700 100,743
Gallaher Group PLC Sponsored ADR* 2,700 49,780
Imperial Tobacco Group PLC Sponsored ADR 2,250 28,687
Philip Morris 3,600 159,750
----------
338,960
----------
TRUCKERS 0.53%
Caliber System 2,200 81,950
----------
TOTAL COMMON STOCKS
(Cost $6,798,177) 9,641,508
----------
FIXED INCOME SECURITIES 27.88%
<PAGE>
US Government Obligations 19.76%
US Treasury Bonds
8.125%, 8/15/2019 200,000 228,063
7.250%, 8/15/2022 300,000 313,031
US Treasury Notes
7.500%, 11/15/2001 300,000 312,656
6.500%, 8/15/2005 300,000 299,250
6.375%, 7/15/1999 200,000 201,125
6.375%, 1/15/2000 300,000 301,594
6.375%, 8/15/2002 400,000 399,750
5.875%, 2/15/2000 995,000 987,227
----------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $3,024,790) 3,042,696
----------
US Government Agency Obligations 4.26%
Federal Home Loan Mortgage, Gold,
Participation Certificates
8.000%, 10/1/2010 66,256 68,254
6.500%, 7/1/2001 92,886 92,731
Federal National Mortgage Association
Gtd Mortgage Pass-Through Certificates
8.500%, 3/1/2010 132,280 136,926
6.500%, 5/1/2026 144,293 138,246
6.000%, 5/1/2009 143,786 139,621
Government National Mortgage Association I
Pass-Through Certificates,
7.500%, 3/15/2026 80,378 80,662
----------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $652,498) 656,440
----------
Corporate Bonds 3.86%
BANKS 1.96%
ABN Amro Bank NV, Sub Notes,
7.550%, 6/28/2006 200,000 205,474
NationsBank Corp, Sub Notes,
6.500%, 3/15/2006 100,000 95,854
----------
301,328
----------
BEVERAGES 0.64%
PepsiCo Inc, Medium-Term Notes,
5.875%, 6/1/2000 100,000 98,395
----------
POLLUTION CONTROL 1.26%
WMX Technologies Notes,
6.375%, 12/1/2003 200,000 194,320
----------
TOTAL CORPORATE BONDS
(Cost $600,243) 594,043
----------
TOTAL FIXED INCOME SECURITIES
(Cost $4,277,531) 4,293,179
----------
<PAGE>
SHORT-TERM INVESTMENTS 9.51%
US Government Obligations 4.56%
US Treasury Notes
6.125%, 3/31/1998 500,000 501,563
5.500%, 9/30/1997 200,000 200,000
----------
(Cost $701,607) 701,563
----------
Repurchase Agreements 4.95%
Repurchase Agreement with State Street Bank
& Trust Co dated 6/30/1997 due 7/1/1997
at 5.600%, repurchased at $763,119
(Collateralized by US Treasury Bonds due
8/15/2013 at 12.000% value
$777,453)
(Cost $763,000) 763,000 763,000
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,464,607) 1,464,563
----------
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
(Cost $12,540,315#) $15,399,250
==========
UTILITIES Portfolio
COMMON STOCKS 94.89%
OIL & GAS RELATED 3.02%
Union Pacific Resources Group 2,400 59,700
Williams Cos 650 28,438
----------
88,138
----------
TELECOMMUNICATIONS -
CELLULAR & WIRELESS 1.23%
NEXTEL Communications Class A* 1,900 35,981
----------
TELECOMMUMICATIONS -
LONG DISTANCE 12.11%
AT&T Corp 1,200 42,075
Brooks Fiber Properties* 1,000 33,750
LCI International* 1,600 35,000
MCI Communications 1,600 61,250
McLeodUSA Inc Class A* 1,350 45,562
Portugal Telecom SA Sponsored ADR 200 8,025
Sprint Corp 1,200 63,150
Telecomunicacoes Brasileiras SA
Sponsored ADR 100 15,175
Viatel Inc* 1,300 8,775
WorldCom Inc* 1,260 40,320
----------
353,082
----------
<PAGE>
Utilities 78.53%
ELECTRIC 40.72%
Allegheny Power System 1,400 37,362
American Electric Power 1,200 50,400
Baltimore Gas & Electric 500 13,344
CMS Energy 900 31,725
Carolina Power & Light 800 28,700
Central & South West 1,230 26,138
CINergy Corp 800 27,850
DTE Energy 1,000 27,625
Dominion Resources 700 25,637
Duke Energy 1,227 58,802
Edison International 1,300 32,338
Entergy Corp 1,100 30,112
FPL Group 600 27,638
Florida Progress 500 15,656
Florida Public Utilities 500 10,437
GPU Inc 900 32,288
IES Industries 1,700 50,150
Idaho Power 1,650 51,769
Interstate Power 300 8,587
NIPSCO Industries 1,300 53,706
Northern States Power 600 31,050
OGE Energy 2,040 92,820
PacifiCorp 2,200 48,400
PECO Energy 2,100 44,100
Pennsylvania Gas & Electric Corp 1,300 31,525
Pennsylvania Power & Light Resources 1,200 23,925
Pinnacle West Capital 900 27,056
Potomac Electric Power 600 13,875
Public Service of Colorado 2,200 91,300
SCANA Corp 2,000 49,625
Southern Co 1,300 28,438
TNP Enterprises 1,500 34,781
Union Electric 800 30,150
----------
1,187,309
----------
NATURAL GAS 11.62%
Coastal Corp 1,250 66,484
Columbia Gas System 800 52,200
Enron Corp 1,200 48,975
New Jersey Resources 400 12,550
ONEOK Inc 1,350 43,453
Sonat Inc 1,150 58,938
Trans Canada PipeLines Ltd 2,800 56,350
----------
338,950
----------
TELEPHONE 26.19%
ALLTEL Corp 1,400 46,813
Ameritech Corp 1,270 86,281
Bell Atlantic 1,250 94,844
<PAGE>
BellSouth Corp 2,270 105,271
Century Telephone Enterprises 1,200 40,425
Cincinnati Bell 800 25,200
GTE Corp 1,750 76,781
NYNEX Corp 1,650 95,081
SBC Communications 1,500 92,812
Southern New England Telecommunications 1,000 38,875
Telefonica del Peru SA Sponsored ADR
Representing Class B Shrs 900 23,569
US WEST Communications Group 1,000 37,688
----------
763,640
----------
TOTAL UTILITIES 2,289,899
----------
TOTAL COMMON STOCKS
(Cost $2,560,416) 2,767,100
----------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 5.11%
AUTOMOBILES 5.11%
Ford Motor Credit, 5.514%, 7/1/1997
(Cost $149,000) 149,000 149,000
----------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $2,709,416#) $2,916,100
==========
^ Securities are registered pursuant to Rule 144A and may be deemed restricted
for resale.
^^ 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 is a payment-in-kind (PIK) bond. PIK bonds may make interest
payments in additional shares.
~ Security may make dividend payments in other types of securities or cash.
* Security is non-income producing.
# Also represents cost for income tax purposes.
</TABLE>
Summary of Investments by Country
<TABLE>
<CAPTION>
% of
Country Investment
Country Code Securities Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Yield Portfolio
Argentina AR 0.65% $107,750
Canada CA 5.32 883,125
<PAGE>
Germany GM 0.92 152,500
United Kingdom UK 5.97 992,375
United States US 87.14 14,468,268
-------------------------
100.00% $16,604,018
=========================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Assets and Liabilities
June 30, 1997
UNAUDITED
Health Industrial
Sciences High Yield Income
Portfolio Portfolio Portfolio
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost $ 0 $16,584,076 $25,032,662
===============================================
At Value $ 0 $16,604,018 $29,055,976
Cash 24,813 138,976 51,041
Receivables:
Investment Securities Sold 0 1,092,282 0
Fund Shares Sold 0 16,763 450,619
Dividends and Interest 0 252,530 92,596
Organization Costs 0 5,523 5,523
Prepaid Expenses and Other Assets 0 13,780 11,317
-----------------------------------------------
TOTAL ASSETS 24,813 18,123,872 29,667,072
-----------------------------------------------
LIABILITIES
Payables:
Investment Securities Purchased 0 338,436 0
Fund Shares Repurchased 0 7,762 9,865
Accrued Expenses and Other Payables 0 13,761 13,938
-----------------------------------------------
TOTAL LIABILITIES 0 359,959 23,803
-----------------------------------------------
Net Assets at Value $ 24,813 $17,763,913 $29,643,269
===============================================
NET ASSETS
Paid-in Capital* $ 24,813 $16,251,084 $24,319,963
Accumulated Undistributed Net
Investment Income (See Note 1) 0 711,300 280,387
Accumulated Undistributed Net
Realized Gain on Investment
Securities and Foreign
Currency Transactions 0 781,587 1,019,605
Net Appreciation of Investment
Securities and Foreign Currency
Transactions 0 19,942 4,023,314
-----------------------------------------------
Net Assets at Value $ 24,813 $17,763,913 $29,643,269
===============================================
Shares Outstanding 2,481 1,402,934 1,813,346
Net Asset Value, Offering and
Redemption Price per Share $ 10.00 $ 12.66 $ 16.35
===============================================
<PAGE>
* The Fund has 900 million authorized shares of common stock, par value $0.01
per share. Of such shares, 100 million have been allocated to each individual
Portfolio.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Assets and Liabilities (Continued)
June 30, 1997
UNAUDITED
Total
Technology Return Utilities
Portfolio Portfolio Portfolio
------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost~ $ 0 $12,540,315 $ 2,709,416
================================================
At Value~ $ 0 $15,399,250 $ 2,916,100
Cash 10,944 72,235 93,636
Receivables:
Fund Shares Sold 0 173,843 93,485
Dividends and Interest 0 107,743 7,657
Organization Costs 0 5,523 5,523
Prepaid Expenses and Other Assets 0 16,269 17,969
------------------------------------------------
TOTAL ASSETS $ 10,944 $15,774,863 $ 3,134,370
------------------------------------------------
LIABILITIES
Payables:
Fund Shares Repurchased 0 5,904 3,632
Accrued Expenses and Other Payables 0 14,178 12,983
------------------------------------------------
TOTAL LIABILITIES 0 20,082 16,615
------------------------------------------------
Net Assets at Value $ 10,944 $15,754,781 $ 3,117,755
================================================
NET ASSETS
Paid-in Capital* $ 10,944 $12,651,184 $ 2,835,175
Accumulated Undistributed Net
Investment Income (See Note 1) 0 205,133 41,042
Accumulated Undistributed Net
Realized Gain on Investment
Securities and Foreign
Currency Transactions 0 39,529 34,854
Net Appreciation of Investment S
ecurities and Foreign
Currency Transactions 0 2,858,935 206,684
------------------------------------------------
Net Assets at Value $ 10,944 $15,754,781 $ 3,117,755
================================================
Shares Outstanding 1,094 1,053,122 245,037
Net Asset Value, Offering
and Redemption Price
per Share $10.00 $14.96 $ 12.72
================================================
<PAGE>
~ Investment securities at cost and value at June 30, 1997 include a repurchase
agreement of $763,000 for Total Return Portfolio.
* The Fund has 900 million authorized shares of common stock, par value $0.01
per share. Of such shares, 100 million have been allocated to each individual
Portfolio.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Operations
Period Ended June 30, 1997 (Note 1)
UNAUDITED
Health High Industrial
Sciences Yield Income
Portfolio Portfolio Portfolio
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 0 $ 7,623 $ 199,281
Interest 0 762,273 194,465
Foreign Taxes Withheld 0 0 (1,496)
------------------------------------------------
TOTAL INCOME 0 769,896 392,250
------------------------------------------------
EXPENSES
Investment Advisory Fees 0 47,679 91,110
Transfer Agent Fees 0 2,500 2,500
Administrative Fees 0 6,192 6,822
Custodian Fees and Expenses 0 5,306 5,228
Directors' Fees and Expenses 0 3,981 4,116
Organization Expenses 0 1,841 1,841
Professional Fees and Expenses 0 8,947 9,484
Registration Fees and Expenses 0 52 52
Other Expenses 0 3,292 1,492
------------------------------------------------
TOTAL EXPENSES 0 79,790 122,645
Fees and Expenses Absorbed
by Investment Adviser 0 (13,396) (10,756)
Fees and Expenses Paid Indirectly 0 (2,748) (2,332)
------------------------------------------------
NET EXPENSES 0 63,646 109,557
------------------------------------------------
NET INVESTMENT INCOME 0 706,250 282,693
------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT
SECURITIES
Net Realized Gain on Investment
Securities and Foreign
Currency Transactions 0 776,999 1,019,605
Change in Net Appreciation of
Investment Securities and
Foreign Currency Transactions 0 (296,531) 1,990,031
------------------------------------------------
NET GAIN ON INVESTMENT
SECURITIES 0 480,468 3,009,636
------------------------------------------------
Net Increase in Net Assets
from Operations $ 0 $ 1,186,718 $ 3,292,329
================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Operations (Continued)
Period Ended June 30, 1997 (Note 1)
UNAUDITED
Total
Technology Return Utilities
Portfolio Portfolio Portfolio
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 0 $ 117,431 $ 50,639
Interest 0 169,466 4,738
Foreign Taxes Withheld 0 (1,875) (207)
------------------------------------------------
TOTAL INCOME 0 285,022 55,170
------------------------------------------------
EXPENSES
Investment Advisory Fees 0 53,663 8,406
Transfer Agent Fees 0 2,500 2,500
Administrative Fees 0 6,084 5,210
Custodian Fees and Expenses 0 3,531 2,139
Directors' Fees and Expenses 0 3,975 3,787
Organization Expenses 0 1,841 1,841
Professional Fees and Expenses 0 8,858 7,611
Registration Fees and Expenses 0 52 52
Other Expenses 0 1,476 310
------------------------------------------------
TOTAL EXPENSES 0 81,980 31,856
Fees and Expenses Absorbed
by Investment Adviser 0 (16,533) (17,845)
Fees and Expenses Paid Indirectly 0 (1,571) (1,391)
------------------------------------------------
NET EXPENSES 0 63,876 12,620
------------------------------------------------
NET INVESTMENT INCOME 0 221,146 42,550
------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT
SECURITIES
Net Realized Gain on Investment
Securities and Foreign
Currency Transactions 0 86,273 34,854
Change in Net Appreciation
of Investment Securities and
Foreign Currency Transactions 0 1,441,574 105,122
------------------------------------------------
NET GAIN ON INVESTMENT
SECURITIES 0 1,527,847 139,976
------------------------------------------------
Net Increase in Net Assets
from Operations $ 0 $ 1,748,993 $ 182,526
================================================
<PAGE>
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets
Health Sciences High Yield
Portfolio Portfolio
Period Six Months Year
Ended Ended Ended
June 30 June 30 December 31
----------------- -----------------------------
1997 1997 1996
UNAUDITED UNAUDITED
(Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 0 $ 706,250 $ 776,704
Net Realized Gain on Investment
Securities and Foreign
Currency Transactions 0 776,999 412,110
Change in Net Appreciation of
Investment Securities and
Foreign Currency Transactions 0 (296,531) 260,801
----------------- -----------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 0 1,186,718 1,449,615
----------------- -----------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (3,333) (768,178)
In Excess of Net Investment Income 0 0 0
Net Realized Gain on Investment
Securities 0 0 (407,604)
----------------- -----------------------------
TOTAL DISTRIBUTIONS 0 (3,333) (1,175,782)
----------------- -----------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 23,815 13,715,445 13,157,662
Reinvestment of Distributions 0 0 1,175,782
----------------- -----------------------------
23,815 13,715,445 14,333,444
Amounts Paid for Repurchases
of Shares (2) (11,173,268) (5,801,973)
----------------- -----------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 23,813 2,542,177 8,531,471
----------------- -----------------------------
Total Increase in Net Assets 23,813 3,725,562 8,805,304
NET ASSETS
Initial Subscription (Note 1) 1,000 0 0
Beginning of Period 0 14,038,351 5,233,047
----------------- -----------------------------
End of Period $ 24,813 $17,763,913 $ 14,038,351
================= =============================
Accumulated Undistributed
Net Investment Income
Included in Net Assets at
End of Period (See Note 1) $ 0 $ 711,300 $ 8,383
--------------------------------------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1) 100 0 0
Shares Sold 2,381 1,127,110 1,101,791
Shares Issued from Reinvestment
of Distributions 0 0 99,812
----------------- -----------------------------
2,481 1,127,110 1,201,603
Shares Repurchased 0 (915,684) (484,030)
----------------- -----------------------------
Net Increase in Fund Shares 2,481 211,426 717,573
================= =============================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets (Continued)
Industrial Income Technology
Portfolio Portfolio
Six Months Year Period
Ended Ended Ended
June 30 December 31 June 30
-----------------------------------------------------
1997 1996 1997
UNAUDITED UNAUDITED
(Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 282,693 $ 405,528 $ 0
Net Realized Gain on Investment
Securities and Foreign
Currency Transactions 1,019,605 1,122,522 0
Change in Net Appreciation of
Investment Securities and
Foreign Currency Transactions 1,990,031 1,369,048 0
------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 3,292,329 2,897,098 0
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (2,636) (405,328) 0
In Excess of Net Investment Income 0 (514) 0
Net Realized Gain on Investment
Securities 0 (1,121,678) 0
------------------------------------------------------
TOTAL DISTRIBUTIONS (2,636) (1,527,520) 0
------------------------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 15,797,206 15,001,088 50,848
Reinvestment of Distributions 0 1,527,203 0
------------------------------------------------------
15,797,206 16,528,291 50,848
Amounts Paid for Repurchases
of Shares (11,785,897) (3,917,900) (40,904)
------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 4,011,309 12,610,391 9,944
------------------------------------------------------
Total Increase in Net Assets 7,301,002 13,979,969 9,944
NET ASSETS
Initial Subscription (Note 1) 0 0 1,000
Beginning of Period 22,342,267 8,362,298 0
------------------------------------------------------
End of Period $ 29,643,269 $22,342,267 $ 10,944
------------------------------------------------------
Accumulated Undistributed Net
Investment Income Included
in Net Assets at End of
Period (See Note 1) $ 281,231 $ 330 $ 0
--------------------------------------------------------------------------
<PAGE>
FUND SHARE TRANSACTIONS
Initial Subscriptions (Note 1) 0 0 100
Shares Sold 1,037,355 1,070,184 5,085
Shares Issued from Reinvestment
of Distributions 0 106,660 0
------------------------------------------------------
1,037,355 1,176,844 5,185
Shares Repurchased (783,060) (282,515) (4,091)
------------------------------------------------------
Net Increase in Fund Shares 254,295 894,329 1,094
======================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets (Continued)
Total Return Utilities
Portfolio Portfolio
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30 December 31 June 30 December 31
--------------------------- ---------------------------
1997 1996 1997 1996
UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 221,146 $ 357,380 $ 42,550 $ 27,768
Net Realized Gain (Loss)
on Investment Securities
and Foreign Currency
Transactions 86,273 (3,764) 34,854 30,198
Change in Net Appreciation
of Investment Securities
and Foreign Currency
Transactions 1,441,574 888,821 105,122 87,087
--------------------------- ---------------------------
NET INCREASE IN NET
ASSETS FROM OPERATIONS 1,748,993 1,242,437 182,526 145,053
--------------------------- ---------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (14,511) (361,829) 0 (27,885)
In Excess of Net Investment
Income 0 (43,701) 0 (1,508)
Net Realized Gain on
Investment Securities 0 (781) 0 (30,023)
--------------------------- ---------------------------
TOTAL DISTRIBUTIONS (14,511) (406,311) 0 (59,416)
--------------------------- ---------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales
of Shares 9,290,449 7,825,087 697,785 2,346,356
Reinvestment of
Distributions 0 406,311 0 59,416
--------------------------- ---------------------------
9,290,449 8,231,398 697,785 2,405,772
Amounts Paid for
Repurchases of Shares (8,783,253) (2,107,418) (422,804) (120,953)
--------------------------- ---------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE
TRANSACTIONS 507,196 6,123,980 274,981 2,284,819
--------------------------- ---------------------------
Total Increase in
Net Assets 2,241,678 6,960,106 457,507 2,370,456
NET ASSETS
Beginning of Period 13,513,103 6,552,997 2,660,248 289,792
--------------------------- ---------------------------
End of Period $ 15,754,781 $ 13,513,103 $ 3,117,755 $ 2,660,248
=========================== ===========================
<PAGE>
Accumulated Undistributed
(Distributions in Excess
of) Net Investment Income
Included in Net Assets at
End of Period (See Note 1) $ 205,133 $ (1,502) $ 41,042 $ (1,508)
FUND SHARE TRANSACTIONS
Shares Sold 661,194 616,196 57,738 201,321
Shares Issued from
Reinvestment of
Distributions 0 30,758 0 4,972
--------------------------- ---------------------------
661,194 646,954 57,738 206,293
Shares Repurchased (631,091) (163,597) (35,271) (10,467)
--------------------------- ---------------------------
Net Increase in Fund Shares 30,103 483,357 22,467 195,826
=========================== ===========================
See Notes to Financial Statements
<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 nine separate Portfolios: Dynamics Portfolio, Growth Portfolio,
Health Sciences Portfolio, High Yield Portfolio, Industrial Income Portfolio,
Small Company Growth Portfolio, Technology Portfolio, Total Return Portfolio and
Utilities Portfolio. Health Sciences Portfolio, High Yield Portfolio, Industrial
Income Portfolio, Technology Portfolio, Total Return Portfolio and Utilities
Portfolio (the "Portfolios") are presented herein. The investment objectives of
the Portfolios are: To seek the best possible current income for Industrial
Income Portfolio; to seek a high total return on investment through capital
appreciation and current income for 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 High Yield Portfolio; to seek capital
appreciation and income on securities principally engaged in specific business
sectors for Technology and Health Sciences Portfolios; and to seek capital
appreciation and income on securities of companies principally engaged in public
utilities for Utilities Portfolio. Health Sciences and Technology Portfolios
commenced investment operations on May 22, 1997 and May 21, 1997, respectively.
Dynamics, Small Company Growth and Growth Portfolios have not yet commenced
operations. 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 income 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.
<PAGE>
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.
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.
Assets and liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing market rates
as quoted by one or more banks or dealers on the date of valuation. The
cost of securities is translated into U.S. dollars at the rates of
exchange prevailing when such securities are acquired. Income and expenses
are translated into U.S. dollars at the rates of exchange prevailing when
accrued.
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, original issue discount
and amortized premium is recorded on the accrual basis. Discounts and
premiums 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.
Effective January 1, 1997, the Fund began accruing income using the
effective interest method which includes amortizing premiums on purchases of
portfolio securities as adjustments to income. This method of recording
income more closely reflects the economics of holding and disposing of debt
instruments. Prior to January 1, 1997, the Fund accrued coupon interest
income and original issue discount and accounted for purchased premiums as
capital gains or losses when realized upon disposition of the associated
security. The cumulative effect of applying this accounting change was to
decrease accumulative undistributed net investment income by $2,636, $3,333
and $14,511 for High Yield, Industrial Income and Total Return Portfolios,
respectively. Such accounting change had no effect on net asset value per
share. Health Sciences, Technology, and Utilities Portfolios were not
effected by this accounting change.
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.
The Fund's use of short-term forward foreign currency contracts may
subject it to certain risks as a result of unanticipated movements in
<PAGE>
foreign exchange rates. The Fund does not hold short-term forward foreign
currency contracts for trading purposes. The Fund may hold foreign currency
in anticipation of settling foreign security transactions and not for
investment purposes.
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. Total Return and Utilities Portfolios, incurred and
elected to defer post-October net capital losses of $8,192 and $1,911,
respectively, to the year ended December 31, 1997. Net Capital loss
carryovers utilized in 1996 by Utilities Portfolio amounted to $175.
To the extent future capital gains are offset by capital loss
carryovers, such gains will not be distributed to shareholders. Therefore,
no 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.
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, amortized
premiums, foreign currency transactions, nontaxable dividends, net operating
losses and expired capital loss carryforwards.
F. ORGANIZATION COSTS - Organization costs of $73,640 advanced by INVESCO Funds
Group, Inc. ("IFG") for High Yield, Industrial Income, Total Return and
Utilities Portfolios 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. Such credits are
included in Fees and Expenses Paid Indirectly in the Statement of
Operations.
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
<PAGE>
paid monthly. The fee is based on the annual rate of each Portfolio's average
net assets as follows:
</TABLE>
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
--------------------------------------------------------------------
$500
$0 to $0 to $350 Million Over Over
$350 $500 to $700 to $1 $700 $1
Portfolio Million Million Million Billion Million Billion
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Health Sciences
Portfolio 0.75% - 0.65% - 0.55% -
High Yield
Portfolio - 0.60% - 0.55% - 0.45%
Industrial Income
Portfolio - 0.75% - 0.65% - 0.55%
Technology
Portfolio 0.75% - 0.65% - -0.55% -
Total Return
Portfolio - 0.75% - 0.65% - 0.55%
Utilities Portfolio - 0.60% - 0.55% - 0.45%
</TABLE>
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of
Health Sciences, High Yield, Industrial Income, Technology 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 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, 1997, 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 $34,966,344 $31,905,803
Industrial Income Portfolio 14,337,808 9,410,039
Total Return Portfolio 374,162 359,222
Utilities Portfolio 882,330 706,588
<PAGE>
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities were as follows:
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
Industrial Income Portfolio $ 0 $ 42,255
Total Return Portfolio 3,518,048 2,718,154
NOTE 4 - APPRECIATION AND DEPRECIATION. At June 30, 1997, 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 by Portfolio were as follows:
Gross Gross Net
Portfolio Appreciation Depreciation Appreciation
- --------------------------------------------------------------------------------
High Yield Portfolio $ 233,735 $ 213,793 $ 19,942
Industrial Income Portfolio 4,192,491 172,817 4,019,674
Total Return Portfolio 2,945,089 86,154 2,858,935
Utilities Portfolio 268,190 61,506 206,684
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 deferred compensation 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 40% of the retainer fee at the time of
retirement.
Pension expenses for the six months ended June 30, 1997, 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 $ 65 $ 137 $ 280
Industrial Income Portfolio 103 227 431
Total Return Portfolio 68 136 295
Utilities Portfolio 7 17 27
NOTES 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 at June 30, 1997, there were no such borrowings.
<PAGE>
-------------------------------------------------------------------
Other Information
UNAUDITED
On January 31, 1997, a special meeting of the shareholders of the Fund was held
at which the eleven directors identified below were elected, the selection of
Price Waterhouse LLP as independent accountants (Proposal 1), the approval of a
new investment advisory agreement with IFG (Proposal 2) and a new sub-advisory
agreement between IFG and ITC (Proposal 3) were ratified. The following is a
report of the votes cast:
Withheld/
Nominee/Proposal For Against Abstain Total
- --------------------------------------------------------------------------------
High Yield Portfolio
Charles W. Brady 1,008,810 0 5,494 1,014,304
Dan J. Hesser 1,008,810 0 5,494 1,014,304
Fred A. Deering 1,008,810 0 5,494 1,014,304
Victor L. Andrews 1,008,810 0 5,494 1,014,304
Bob R. Baker 1,008,810 0 5,494 1,014,304
Lawrence H. Budner 1,008,810 0 5,494 1,014,304
Daniel D. Chabris 1,008,810 0 5,494 1,014,304
A.D. Frazier, Jr 1,008,810 0 5,494 1,014,304
Hubert L. Harris, Jr 1,008,810 0 5,494 1,014,304
Kenneth T. King 1,008,810 0 5,494 1,014,304
John W. McIntyre 1,008,810 0 5,494 1,014,304
Proposal 1 994,439 0 19,859 1,014,298
Proposal 2 945,997 53,706 14,595 1,014,298
Proposal 3 940,186 59,517 14,595 1,014,298
Industrial Income Portfolio
Charles W. Brady 1,390,505 0 5,735 1,406,240
Dan J. Hesser 1,390,505 0 15,735 1,406,240
Fred A. Deering 1,390,505 0 15,735 1,406,240
Victor L. Andrews 1,390,505 0 15,735 1,406,240
Bob R. Baker 1,390,505 0 15,735 1,406,240
Lawrence H. Budner 1,390,505 0 15,735 1,406,240
Daniel D. Chabris 1,390,505 0 15,735 1,406,240
A.D. Frazier, Jr 1,390,505 0 15,735 1,406,240
Hubert L. Harris, Jr 1,390,505 0 15,735 1,406,240
Kenneth T. King 1,390,505 0 15,735 1,406,240
John W. McIntyre 1,390,505 0 15,735 1,406,240
Proposal 1 1,351,337 14,892 40,011 1,406,240
Proposal 2 1,342,837 12,638 50,765 1,406,240
Proposal 3 1,338,592 15,969 51,673 1,406,234
Total Return Portfolio
Charles W. Brady 975,226 0 11,499 986,725
Dan J. Hesser 975,226 0 11,499 986,725
Fred A. Deering 975,226 0 11,499 986,725
Victor L. Andrews 975,226 0 11,499 986,725
Bob R. Baker 975,226 0 11,499 986,725
<PAGE>
Lawrence H. Budner 975,226 0 11,499 986,725
Daniel D. Chabris 975,226 0 11,499 986,725
A.D. Frazier, Jr 975,226 0 11,499 986,725
Hubert L. Harris, Jr 975,226 0 11,499 986,725
Kenneth T. King 975,226 0 11,499 986,725
John W. McIntyre 975,226 0 11,499 986,725
Proposal 1 942,976 0 43,749 986,725
Proposal 2 932,521 4,958 49,246 986,725
Proposal 3 930,662 4,958 51,105 986,725
Utilities Portfolio
Charles W. Brady 124,504 0 0 124,504
Dan J. Hesser 124,504 0 0 124,504
Fred A. Deering 124,504 0 0 124,504
Victor L. Andrews 124,504 0 0 124,504
Bob R. Baker 124,504 0 0 124,504
Lawrence H. Budner 124,504 0 0 124,504
Daniel D. Chabris 124,504 0 0 124,504
A.D. Frazier, Jr 124,504 0 0 124,504
Hubert L. Harris, Jr 124,504 0 0 124,504
Kenneth T. King 124,504 0 0 124,504
John W. McIntyre 124,504 0 0 124,504
Proposal 1 106,900 974 16,630 124,504
Proposal 2 107,874 0 16,630 124,504
Proposal 3 106,900 974 16,630 124,504
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
June 30
----------
1997+
UNAUDITED
Health Sciences Portfolio
PER SHARE DATA
Net Asset Value - Beginning of Period $ 10.00
----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.00
Net Gains on Securities
(Both Realized and Unrealized) 0.00
----------
Total from Investment Operations 0.00
----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00
Distributions from Capital Gains 0.00
----------
Total Distributions 0.00
----------
Net Asset Value - End of Period $ 10.00
==========
TOTAL RETURN 0.00%*
RATIOS
Net Assets - End of Period ($000 Omitted) $25
Ratio of Expenses to Average Net Assets 0.00%
Ratio of Net Investment Income to
Average Net Assets 0.00%
Portfolio Turnover Rate 0%
Average Commission Rate Paid $0.0000*
* Based on operations for the period shown and, accordingly are not
representative of a full year.
+ All of the expenses of the Portfolio were voluntarily absorbed by IFG for the
period ended June 30, 1997, since investment operations began May 22, 1997.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Six Months Period
Ended Ended
June 30 Year Ended December 31 December 31
---------- ----------------------- ------------
1997 1996 1995 1994^
UNAUDITED
<S> <C> <C> <C> <C>
High Yield Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $11.78 $11.04 $10.01 $10.00
---------- ----------------------- ------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.50 0.72 0.55 0.05
Net Gains on Securities
(Both Realized and
Unrealized) 0.38 1.11 1.43 0.01
---------- ----------------------- ------------
Total from Investment
Operations 0.88 1.83 1.98 0.06
---------- ----------------------- ------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.71 0.55 0.05
Distributions from
Capital Gains 0.00 0.38 0.40 0.00
---------- ----------------------- ------------
Total Distributions 0.00 1.09 0.95 0.05
---------- ----------------------- ------------
Net Asset Value -
End of Period 12.66 11.78 11.04 10.01
========== ======================= ============
TOTAL RETURN> 7.47%* 16.59% 19.76% 0.60%*
RATIOS
Net Assets - End of Period
($000 Omitted) $17,764 $14,033 $5,233 $624
Ratio of Expenses to
Average Net Assets# 0.42%*@ 0.87%@ 0.97%@ 0.74%~
Ratio of Net Investment
Income to Average
Net Assets# 4.41%* 9.19% 8.79% 2.72%~
Portfolio Turnover Rate 214%* 380% 310% 23%*
<PAGE>
^ 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
month ended June 30, 1997, the years ended December 31, 1996, 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 0.50% (not
annualized), 1.32%, 2.71% and 30.38%, respectively, and ratio of net investment
income to average net assets would have been 4.33% (not annualized), 8.74%,
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Six Months Period
Ended Ended
June 30 Year Ended December 31 December 31
---------- ----------------------- ------------
1997 1996 1995 1994^
UNAUDITED
<S> <C> <C> <C> <C>
Industrial Income Portfolio
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.33 $12.58 $10.09 $10.00
---------- ----------------------- ------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.15 0.28 0.19 0.03
Net Gains on Securities
(Both Realized and
Unrealized) 1.87 2.52 2.76 0.09
---------- ----------------------- -----------
Total from Investment
Operations 2.02 2.80 2.95 0.12
---------- ----------------------- -----------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.00 0.28 0.20 0.03
Distributions from
Capital Gains 0.00 0.77 0.26 0.00
---------- ----------------------- -----------
Total Distributions 0.00 1.05 0.46 0.03
---------- ----------------------- -----------
Net Asset Value -
End of Period 16.35 14.33 12.58 10.09
========== ======================= ===========
TOTAL RETURN> 14.10%* 22.28% 29.25% 1.23%*
RATIOS
Net Assets - End of Period
($000 Omitted) 29,643 22,342 8,362 525
Ratio of Expenses to
Average Net Assets# 0.46%*@ 0.95%@ 1.03%@ 0.79%~
Ratio of Net Investment
Income to Average
Net Assets# 1.15%* 2.87% 3.50% 1.69%~
Portfolio Turnover Rate 42%* 93% 97% 0%*
Average Commission
Rate Paid^^ 0.1491* 0.0867 - -
<PAGE>
^ From August 10, 1994, commencement of operations, to December 31, 1994.
+ Distributions in excess of net investment income for the year ended December
31, 1996, aggregated less than $0.01 on a per share basis.
> 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
period 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, 1997, the years ended December 31, 1996, 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 0.50% (not
annualized), 1.19%, 2.31% and 32.55%, respectively, and ratio of net investment
income to average net assets would have been 1.11% (not annualized), 2.63%,
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
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
June 30
----------
1997+
UNAUDITED
Technology Portfolio
PER SHARE DATA
Net Asset Value - Beginning of Period $ 10.00
----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.00
Net Gains or on Securities
(Both Realized and Unrealized) 0.00
----------
Total from Investment Operations 0.00
----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00
Distributions from Capital Gains 0.00
----------
Total Distributions 0.00
----------
Net Asset Value - End of Period 10.00
==========
TOTAL RETURN 0.00%*
RATIOS
Net Assets - End of Period ($000 Omitted 11
Ratio of Expenses to Average Net Assets 0.00%
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.00%
Portfolio Turnover Rate 0%
Average Commission Rate Paid $0.0000*
* Based on operations for the period shown and, accordingly are not
representative of a full year.
+ All of the expenses of the Portfolio were voluntarily absorbed by IFG for the
period ended June 30, 1997, since investment operations began May 21, 1997.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Six Months Period
Ended Ended
June 30 Year Ended December 31 December 31
----------- ----------------------- ------------
1997 1996 1995 1994^
UNAUDITED
Total Return Portfolio
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $13.21 $12.14 $10.09 $10.00
----------- ----------------------- ------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.19 0.36 0.25 0.09
Net Gains on Securities
(Both Realized and
Unrealized) 1.56 1.12 2.05 0.09
----------- ----------------------- ------------
Total from Investment
Operations 1.75 1.48 2.30 0.18
----------- ----------------------- ------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.36 0.24 0.09
In Excess of Net
Investment Income 0.00 0.05 0.00 0.00
Distributions from
Capital Gains 0.00 0.00 0.01 0.00
----------- ----------------------- ------------
Total Distributions 0.00 0.41 0.25 0.09
----------- ----------------------- ------------
Net Asset Value -
End of Period 14.96 13.21 12.14 $10.09
=========== ======================= ============
TOTAL RETURN> 13.25%* 12.18% 22.79% 1.75%*
RATIOS
Net Assets - End of Period
($000 Omitted) 15,755 13,513 6,553 1,055
Ratio of Expenses to
Average Net Assets# 0.46%*@ 0.94%@ 1.01%@ 0.86%~
Ratio of Net Investment
Income to Average
Net Assets# 1.55%* 3.44% 3.91% 3.86%~
Portfolio Turnover Rate 24%* 12% 5% 0%*
Average Commission Rate Paid^^ 0.0320* 0.0890 - -
<PAGE>
^ 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
period 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, 1997, the year ended December 31, 1996, 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 0.58% (not
annualized), 1.30%, 2.51% and 16.44%, respectively, and ratio of net investment
income to average net assets would have been 1.43% (not annualized), 3.08%,
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
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Six Months Period
Ended Ended
June 30 Year Ended December 31 December 31
----------- ----------------------- ------------
1997 1996 1995 1994+
UNAUDITED
Utilities Portfolio
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $11.95 $10.84 $10.00 $10.00
----------- ----------------------- ------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.17 0.13 0.07 0.00
Net Gains on Securities
(Both Realized and
Unrealized) 0.60 1.26 0.84 0.00
----------- ----------------------- ------------
Total from Investment
Operations 0.77 1.39 0.91 0.00
----------- ----------------------- ------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.13 0.07 0.00
In Excess of Net
Investment Income 0.00 0.01 0.00 0.00
Distributions from
Capital Gains 0.00 0.14 0.00 0.00
----------- ----------------------- ------------
Total Distributions 0.00 0.28 0.07 0.00
----------- ----------------------- ------------
Net Asset Value -
End of Period 12.72 11.95 10.84 10.00
=========== ======================= ============
TOTAL RETURN> 6.44%* 12.76% 9.08% 0.00%
RATIOS
Net Assets - End of Period
($000 Omitted) 3,118 2,660 290 25
Ratio of Expenses to
Average Net Assets# 0.50%*@ 1.16%@ 1.80%@ 0.00%
Ratio of Net Investment
Income to Average
Net Assets# 1.51%* 2.92% 2.47% 0.00%
Portfolio Turnover Rate 27%* 48% 24% 0%
Average Commission Rate Paid^^ 0.0763* 0.1055 - -
<PAGE>
+ 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 figures
for the period 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, 1997 and the years ended December 31, 1996 and 1995. If
such expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 1.13% (not annualized), 5.36% and 57.13%,
respectively, and ratio of net investment income to average net assets would
have been 0.88% (not annualized), (1.28%) 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.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
</TABLE>
<PAGE>
INVESCO FUNDS
INVESCO Funds Group, Inc.,(SM)Distributor
7800 E. Union Avenue
Post Office Box 173706
Denver, CO 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
This information must be preceded or accompanied
by a current prospectus.