Annual Report
December 31, 1997
INVESCO
VARIABLE
INVESTMENT FUNDS
VIF--High Yield Fund
VIF--Industrial Income Fund
VIF--Total Return Fund
VIF--Utilities Fund
VIF--Dynamics Fund
VIF--Growth Fund
VIF--Health Sciences Fund
VIF--Small Company Growth Fund
VIF--Technology Fund
<PAGE>
Economic Overview January 1998
After seven years of economic expansion, will 1998 be the year in which the
U.S. economy slows down? That's the question currently being pondered by
investment professionals. In 1997, near perfect conditions contributed to
above-average economic growth as measured by the Gross Domestic Product. This
economic environment was appropriately named the "Goldilocks Economy," as low
inflation, declining interest rates, and increased worker productivity produced
double-digit gains in operating earnings for the fifth straight year for
companies in the S&P 500 - an unprecedented record. Also, consumer confidence in
1997 reached the highest level in 28 years, as jobs were plentiful and real
wages improved for many Americans.(2)
Against this backdrop, equity markets produced euphoric returns for
investors - major equity market indexes (S&P 500 and Dow Jones Industrial
Average) returned over 20% for the third straight year, the first time in
history. However, most of the gains in 1997 were accumulated in the first eight
months of the year; doubts about the sustainability of corporate profits
increased market volatility over the latter half of 1997. In fact, the Dow Jones
Industrial Average experienced swings of greater than 100 points 52 times in
1997 (27 up days and 25 down). Fears of slowing economies in the Asia/Pacific
Rim region, and their effect on the U.S. economy, produced the first market
correction in more than seven years - a decline in value of more than 10% from
the indexes' highs.(2)
Fixed-income markets also produced above-average results in 1997; however,
these returns exhibited a different performance pattern. In the spring of 1997,
fears of inflation and an overheating economy encouraged the Federal Reserve
Board to increase short-term interest rates by 25 basis points. This action
intensified speculation that the economy was expanding too fast, and higher
interest rates were needed to cool off the economy. However, as inflation
remained subdued, fears diminished. Investors then focused on the potential
deflationary pressure exerted by the Asian currency crisis - producing strong
returns for fixed-income investors over the last six months. In fact, the
implied rate on the 30-year U.S. government bond started off 1997 at 6.64%,
moved to a high of 7.17% in April, and experienced a steady decline throughout
the second half of the year, ending at 5.97%.
As we move into 1998, the investment landscape in the U.S. has changed
somewhat; yet, in many respects, the economy is still poised for growth with
benign inflation. Unemployment remains at historically low levels and real wages
are starting to increase. Intense price competition is keeping consumer prices
in check; in many cases, prices are declining due to the flood of cheap goods
from Asian countries. For many companies, the easy gains in earnings produced
over the last few years may be more difficult to replicate. Thus, 1998 may be a
year with increased volatility in the equity markets - producing a more
selective stock market. For the fixed-income market, the fundamentals driving
the rally in bond prices remain intact, with additional help from the Asian
crisis.
<PAGE>
INVESCO Variable Investment Funds
The line graphs on the following pages illustrate, for the period from
inception through 12/31/97, 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--High Yield Fund
VIF--High Yield Fund
Average Annual Total Return
as of 12/31/97 (1)
1 year 17.33%
-----------------------------
Since inception (5/94) 14.60%
-----------------------------
For the one-year period ended 12/31/97, VIF--High Yield Fund achieved a
total return of 17.33%. This easily outperformed the Merrill Lynch High Yield
Index, which over the same period had a total return of 12.83%. In addition,
independent mutual fund analyst Lipper Analytical Services ranked VIF--High
Yield Fund #2 of 36 variable high yield funds for the three-year period ended
12/31/97. For the one-year period, the fund ranked #4 of 48 funds. (Of course,
past performance is not a guarantee of future results.)(1),(2),(3)
Graph:
This line graph represents a comparison of 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 Index, assuming in each case reinvestment of all dividends
and capital gain distributions, for the period from inception (5/94) through
12/31/97.
The high-yield sector again produced strong returns for investors over the
last year. Through in-depth analysis, we seek to identify corporate securities
that we believe are mispriced by the market, regardless of the interest rate
environment. This value-oriented management style helps limit our risk exposure,
while identifying undervalued, high-yield securities whose fundamentals may be
improving.
Over the last year, the communications sector has been one of the dominant
themes in the portfolio. Industry deregulation has created enormous market
potential for competitive local exchange carriers (CLECs) and rural services
providers. Not only are many of these companies improving fundamentally, but the
rapid pace of consolidation in this sector increases the chance that they may be
<PAGE>
acquired by firms with stronger credit ratings. Thus, investors may have a
chance for capital appreciation in two ways: through improving company
fundamentals (which may lead to higher bond ratings), or through industry
consolidation. Both McLeodUSA Inc. and Brooks Fiber Properties produced strong
returns for the fund over the last year. McLeodUSA Inc., a local
telecommunications services company, continues to improve fundamentally and its
bonds have appreciated accordingly. In the fall of 1997, Brooks Fiber Properties
produced significant returns for the fund when it was acquired by WorldCom Inc.
One company that we are enthusiastic about for 1998 and 1999 is Intermedia
Communications. This company is improving fundamentally and could be a logical
takeover candidate in the future.
Many similarities exist between the communications and energy sectors. The
latter shows early signs of industry consolidation and improving fundamentals.
One company that we are optimistic about is Ocean Energy, an offshore oil/gas
field services company.
Over the last year, we did reduce the portfolio's exposure to cable
television. This industry had been a theme in the fund for some time, but
spreads have since tightened in the industry, changing the risk/reward structure
for investors. Cable's fundamentals remain strong, however, and we may
selectively re-enter this market.
Looking forward, we remain confident in the belief that the high-yield
market offers attractive returns to investors. This market has the potential to
offer competitive returns with less risk than the broad equity market, and may
be appropriate for the aggressive investor.
Fund Management
VIF--High Yield Fund is managed by Senior Vice President and Director of
Fixed-Income Investments 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.
VIF--Industrial Income Fund
VIF--Industrial Income Fund
Average Annual Total Return
as of 12/31/97 (1)
1 year 28.17%
-----------------------------
Since inception (8/94) 23.39%
-----------------------------
<PAGE>
For the one-year period ended 12/31/97, VIF--Industrial Income Fund
achieved a total return of 28.17%. During the same period, the S&P 500 had a
total return of 33.35%, and the Lehman Government/Corporate Bond Index had a
total return of 9.76%. (Of course, past performance is not a guarantee of future
results.)(1),(2)
Equity Strategy
Over the last six months, we have witnessed a change in market sentiment as
the Asian currency crisis spread from a few isolated countries to the whole
Pacific Rim region. That meltdown altered the investment landscape for domestic
equities, since it might lead to slower U.S. economic growth. This possibility,
combined with the strong U.S. dollar, may put pressure on corporate earnings for
multinational corporations. We believe there is no quick fix for the crisis, and
1998 is likely to see a more selective stock market with increased volatility.
In the fall of 1997, we started to reduce the fund's exposure to firms that
derive a significant portion of their revenues from Asian/Pacific Rim economies.
We feel that many of these companies may experience a contraction in earnings in
the first and second quarters of 1998, as much of their earnings growth was
predicated on strong demand overseas. Most of these firms were in the capital
goods, energy, and technology sectors. Conversely, we increased exposure to
institutions that import goods from the Asian/Pacific Rim region and sell their
products domestically, as they should benefit from cheaper imports, while demand
remains strong. This may allow these companies to grow their earnings regardless
of the market environment.
Graph:
This line graph represents a comparison of 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 and Lehman Government/Corporate Bond Indexes, assuming in each case
reinvestment of all dividends and capital gain distributions, for the period
from inception (8/94) through 12/31/97.
Fixed-Income Strategy
Fixed-income markets rallied over the last six months, producing strong
returns for investors as fears of inflation subsided. Within this environment,
we have stayed true to our investment philosophy which has been successful in
the past: using a value-oriented bond management style, we attempt to identify
corporate issues that are mispriced by the market. These securities often
provide investors the opportunity to enhance value in multiple ways. This
approach is somewhat unusual for the bond market, as we focus more on company
and industry fundamentals, and less on interest rates and Federal Reserve policy
- - although we remain sensitive to both.
Our disciplined approach continues to identify opportunities in the
communications and energy sector, as well as within the electric utilities
industry. We have also reduced the fund's exposure to the cable industry as
spreads tightened. We will continue to use putable and yield-to-call bonds in
<PAGE>
the portfolio, as these instruments could help provide performance and stability
if the market becomes volatile.
Looking forward, it appears that 1998 may be the year when equity markets
finally produce more "normal" returns. Dividends are likely to play an important
role in enhancing shareholder returns, and the fund invests roughly 65% of its
assets in dividend-paying stocks. The fund also has approximately 20% of its
assets in bonds, which may help mitigate stock market volatility. We have
designed this fund as an appropriate core holding for most portfolios as it
historically 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.
Senior Vice President and Director of Fixed-Income Investments 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 Fund
VIF--Total Return Fund
Average Annual Total Return
as of 12/31/97 (1)
1 year 22.91%
------------------------------
Since inception (6/94) 16.39%
------------------------------
For the one-year period ended 12/31/97, VIF--Total Return Fund achieved a
total return of 22.91%. During the same period, the S&P 500 had a total return
of 33.32%, and the Lehman Government/Corporate Bond Index had a total return of
9.76%. (Of course, past performance is not a guarantee of future
results.)(1),(2)
The fund seeks to add value in three ways: through asset allocation, stock
selection, and bond strategy. Asset allocation is based on the spread of returns
between bonds and stocks. If this relationship is out-of-line with the
historical spread of three percent, then the fund's asset mix is adjusted, with
<PAGE>
60% stocks and 40% bonds considered a neutral position. As of 12/31/97, we
slightly favored equities, with an approximate allocation of 22% bonds, 63%
equities, and 15% in cash and cash equivalents. Historically, our value-based,
conservative investment philosophy has helped create a higher-quality,
lower-risk portfolio with minimal portfolio turnover.
Graph:
This line graph represents a comparison of 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 and Lehman Government/Corporate Bond Indexes, assuming in each case
reinvestment of all dividends and capital gain distributions, for the period
from inception (6/94) through 12/31/97.
Although individual stock selection drives the equity performance of the
fund, we remain intrigued by opportunities in two industries -- utilities and
large-cap pharmaceuticals. Many stocks in these industries appear to be selling
at reasonable valuations, with improving fundamentals. Stocks that have enhanced
the fund's returns over the last year are Abbott Laboratories, Dun & Bradstreet,
and Fannie Mae.
Our bond selection process seeks to identify securities undervalued by the
broad market. Investment decisions are highly dependent on our analysis of the
Federal Reserve Board policy. Earlier this year, our evaluation suggested that
the Fed might tighten credit availability, and we structured the portfolio
accordingly. This strategy paid off for the fund, when the Fed raised short-term
interest rates in March. However, as the Asian currency crisis unfolded, the
fixed-income market experienced lower interest rates and a flight to quality by
investors. This benefited the fund as it was heavily invested in high-quality
securities, which appreciated significantly. The Asian crisis has also caused us
to revise our view of Federal Reserve policy. For most of the year, we believed
that the Fed had a bias towards tightening. However, we are presently more
neutral, and the portfolio has been adjusted accordingly.
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.
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.
<PAGE>
VIF--Utilities Fund
VIF--Utilities Fund
Average Annual Total Return
as of 12/31/97 (1)
1 year 23.41%
-----------------------------
Since inception (1/95) 14.93%
-----------------------------
For the one-year period ended 12/31/97, VIF--Utilities Fund achieved a total
return of 23.41%. During the same period, the Dow Jones Utilities Index had a
total return of 17.43%. (Of course, past performance is not a guarantee of
future results.)(1),(2)
The utilities sector experienced increased volatility over the last 12
months. Earlier this year, a jumpy bond market, milder-than-expected winter, and
a communications sell-off during the spring stock market decline all tempered
the fund's returns. However, as summer arrived, fundamentals for the sector
improved and fund performance accelerated. Within this unpredictable
environment, we remain committed to investing in the best growth opportunities
in the utilities sector - primarily among electric utilities,
telecommunications, and natural gas and oil.
Graph:
This line graph represents a comparison of 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 case reinvestment of all dividends and
capital gain distributions, for the period from inception (1/95) through
12/31/97.
Over the last six months, strong results were produced by the energy
industry, especially natural gas pipeline companies. The latter is benefiting
from being one of the first industries to go through deregulation. With
structural changes now behind it, market-leading, low-cost providers of natural
gas continue to enhance their profitability. An added bonus is that improving
supply-and-demand fundamentals have translated into increased prices for natural
gas and oil companies. Presently, one of our favorite energy companies is
Coastal Corp. (which has produced significant returns for the fund over the last
year).
Conversely, the electric utility industry is in a period of transition.
Deregulation has forced structural changes which should allow the best electric
companies to increase their revenue and earnings. The fund continues to focus on
low-cost providers like Duke Energy, a market leader with proven management in
the southeastern U.S.
In the telecommunication industry, RBOCs (Regional Bell Operating Companies)
remain among our favorites. These companies continue to deliver strong earnings
growth rates compared to electric utilities, while paying a high-dividend yield.
<PAGE>
Companies like SBC Communications and BellSouth Corp. have enhanced the
fund's performance over the last year. Another strong performer for the fund
(but not a RBOC) was Century Telephone Enterprises. This company is a
broad-based rural service provider -- servicing 14 states -- which enjoys strong
earnings growth by focusing on its niche market.
Looking forward, the utilities sector continues to go through positive
structural changes. When this evolution is finally complete, the sector should
be more profitable and efficient. Not only are the long-term growth prospects
good, the defensive characteristics of utility stocks are still present -- which
may add a degree of stability for investors exposed to the broad equity market.
Fund Management
Effective July 1, 1997, Brian B. Hayward assumed 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 a MA in
Economics from the University of Missouri. He is a Chartered Financial Analyst.
VIF--Dynamics Fund
VIF--Dynamics Fund
Total Return Since Inception
as of 12/31/97 (1)
------------------------------
Since inception (8/97) 3.40%
------------------------------
In its limited performance history, the fund's return from inception (8/97)
through 12/31/97, was 3.40%. During the same time period, the S&P MidCap 400
Index returned 6.63%.(1),(2)
The fund uses a disciplined investment approach by investing in a core group
of higher-quality, market-leading growth companies; the remaining holdings
consist of rapidly accelerating growth companies, which tend to experience
higher volatility. This strategy offers exposure to the faster-growing sectors
of the economy, which typically include health care, technology, communications,
and selected consumer growth companies.
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in VIF--Dynamics Fund to the value of a $10,000 investment in the S&P MidCap
400 Index, assuming in each case reinvestment of all dividends and capital
gain distributions, for the period from inception (8/97) through 12/31/97.
<PAGE>
Fund Management
VIF--Dynamics Fund is managed by INVESCO Senior Vice President Timothy J.
Miller and portfolio manager Thomas R. Wald. Tim, who heads up our growth
investing team, received his MBA from the University of Missouri, and a BSBA
from St. Louis University. An 18-year veteran of the investment business, he is
a Chartered Financial Analyst. Before joining INVESCO in 1992, Tim was an
analyst and portfolio manager with Mississippi Valley Advisors.
Thomas R. Wald assumed responsibilities of co-manager in October 1997. He
received his MBA from The Wharton School, University of Pennsylvania, and a BA
from Tulane University. Before joining INVESCO in 1997, Tom was the senior
health care analyst at Munder Capital Management.
VIF--Growth Fund
VIF--Growth Fund
Total Return Since Inception
as of 12/31/97 (1)
------------------------------
Since inception (8/97) 6.90%
------------------------------
In its limited performance history, the fund's return from inception (8/97)
through 12/31/97, was 6.90%. During the same time period, the S&P 500 returned
2.47%.(1),(2)
The fund focuses on classic growth companies (such as Coca-Cola Co., General
Electric, Microsoft Corp., and Pfizer, Inc.), while remaining exposed to some
faster-growing, more volatile stocks. However, the large-capitalization growth
companies will make up the foundation of the portfolio.
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in VIF--Growth Fund to the value of a $10,000 investment in the S&P 500
Index, assuming in each case reinvestment of all dividends and capital gain
distributions, for the period from inception (8/97) through 12/31/97.
Fund Management
VIF--Growth Fund is managed by Senior Vice President Timothy J. Miller. He
received his MBA from the University of Missouri, and a BSBA from St. Louis
University. An 18-year veteran of the investment business, he is a Chartered
Financial Analyst and heads up our growth investing team. Before joining INVESCO
in 1992, Tim was an analyst and portfolio manager with Mississippi Valley
Advisors.
Trent E. May serves as co-manager for the fund. He received a BS from the
Florida Institute of Technology and a MBA from Rollins College. Before joining
INVESCO in 1996, Trent was a senior equity manager/equity analyst with Munder
Capital Management. He is a Chartered Financial Analyst.
<PAGE>
VIF--Health Sciences Fund
VIF--Health Sciences Fund
Total Return Since Inception
as of 12/31/97 (1)
Since inception (5/97) 10.40%
-----------------------------
In its limited performance history, the fund's return from inception (5/97)
through 12/31/97, was 10.40%. During the same time period, the S&P 500 returned
22.66%.(1),(2)
The fund invests primarily in the equity securities of companies that
develop, produce, or distribute products and/or services related to health care.
These industries include medical equipment or supplies, pharmaceuticals, health
care facilities, and applied research and development of new products or
services.
Looking forward, we plan to keep the portfolio skewed towards large-cap
pharmaceuticals, while avoiding health care delivery companies until their
fundamentals improve. Pharmaceutical firms are benefiting from strong new
product pipelines and an improved regulatory environment. Another area of
interest is medical devices, as we believe new products may improve this area's
fundamentals.
Fund Management
VIF--Health Sciences Fund is managed by INVESCO Senior Vice President John
R. Schroer, a Chartered Financial Analyst. He started his investment career in
1989, after earning an MBA and BA from the University of Wisconsin.
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in VIF--Health Sciences Fund to the value of a $10,000 investment in the S&P
500 Index, assuming in each case reinvestment of all dividends and capital
gain distributions, for the period from inception (5/97) through 12/31/97.
VIF--Small Company Growth Fund
VIF-Small Company Growth Fund
Total Return Since Inception
as of 12/31/97 (1)
Since inception (8/97) -0.90%
------------------------------
<PAGE>
In its limited performance history, the fund's return from inception (8/97)
through 12/31/97, was -0.90%. During the same time period, the Russell 2000
Index returned 3.73%.(1),(2)
The fund invests in companies with market capitalization of a billion or
less at purchase, which have the potential to grow their earnings faster than
the small-cap market in general. Our strategy focuses on the faster-growing
sectors of the economy: health care, technology, and consumer cyclicals --
although fund performance is typically driven by individual stock selection.
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in VIF--Small Company Growth Fund to the value of a $10,000 investment in
the Russell 2000 Index, assuming in each case reinvestment of all dividends
and capital gain distributions, for the period from inception (8/97) through
12/31/97.
Fund Management
Stacie L. Cowell is the portfolio manager of VIF--Small Company Growth Fund.
She earned her BA in Economics from Colgate University and is a Chartered
Financial Analyst. Prior to joining INVESCO, Stacie was a senior equities
analyst with Founders Asset Management, and a capital markets and trading
analyst with Chase Manhattan Bank. She is assisted by co-managers Tim J. Miller
and Trent E. May.
Tim, a senior vice president, heads up our growth investing team. He
received his MBA from the University of Missouri, and a BSBA from St. Louis
University. An 18-year veteran of the investment business, he is a Chartered
Financial Analyst. Before joining INVESCO in 1992, Tim was an analyst and
portfolio manager with Mississippi Valley Advisors.
Trent received a BS from the Florida Institute of Technology and a MBA from
Rollins College. Before joining INVESCO in 1996, Trent was a senior equity
manager/equity analyst with Munder Capital Management. He is a Chartered
Financial Analyst.
VIF--Technology Fund
VIF--Technology Fund
Total Return Since Inception
as of 12/31/97
Since inception (5/97) 14.80%
-----------------------------
<PAGE>
In its limited performance history, the fund's return from inception (5/97)
through 12/31/97, was 14.80%. During the same time period, the S&P 500 returned
22.66%.(1),(2)
The fund invests in the fastest-growing companies in the technology sector.
We believe that this sector will be a major engine of growth for the U.S. and
world economies in coming years. Although short-term volatility is likely, the
dynamic potential for long-term growth remains bright.
Fund Management
VIF--Technology Fund is co-managed by Senior Vice President Daniel B.
Leonard and Vice President Gerard Hallaren. Dan's experience in investment
management extends back to 1960. He joined INVESCO in 1975 and is now a senior
vice president. He attended the New York University Graduate School of Business
and holds a BA from Washington & Lee University. Gerard, who joined INVESCO in
1994, earned his BA from the University of Massachusetts at Amherst and is a
Chartered Financial Analyst.
Graph:
This line graph represents a comparison of the value of a $10,000 investment
in VIF--Technology Fund to the value of a $10,000 investment in the S&P 500
Index, assuming in each case reinvestment of all dividends and capital gain
distributions, for the period from inception (5/97) through 12/31/97.
(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 S&P MidCap 400 is an unmanaged
index indicative of domestic mid-capitalization stocks, while the Dow Jones
Industrial Average reflects performance of large-capitalization stocks. The
Russell 2000 is an unmanaged index indicative of smaller-capitalization stocks,
while the Dow Jones Utilities Index is an unmanaged index of utilities stocks.
The Lehman Government/Corporate Bond and Merrill Lynch High Yield Indexes are
unmanaged indexes indicative of the broad fixed-income and high-yield markets,
respectively.
(3)Rankings provided by Lipper Analytical Services, an independent fund analyst,
are based upon total return performance unadjusted for commissions. When
available, rankings are cited for one-, five, and 10-year periods.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Investment Securities
December 31, 1997
- ----------------------------------------------------------------------------------------------
Country Shares,Units
Code if or Principal
Description Non US Amount Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DYNAMICS Portfolio
COMMON STOCKS 100.00%
AEROSPACE & DEFENSE 1.02%
Sundstrand Corp 50 $ 2,519
------------
AIRLINES 0.62%
Air Express International 50 1,525
------------
BANKS 4.72%
Mercantile Bancorp 25 1,537
Southtrust Corp 50 3,172
State Street 50 2,909
Summit Bancorp 75 3,994
------------
11,612
------------
BEVERAGES 1.44%
Coca-Cola Enterprises 100 3,556
------------
BROADCASTING 3.03%
Clear Channel Communications* 50 3,972
Sinclair Broadcast Group Class A* 75 3,497
------------
7,469
------------
COMMUNICATIONS - EQUIPMENT &
MANUFACTURING 3.87%
CIENA Corp* 75 4,584
Nokia Corp Sponsored ADR Representing
A Shrs 50 3,500
PairGain Technologies* 75 1,453
------------
9,537
------------
COMPUTER RELATED 11.46%
Autodesk Inc 75 2,775
Bay Networks* 150 3,834
<PAGE>
Cadence Design Systems 100 $ 2,450
Cisco Systems* 75 4,181
Cognos Inc* 100 2,300
Electronic Arts* 125 4,727
HMT Technology* 100 1,300
Microsoft Corp* 25 3,231
Parametric Technology* 50 2,369
Remedy Corp* 50 1,050
------------
28,217
------------
ELECTRICAL EQUIPMENT 1.17%
Linear Technology 50 2,881
------------
ELECTRONICS 1.40%
Parker-Hannifin Corp 75 3,441
------------
ELECTRONICS - SEMICONDUCTOR 3.91%
Altera Corp 50 1,656
Analog Devices 100 2,769
Maxim Integrated Products 100 3,450
Xilinx Inc* 50 1,753
------------
9,628
------------
ENGINEERING & CONSTRUCTION 0.50%
Chicago Bridge & Iron NV New York Shrs 75 1,219
------------
FINANCIAL 5.15%
Crestar Financial 50 2,850
Edwards (A G) Inc 50 1,987
Franklin Resources 50 4,347
Northern Trust 50 3,487
------------
12,671
------------
GAMING 1.20%
Midway Games* 100 1,819
Mirage Resorts* 50 1,137
------------
2,956
------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 1.98%
Watson Pharmaceuticals 150 4,866
------------
<PAGE>
HEALTH CARE RELATED 3.09%
HBO & Co 100 $ 4,800
Stryker Corp 75 2,794
------------
7,594
------------
HOUSEHOLD FURNITURE & APPLIANCES 1.23%
Philips Electronics NV New York
Registered Shrs 50 3,025
------------
INSURANCE 1.22%
Progressive Corp 25 2,997
------------
INVESTMENT BANK/BROKER FIRM 1.55%
Lehman Brothers Holdings 75 3,825
------------
LEISURE TIME 2.11%
International Game Technology 100 2,525
Royal Caribbean Cruises Ltd 50 2,666
------------
5,191
------------
MACHINERY 4.75%
Aeroquip-Vickers Inc 75 3,680
Case Corp 50 3,022
Cincinnati Milacron 75 1,945
Ingersoll-Rand Co 75 3,037
------------
11,684
------------
MANUFACTURING 1.81%
Eaton Corp 50 4,462
------------
OFFICE EQUIPMENT & SUPPLIES 1.49%
US Office Products 187 3,670
------------
OIL & GAS RELATED 9.94%
Apache Corp 125 4,383
Canadian Occidental Petroleum 150 3,394
Coflexip SA Sponsored ADR 50 2,775
Cooper Cameron 75 4,575
EEX Corp* 250 2,266
Nabors Industries* 125 3,930
National Energy Group* 300 1,219
<PAGE>
Seagull Energy* 50 $ 1,031
Vastar Resources 25 894
------------
24,467
------------
POLLUTION CONTROL 2.20%
Laidlaw Inc 100 1,363
USA Waste Services* 103 4,043
------------
5,406
------------
PUBLISHING 0.54%
Applied Graphics Technologies* 25 1,331
------------
RAILROADS 0.97%
Kansas City Southern Industries 75 2,381
------------
RETAIL 7.85%
Costco Cos* 75 3,347
Home Depot 100 5,887
Meyer (Fred) Inc 100 3,637
Nordstrom Inc 75 4,528
Tandy Corp 50 1,928
------------
19,327
------------
SAVINGS & LOAN 1.96%
Charter One Financial 26 1,641
Washington Mutual 50 3,191
------------
4,832
------------
SERVICES 6.47%
Avis Rent A Car * 50 1,597
Budget Group Class A* 50 1,728
i2 Technologies* 50 2,637
Omnicom Group 100 4,237
Robert Half International 75 3,000
Snyder Communications* 75 2,738
------------
15,937
------------
TELECOMMUNICATIONS -
CELLULAR & WIRELESS 2.02%
Nextel Communications Class A* 150 3,900
<PAGE>
NEXTLINK Communications Class A* 50 $ 1,066
------------
4,966
------------
TELECOMMUNICATIONS -
LONG DISTANCE 5.80%
Brooks Fiber Properties* 50 2,750
ICG Communications* 75 2,044
Teleport Communications Group Class A* 75 4,116
Teligent Inc Class A* 50 1,231
WinStar Communications* 75 1,870
WorldCom Inc* 75 2,269
------------
14,280
------------
TELEPHONE 2.25%
Century Telephone Enterprises 50 2,491
Intermedia Communications* 50 3,037
------------
5,528
------------
TEXTILE - APPAREL
MANUFACTURING 1.28%
Warnaco Group Class A 100 3,138
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $242,022#) 246,138
============
GROWTH Portfolio
COMMON STOCKS 100.00%
BANKS 4.97%
BankAmerica Corp 50 3,650
Citicorp 75 9,483
------------
13,133
------------
BEVERAGES 7.91%
Coca-Cola Co 150 9,994
PepsiCo Inc 300 10,931
------------
20,925
------------
<PAGE>
CHEMICALS 3.41%
du Pont (E I) de Nemours 150 $ 9,009
------------
COMPUTER RELATED 13.10%
Bay Networks* 200 5,113
Hewlett-Packard Co 150 9,375
International Business Machines 100 10,456
Microsoft Corp* 75 9,694
------------
34,638
------------
ELECTRICAL EQUIPMENT 4.16%
General Electric 150 11,006
------------
ELECTRONICS - SEMICONDUCTOR 5.26%
Intel Corp 100 7,025
Maxim Integrated Products 200 6,900
------------
13,925
------------
ENTERTAINMENT 1.87%
Disney (Walt) Co 50 4,953
------------
FINANCIAL 2.16%
Federal National Mortgage Association 100 5,706
------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 20.89%
Bristol-Myers Squibb 100 9,463
Johnson & Johnson 175 11,528
Lilly (Eli) & Co 125 8,703
Merck & Co 100 10,625
Pfizer Inc 200 14,912
------------
55,231
------------
HOUSEHOLD PRODUCTS 6.55%
Colgate-Palmolive Co 100 7,350
Procter & Gamble 125 9,977
------------
17,327
------------
INSURANCE 4.11%
American International Group 100 10,875
------------
<PAGE>
OIL & GAS RELATED 7.57%
Exxon Corp 150 $ 9,178
Royal Dutch Petroleum New York
Registry 1.25 Gldr Shrs 200 10,838
------------
20,016
------------
PERSONAL CARE 0.95%
Gillette Co 25 2,511
------------
RESTAURANTS 0.33%
Tricon Global Restaurants* 30 872
------------
RETAIL 4.10%
Wal-Mart Stores 275 10,845
------------
TELECOMMUNICATIONS -
LONG DISTANCE 2.32%
AT&T Corp 100 6,125
------------
TELEPHONE 6.91%
Bell Atlantic 60 5,460
SBC Communications 175 12,819
------------
18,279
------------
TOBACCO 3.43%
Philip Morris 200 9,062
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $246,908#) $ 264,438
============
HEALTH SCIENCES Portfolio
COMMON STOCKS 100.00%
BIOTECHNOLOGY 7.89%
Emisphere Technologies* 250 4,656
Genentech Inc Special Cmn* 215 13,034
IDEC Pharmaceuticals* 100 3,437
PathoGenesis Corp* 100 3,713
Sepracor Inc* 55 2,203
------------
27,043
------------
<PAGE>
CHEMICALS 0.61%
Monsanto Co 50 $ 2,100
------------
DRUGS 65.63%
ALZA Corp 200 6,363
Abbott Laboratories 200 13,112
Bristol-Myers Squibb 235 22,237
Forest Laboratories* 200 9,862
Glaxo Wellcome PLC Sponsored ADR
Representing 2 Ord Shrs 300 14,363
ICN Pharmaceuticals 300 14,644
Johnson & Johnson 200 13,175
Lilly (Eli) & Co 330 22,976
MedImmune Inc* 145 6,217
Merck & Co 195 20,719
Pfizer Inc 300 22,369
Schering-Plough Corp 330 20,501
SmithKline Beecham PLC Sponsored ADR
Representing Ord A Shrs 470 24,176
Warner-Lambert Co 115 14,260
------------
224,974
------------
HEALTH CARE - SERVICES 8.77%
HBO & Co 340 16,320
McKesson Corp 85 9,196
Quorum Health Group* 60 1,568
Transition Systems* 135 2,987
------------
30,071
------------
MEDICAL EQUIPMENT & DEVICES 17.10%
Guidant Corp 370 23,032
IDEXX Laboratories* 150 2,391
Medtronic Inc 260 13,601
ResMed Inc* 245 6,891
Sofamor/Danek Group* 195 12,687
------------
58,602
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $309,027)
(Cost for Income Tax Purposes $311,070) $ 342,790
============
<PAGE>
HIGH YIELD Portfolio
FIXED INCOME SECURITIES 93.62%
Corporate Bonds 93.62%
AGRICULTURAL PRODUCTS 0.86%
Imperial Holly, Sr Sub Notes^,
9.750%, 12/15/2007 250,000 251,562
------------
AIR FREIGHT 0.90%
Navigator Gas Transport PLC, 1st
Priority Ship Mortgage Notes^
10.500%, 6/30/2007 UK 250,000 265,000
------------
BROADCASTING 8.10%
Allbritton Communications, Sr Sub
Deb, Series B, 9.750%, 11/30/2007 400,000 410,000
Chancellor Media-Los Angeles,
Sr Sub Notes^, 8.125%, 12/15/2007 750,000 734,062
Commodore Media, Sr Sub Step-Up
Notes, 7.500%^^, 5/1/2003 415,000 464,800
EchoStar Communications, Gtd Sr
Discount Step-Up Notes
Zero Coupon^^, 6/1/2004 213,000 194,895
SFX Broadcasting, Sr Sub Notes,
Series B, 10.750%, 5/15/2006 100,000 109,500
Sinclair Broadcast Group, Sr Sub Notes,
8.750%, 12/15/2007 350,000 350,000
Young Broadcasting, Gtd Sr Sub Notes,
11.750%, 11/15/2004 100,000 111,250
------------
2,374,507
------------
CABLE 5.02%
Diamond Cable Communications PLC,
Sr Discount Step-Up Notes
Zero Coupon^^, 2/15/2007 UK 300,000 204,000
EchoStar Satellite Broadcasting,
Sr Secured Discount Step-Up Notes
Zero Coupon^^, 3/15/2004 200,000 170,000
Fox/Liberty Networks LLC Finance,
Sr Discount Step-Up Notes^
Zero Coupon^^, 8/15/2007 500,000 320,000
Galaxy Telecom LP/Galaxy Telecom
<PAGE>
Capital, Sr Sub Notes
12.375%, 10/1/2005 250,000 275,000
Marcus Cable LP/Marcus Cable
Capital III, Sr Deb
11.875%, 10/1/2005 100,000 108,625
NTL Inc, Sr Deferred Coupon Step-Up
Notes, Series B
Zero Coupon^^, 2/1/2006 250,000 194,063
TCI Satellite Entertainment, Sr Sub
Discount Step-Up Notes^
Zero Coupon^^, 2/15/2007 300,000 199,500
------------
1,471,188
------------
CHEMICALS 2.52%
LaRoche Industries, Sr Sub Notes^,
9.500%, 9/15/2007 500,000 492,500
PCI Chemicals Canada, Sr Secured
Notes^, 9.250%, 10/15/2007 CA 250,000 246,250
------------
738,750
------------
COMMUNICATIONS - EQUIPMENT &
MANUFACTURING 2.29%
FWT Inc, Sr Sub Notes^,
9.875%, 11/15/2007 350,000 358,750
RCN Corp, Sr Discount Step-Up Notes^,
Zero Coupon^^, 10/15/2007 500,000 312,500
------------
671,250
------------
COMPUTER RELATED 0.97%
Unisys Corp, Sr Notes, Series B,
12.000%, 4/15/2003 250,000 283,125
------------
CONTAINERS 2.44%
Gaylord Container
Sr Notes, Series B, 9.750%, 6/15/2007 350,000 339,500
Sr Sub Discount Step-Up Deb,
12.750%^^, 5/15/2005 350,000 374,500
------------
714,000
------------
DISTRIBUTION 1.17%
Di Giorgio Corp, Sr Notes, Series B,
<PAGE>
10.000%, 6/15/2007 350,000 342,125
------------
ELECTRIC UTILITIES 0.95%
Long Island Lighting, Deb,
9.000%, 11/1/2022 250,000 278,296
------------
ELECTRICAL EQUIPMENT 0.75%
Alpine Group, Gtd Sr Secured
Notes, Series B
12.250%, 7/15/2003 200,000 220,500
------------
ENTERTAINMENT 6.17%
Ascent Entertainment Group, Sr
Secured Discount Step-Up Notes^
Zero Coupon^^, 12/15/2004 750,000 429,375
Fox Kids Worldwide, Sr Discount
Step-Up Notes^
Zero Coupon^^, 11/1/2007 1,000,000 595,000
Production Resource Group
LLC/Program Finance
Sr Sub Notes^, 11.500%, 1/15/2008 250,000 250,625
Six Flags Theme Parks, Sr Sub Discount
Step-Up Notes, Series A^^
Zero Coupon^^, 6/15/2005 500,000 532,500
------------
1,807,500
------------
FOODS 1.34%
Keebler Corp, Gtd Sr Secured Sub
Notes, 10.750%, 7/1/2006 350,000 393,750
------------
GAMING 5.16%
Aztar Corp, Sr Sub Notes,
13.750%, 10/1/2004 350,000 400,750
Mohegan Tribal Gaming Authority,
Sr Secured Notes, Series B
13.500%, 11/15/2002 240,000 307,200
Station Casinos, Sr Sub Notes,
9.750%, 4/15/2007 250,000 258,750
Trump Atlantic City Association/Trump
Atlantic City Funding
Gtd Secured 1st Mortgage Notes,
11.250%, 5/1/2006 200,000 195,000
Venetian Casino Resort LLC/Las Vegas
Sands, Mortgage Notes^
<PAGE>
12.250%, 11/15/2004 350,000 350,438
------------
1,512,138
------------
LODGING - HOTELS 1.71%
Signature Resorts, Sr Sub Notes^,
9.750%, 10/1/2007 500,000 500,000
------------
MACHINERY 0.86%
Bucyrus International, Sr Notes^,
9.750%, 9/15/2007 250,000 252,500
------------
METALS MINING 3.24%
Centaur Mining & Exploration,
Gtd Sr Secured Notes^
11.000%, 12/1/2007 AS 200,000 200,500
Glencore Nickel Property Ltd,
Gtd Sr Secured Notes^
9.000%, 12/1/2014 AS 250,000 248,125
Haynes International, Sr Notes,
11.625%, 9/1/2004 200,000 229,000
Westmin Resources Ltd, Sr Secured
Notes, 11.000%, 3/15/2007 CA 250,000 273,750
------------
951,375
------------
OIL & GAS RELATED 10.88% Belco Oil & Gas, Sr Sub Notes,
Series B, 8.875%, 9/15/2007 200,000 203,500
Canadian Forest Oil Ltd, Gtd Sr
Sub Notes, 8.750%, 9/15/2007 CA 300,000 304,623
Cliffs Drilling, Gtd Sr Notes,
Series B, 10.250%, 5/15/2003 350,000 381,062
Cross Timbers Oil, Sr Sub Notes,
Series B, 9.250%, 4/1/2007 250,000 260,000
Energy Corp of America, Sr Sub Notes,
Series A, 9.500%, 5/15/2007 250,000 249,375
Magnum Hunter Resources, Gtd Sr
Notes, 10.000%, 6/1/2007 300,000 306,000
Newpark Resources, Sr Sub Notes^,
8.625%, 12/15/2007 250,000 254,062
Ocean Energy, Gtd Sr Sub Notes,
Series B, 8.875%, 7/15/2007 250,000 265,000
Panaco Inc, Sr Notes^,
10.625%, 10/1/2004 350,000 353,500
<PAGE>
Petsec Energy, Sr Sub Notes, Series B,
9.500%, 6/15/2007 AS 250,000 $ 255,625
Snyder Oil, Gtd Sub Notes,
8.750%, 6/15/2007 100,000 101,500
Stone Energy, Gtd Sr Sub Notes,
8.750%, 9/15/2007 250,000 254,375
------------
3,188,622
------------
PAPER & FOREST PRODUCTS 3.57%
Ainsworth Lumber Ltd, Sr Secured
Notes^, 12.500%, 7/15/2007 CA 150,000 150,750
Bear Island Paper LLC/Bear Island
Finance II, Sr Secured Notes^
10.000%, 12/1/2007 250,000 253,125
Pindo Deli Finance Mauritius Ltd,
Gtd Sr Notes^, 10.750%, 10/1/2007 ID 150,000 129,000
Tembec Finance, Gtd Sr Notes,
9.875%, 9/30/2005 CA 500,000 513,750
------------
1,046,625
------------
PHOTOGRAPHY & IMAGING 0.87%
Alliance Imaging, Sr Sub Notes,
9.625%, 12/15/2005 250,000 254,375
------------
PUBLISHING 3.37%
Affiliated Newspaper Investments,
Sr Discount Step-Up Notes
Zero Coupon^^, 7/1/2006 500,000 472,500
American Lawyer Media, Sr Notes^,
9.750%, 12/15/2007 250,000 253,750
Perry-Judds Inc, Sr Sub Notes^,
10.625%, 12/15/2007 250,000 260,000
------------
986,250
------------
REAL ESTATE INVESTMENT TRUST 0.91%
Saul (B F) REIT, Sr Secured Notes,
Series B, 11.625%, 4/1/2002 250,000 267,500
------------
SAVINGS & LOAN 2.01%
Dime Bancorp, Sr Notes,
10.500%, 11/15/2005 100,000 107,750
Western Financial Savings Bank,
<PAGE>
Sub Capital Deb, 8.875%, 8/1/2007 500,000 $ 481,181
------------
588,931
------------
SERVICES 1.24%
Williams Scotsman, Gtd Sr Notes,
9.875%, 6/1/2007 350,000 364,000
------------
SPECIALTY PRINTING 0.36%
MDC Communications, Sr Sub Notes,
10.500%, 12/1/2006 CA 100,000 105,750
------------
TELECOMMUNICATIONS -
CELLULAR & WIRELESS 9.04%
CommNet Cellular
Sr Sub Discount Step-Up Notes,
Zero Coupon^^, 9/1/2003 400,000 401,000
Sub Notes, 11.250%, 7/1/2005 200,000 229,000
Globalstar LP/Globalstar Capital,
Sr Notes^, 10.750%, 11/1/2004 200,000 195,000
NEXTEL Communications, Sr Discount
Step-Up Notes^, Zero Coupon^^
9/15/2007 1,000,000 630,000
10/31/2007 250,000 152,500
PriCellular Wireless
Sr Discount Notes, Series B,
14.000%, 11/15/2001 200,000 222,000
Sr Discount Step-Up Notes,
Zero Coupon^^, 10/1/2003 800,000 820,000
------------
2,649,500
------------
TELECOMMUNICATIONS -
LONG DISTANCE 10.78%
Barak International
Telecommunications Services
Sr Sub Discount Step-Up Notes^,
Zero Coupon^^, 11/15/2007 IS 500,000 282,500
Esprit Telecom Group PLC, Sr Notes,
11.500%, 12/15/2007 UK 250,000 257,500
fONOROLA Inc, Gtd Sr Secured Notes,
12.500%, 8/15/2002 CA 100,000 111,500
GCI Inc, Sr Notes, 9.750%, 8/1/2007 400,000 415,000
IXC Communications, Gtd Sr Notes,
Series B, 12.500%, 10/1/2005 200,000 230,500
<PAGE>
McLeodUSA Inc
Sr Discount Step-Up Notes,
Zero Coupon^^, 3/1/2007 250,000 180,000
Sr Notes^, 9.250%, 7/15/2007 250,000 261,875
NEXTLINK Communications LLC, Sr Notes
12.500%, 4/15/2006 250,000 285,000
9.625%, 10/1/2007 350,000 362,250
Qwest Communications International,
Sr Discount Step-Up Notes^
Zero Coupon^^, 10/15/2007 200,000 135,000
Sprint Spectrum LP/Sprint Spectrum
Finance, Sr Discount
Step-Up Notes, Zero Coupon^^,
8/15/2006 500,000 388,750
Teligent Inc, Sr Notes, 11.500%,
12/1/2007 250,000 250,625
------------
3,160,500
------------
TELEPHONE 5.46%
Intermedia Communications, Sr Notes^
8.875%, 11/1/2007 500,000 512,500
8.500%, 1/15/2008 500,000 500,000
MetroNet Communications, Sr
Discount Step-Up Notes^
Zero Coupon^^, 11/1/2007 CA 500,000 306,250
Netia Holdings BV, Gtd Sr Discount
Step-Up Notes^
Zero Coupon^^, 11/1/2007 PL 500,000 282,500
------------
1,601,250
------------
TEXTILE - HOME FURNISHINGS 0.68%
Maxim Group, Sr Notes^,
9.250%, 10/15/2007 200,000 198,500
------------
TOTAL FIXED INCOME SECURITIES
(Cost $27,127,261) 27,439,369
------------
COMMON STOCKS & WARRANTS 0.17%
TELECOMMUNICATIONS -
CELLULAR & WIRELESS 0.17%
Microcell Telecommunications
Warrants*^ (Exp 2006) CA 2,000 27,374
Nextel Communications Class A*~ 938 21,844
------------
<PAGE>
TOTAL COMMON STOCKS & WARRANTS
(Cost $27,800) $ 49,218
------------
PREFERRED STOCKS 2.27%
INSURANCE 2.27%
Superior National Capital Trust I
Pfd*^, 10.750% 300 307,500
Veritas Capital Trust Pfd*^, 10.000% 350 357,000
------------
TOTAL PREFERRED STOCKS
(Cost $650,000) 664,500
------------
OTHER SECURITIES 1.78%
SERVICES 0.80%
Brill Media LLC, Units^
(Each unit consists of one $1,000
face amount Sr Step-Up
Notes, 7.500%^^, 12/15/2007
and approximately $28.57 face amount of
Appreciation Notes,
12/15/2007) 250 233,125
------------
TELEPHONE 0.98%
MetroNet Communications, Units^
(Each unit consists of one $1,000
face amount Sr Note, 12.000%, 8/15/2007 and
1 wrnt to purchase 3.429 shrs of
Non-Voting Class B cmn stk) CA 250 288,750
------------
TOTAL OTHER SECURITIES
(Cost $480,502) 521,875
------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 2.16%
Repurchase Agreement with State
Street Bank & Trust Co dated
12/31/1997 due 1/2/1998 at 5.800%,
repurchased at $634,204
(Collateralized by US Treasury Bonds
due 2/15/2023 at 7.125%
value $654,083)
(Cost $634,000) 634,000 634,000
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $28,919,563) (Cost for Income
<PAGE>
Tax Purposes $28,920,109) $ 29,308,962
------------
INDUSTRIAL INCOME Portfolio
COMMON STOCKS 75.14%
AEROSPACE & DEFENSE 3.62%
Howmet International* 25,000 373,438
Northrop Grumman 6,000 690,000
Raytheon Co Class A 2,070 102,068
Sundstrand Corp 7,000 352,625
------------
1,518,131
------------
AIRLINES 1.98%
KLM Royal Dutch Airlines New York
Registered Shrs 22,000 830,500
------------
AUTOMOBILES 1.53%
Chrysler Corp 2,000 70,375
Ford Motor 2,000 97,375
General Motors 6,000 363,750
General Motors Class H 3,000 110,813
------------
642,313
------------
BANKS 5.76%
Bank of New York 10,000 578,125
First Tennessee National 10,000 667,500
Fleet Financial Group 5,000 374,687
Summit Bancorp 15,000 798,750
------------
2,419,062
------------
BEVERAGES 0.84%
Anheuser-Busch Cos 8,000 352,000
------------
CHEMICALS 1.01%
Agrium Inc 15,000 182,813
Lawter International 5,000 54,375
Olin Corp 4,000 187,500
------------
424,688
------------
<PAGE>
COMMUNICATIONS - EQUIPMENT &
MANUFACTURING 1.09%
Motorola Inc 8,000 456,500
------------
COMPUTER RELATED 1.95%
Edwards (J D) & Co* 6,500 191,750
International Business Machines 6,000 627,375
------------
819,125
------------
ELECTRIC UTILITIES 2.18%
Endesa SA Sponsored ADR 30,000 545,625
IES Industries 10,000 368,125
------------
913,750
------------
ELECTRICAL EQUIPMENT 1.99%
Emerson Electric 7,000 395,062
General Electric 6,000 440,250
------------
835,312
------------
ELECTRONICS - SEMICONDUCTOR 0.99%
Analog Devices* 15,000 415,312
------------
FOODS 7.80%
General Mills 7,000 501,375
Heinz (H J) Co 9,725 494,152
Kellogg Co 10,000 496,250
Quaker Oats 10,000 527,500
Ralston Purina Group 7,000 650,563
Tasty Baking 31,250 603,516
------------
3,273,356
------------
GOLD & PRECIOUS METALS MINING 0.49%
Newmont Mining 7,000 205,625
------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 5.14%
Abbott Laboratories 4,000 262,250
American Home Products 6,000 459,000
Merck & Co 5,000 531,250
Novo-Nordisk A/S ADR 2,000 144,750
Pfizer Inc 4,000 298,250
SmithKline Beecham PLC ADR
<PAGE>
Representing Ord A Shrs 9,000 462,938
------------
2,158,438
------------
HEALTH CARE RELATED 1.58%
Becton Dickinson & Co 4,000 200,000
Tenet Healthcare* 14,000 463,750
------------
663,750
------------
INSURANCE 5.24%
Allmerica Financial 10,000 499,375
Chubb Corp 10,000 756,250
Lincoln National 3,000 234,375
Ohio Casualty 8,000 357,000
Travelers Property Casualty Class A 8,000 352,000
------------
2,199,000
------------
INVESTMENT BANK/BROKER FIRM 0.84%
Morgan Stanley Dean Witter
Discover & Co 6,000 354,750
------------
LODGING HOTELS 1.42%
Hilton Hotels 20,000 595,000
------------
MANUFACTURING 1.11%
AlliedSignal Inc 12,000 467,250
------------
OIL & GAS RELATED 8.54%
Apache Corp 10,000 350,625
Baker Hughes 10,000 436,250
Chevron Corp 5,000 385,000
Enron Oil & Gas 15,000 317,812
Exxon Corp 8,000 489,500
Noble Drilling* 10,000 306,250
Phillips Petroleum 5,000 243,125
Schlumberger Ltd 4,000 322,000
Sonat Inc 6,000 274,500
USX-Marathon Group 10,000 337,500
Union Pacific Resources Group 5,000 121,250
------------
3,583,812
------------
PAPER & FOREST PRODUCTS 0.27%
<PAGE>
Albany International Class A 5,000 $ 115,000
------------
RAILROADS 1.02%
Kansas City Southern Industries 13,500 428,625
------------
REAL ESTATE INVESTMENT TRUST 0.34%
Patriot American Hospitality 4,998 144,005
------------
RETAIL 4.31%
Dayton Hudson 8,000 540,000
May Department Stores 6,000 316,125
Penney (J C) Co 3,000 180,938
Tandy Corp 20,000 771,250
------------
1,808,313
------------
SAVINGS & LOAN 4.07%
Ahmanson (H F) & Co 10,000 669,375
Charter One Financial 10,250 647,031
St Paul Bancorp 15,000 393,750
------------
1,710,156
------------
SERVICES 1.97%
Galileo International 30,000 828,750
------------
TELECOMMUNICATIONS -
LONG DISTANCE 2.49%
Sprint Corp 2,000 117,250
Teleport Communications Group Class A* 12,000 658,500
US WEST Communications Group 6,000 270,750
------------
1,046,500
------------
TELEPHONE 4.95%
Ameritech Corp 3,000 241,500
Bell Atlantic 8,072 734,552
BellSouth Corp 8,000 450,500
GTE Corp 5,500 287,375
SBC Communications 5,000 366,250
------------
2,080,177
------------
TOBACCO 0.62%
Fortune Brands 7,000 259,437
------------
<PAGE>
TOTAL COMMON STOCKS
(Cost $25,932,260) $ 31,548,637
------------
PREFERRED STOCKS 0.09% GOLD &
PRECIOUS METALS MINING 0.09%
Amax Gold, Conv Pfd, $3.75,
Series B (Cost $48,795) 1,000 36,000
------------
FIXED INCOME SECURITIES 15.94%
US Government Obligations 0.62%
US Treasury Notes, 6.500%,
5/15/2005 (Cost $256,778) 250,000 260,625
US Government Agency Obligations 3.26%
Freddie Mac, Gold, Participation
Certificates
6.500%, 8/1/2011 (Cost $1,334,861) 1,366,394 1,369,250
Corporate Bonds 12.06%
AUTOMOBILES 0.24%
General Motors Acceptance, Medium-Term
Notes, 6.700%, 4/25/2001 100,000 101,337
------------
BROADCASTING 0.24%
Allbritton Communications, Sr Sub Deb,
Series B, 9.750%, 11/30/2007 100,000 102,500
------------
ELECTRIC UTILITIES 4.53%
Boston Edison, Deb, 7.800%, 5/15/2010 250,000 270,656
Carolina Power & Light, 1st Mortgage,
6.875%, 8/15/2023 250,000 247,504
DQU-II Funding, Collateral Lease,
8.700%, 6/1/2016 200,000 223,346
Jersey Central Power & Light,
1st Mortgage, 6.750%, 11/1/2025 200,000 195,367
Long Island Lighting, Deb,
8.200%, 3/15/2023 200,000 213,694
New York Electric & Gas, 1st Mortgage,
8.300%, 12/15/2022 200,000 214,502
Pacific Gas & Electric, 1st &
Refunding Mortgage, Series 1992D
8.250%, 11/1/2022 260,000 284,374
PSI Energy, Deb, 6.350%, 11/15/2006 250,000 253,692
------------
1,903,135
------------
<PAGE>
ENTERTAINMENT 0.68%
Time Warner Entertainment LP, Sr Deb,
8.375%, 3/15/2023 250,000 $ 285,201
------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 0.54%
McKesson Corp, Sub Deb,
4.500%, 3/1/2004 250,000 227,340
------------
HEALTH CARE RELATED 1.30%
Tenet Healthcare, Sr Sub Notes,
10.125%, 3/1/2005 500,000 545,625
------------
INSURANCE 0.67%
Equitable Cos, Sr Notes,
9.000%, 12/15/2004 250,000 282,819
------------
OIL & GAS RELATED 0.50%
Cross Timbers Oil, Sr Sub Notes,
Series B, 9.250%, 4/1/2007 200,000 208,000
------------
PAPER & FOREST PRODUCTS 0.52%
Champion International, Deb,
6.400%, 2/15/2026 215,000 216,873
------------
PUBLISHING 0.23%
Affiliated Newspaper Investments,
Sr Discount Step-Up Deb
Zero Coupon^^, 7/1/2006 100,000 94,500
------------
REAL ESTATE INVESTMENT TRUST 0.60%
Spieker Properties LP, Deb,
7.350%, 12/1/2017 250,000 251,852
------------
TELECOMMUNICATIONS -
CELLULAR & WIRELESS 0.49%
NEXTLINK Communications, Sr Notes,
9.625%, 10/1/2007 200,000 207,000
------------
TELECOMMUNICATIONS -
LONG DISTANCE 0.90%
McLeodUSA Inc, Sr Discount Step-Up
Notes, Zero Coupon^^
3/1/2007 150,000 108,000
WorldCom Inc, Sr Notes,
<PAGE>
8.875%, 1/15/2006 250,000 268,750
------------
376,750
------------
TELEPHONE 0.62%
Frontier Corp, Notes,
7.250%, 5/15/2004 250,000 260,804
------------
TOTAL CORPORATE BONDS
(Cost $4,945,506) 5,063,736
------------
TOTAL FIXED INCOME SECURITIES
(Cost $6,537,145) 6,693,611
------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 8.83%
Repurchase Agreement with State
Street Bank & Trust Co dated 12/31/1997
due 1/2/1998 at 5.800%,
repurchased at $3,707,194
(Collateralized by US Treasury
Bonds due 2/15/2023 at 7.125% value
$3,801,859) (Cost $3,706,000) 3,706,000 3,706,000
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $36,224,200) (Cost for Income
Tax Purposes $36,224,733) $ 41,984,248
============
SMALL COMPANY GROWTH Portfolio
COMMON STOCKS 100.00%
AIR FREIGHT 0.59%
Eagle USA Airfreight* 50 1,425
------------
AUTO PARTS 1.62%
O'Reilly Automotive* 150 3,938
------------
BEVERAGES 1.25%
Beringer Wine Estates Holdings Class B* 80 3,040
------------
COMMUNICATIONS - EQUIPMENT &
MANUFACTURING 5.86%
Aspect Telecommunications* 100 2,087
<PAGE>
CIENA Corp* 50 3,056
GeoTel Communications* 75 1,172
Gilat Satellite Networks Ltd* 100 2,863
NICE-Systems Ltd Sponsored ADR
Representing 1 Ord Shr* 60 2,520
Powerwave Technologies* 50 841
REMEC Inc* 75 1,688
------------
14,227
------------
COMPUTER RELATED 9.41%
Aspen Technology* 50 1,712
CBT Group PLC Sponsored ADR
Representing 0.5 Ord Shr* 50 4,106
Citrix Systems* 50 3,800
HMT Technology* 125 1,625
Harbinger Corp* 50 1,406
Intelligroup Inc* 100 1,913
Peerless Systems* 100 1,288
Peregrine Systems* 75 1,003
Saville Systems PLC Sponsored ADR
Representing 1 Ord Shr* 50 2,075
Simulation Sciences* 120 1,920
Wind River Systems* 50 1,984
------------
22,832
------------
DISTRIBUTION 2.88%
Brightpoint Inc* 180 2,497
Central Garden & Pet* 100 2,625
Weider Nutrition International Class A 150 1,866
------------
6,988
------------
ELECTRONICS 2.49%
Aehr Test Systems* 150 1,200
ANADIGICS Inc* 50 1,506
CerProbe Corp* 75 1,303
SanDisk Corp* 100 2,031
------------
6,040
------------
ELECTRONICS - SEMICONDUCTOR 7.56%
Altron Inc* 125 1,656
Applied Micro Circuits* 230 2,846
<PAGE>
DuPont Photomasks* 50 $ 1,744
Flextronics International Ltd* 40 1,380
QLogic Corp* 75 2,213
SIPEX Corp* 100 3,025
Unitrode Corp* 50 1,075
VLSI Technology* 75 1,772
Xilinx Inc* 75 2,630
------------
18,341
------------
ENGINEERING & CONSTRUCTION 0.93%
Willbros Group* 150 2,250
------------
FINANCIAL 3.41%
ACNielsen Corp* 125 3,047
AMRESCO Inc* 100 3,025
Warrantech Corp* 225 2,194
------------
8,266
------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 1.34%
Watson Pharmaceuticals* 100 3,244
------------
HEALTH CARE RELATED 8.22%
ATL Ultrasound* 75 3,450
AmeriPath Inc* 140 2,380
Capital Senior Living* 200 2,087
Coventry Corp* 150 2,287
Envoy Corp* 100 2,912
Graham-Field Health Products* 250 4,172
HealthCare Financial Partners* 75 2,662
------------
19,950
------------
INSURANCE 5.34%
Frontier Insurance Group 75 1,716
HCC Insurance Holdings 125 2,656
Liberty Corp 50 2,337
Mercury General 50 2,763
Orion Capital 75 3,483
------------
12,955
------------
LEISURE TIME 1.13%
<PAGE>
Bally Total Fitness Holdings* 125 $ 2,734
------------
LODGING - HOTELS 1.43%
Extended Stay America* 75 933
Prime Hospitality* 125 2,547
------------
3,480
------------
MACHINERY 0.62%
OmniQuip International 75 1,495
------------
MANUFACTURING 2.48%
Innovative Valve Technologies* 150 3,037
Robbins & Myers 75 2,972
------------
6,009
------------
OFFICE EQUIPMENT & SUPPLIES 1.21%
US Office Products* 150 2,944
------------
OIL & GAS RELATED 7.82%
EEX Corp* 300 2,719
Key Energy Group* 75 1,627
Newfield Exploration* 150 3,497
Patterson Energy* 75 2,902
Petsec Energy Ltd Sponsored ADR
Representing 5 Ord Shrs* 200 2,750
Precision Drilling* 100 2,438
Rowan Cos* 100 3,050
------------
18,983
------------
PERSONAL CARE 2.48%
Enamelon Inc* 100 1,287
Helen of Troy Ltd* 150 2,419
Playtex Products* 225 2,306
------------
6,012
------------
POLLUTION CONTROL 2.33%
Allied Waste Industries* 150 3,497
Philip Services* 150 2,156
------------
5,653
------------
<PAGE>
PUBLISHING 0.95%
Petersen Cos Class A* 100 $ 2,300
------------
REAL ESTATE INVESTMENT TRUST 1.66%
CRIIMI MAE 150 2,250
FelCor Suite Hotels 50 1,775
------------
4,025
------------
REAL ESTATE RELATED 1.07%
Intrawest Corp 150 2,606
------------
RESTAURANTS 1.85%
Schlotzsky's Inc* 150 2,194
ShowBiz Pizza Time* 100 2,300
------------
4,494
------------
RETAIL 3.37%
Global DirectMail* 50 866
Men's Wearhouse* 75 2,606
Proffitt's Inc* 100 2,844
Stage Stores* 50 1,869
------------
8,185
------------
SAVINGS & LOAN 1.20%
FirstFed Financial* 75 2,906
------------
SERVICES 12.80%
AHL Services* 175 4,309
Alternative Resources* 125 2,883
Boron LePore & Associates* 100 2,750
Concord EFS* 100 2,487
Corrections Corp of America* 50 1,853
Interim Services* 150 3,881
NCO Group* 112 2,884
NCS HealthCare Class A* 75 1,978
Registry Inc* 50 2,294
Safeguard Scientifics* 80 2,510
TMP Worldwide* 140 3,220
------------
31,049
------------
<PAGE>
TELECOMMUNICATIONS - CELLULAR &
WIRELESS 0.70%
Microcell Telecommunications Class B* 250 $ 1,688
------------
TELECOMMUNICATIONS -
LONG DISTANCE 3.63%
ICG Communications* 160 4,360
IDT Corp* 100 2,025
P-COM Inc* 140 2,415
------------
8,800
------------
TEXTILE - APPAREL MANUFACTURING 0.89%
Quiksilver Inc* 75 2,147
------------
TRUCKERS 1.48%
Simon Transportation Services* 150 3,600
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $244,972) (Cost for Income
Tax Purposes $245,068) $ 242,606
============
TECHNOLOGY Portfolio
COMMON STOCKS 100.00%
COMMUNICATIONS - EQUIPMENT &
MANUFACTURING 5.38%
Pittway Corp Class A 300 20,887
------------
COMPUTER SOFTWARE & SERVICE 28.05%
Accelr8 Technology* 500 13,500
American Software Class A* 1,600 14,700
CBT Group PLC Sponsored ADR
Representing 0.5 Ord Shrs* EI 200 16,425
DataWorks Corp* 1,000 19,875
Edwards (J D) & Co* 500 14,750
Learning Co* 1,200 19,275
Made2Manage Systems* 1,000 7,563
Wonderware Corp* 200 2,825
------------
108,913
------------
COMPUTER SYSTEMS 3.39%
Geac Computer Ltd* CA 400 13,166
------------
<PAGE>
COMPUTERS - HARDWARE 11.04%
Compaq Computer 200 $ 11,287
HMT Technology* 300 3,900
International Business Machines 200 20,912
Kentek Information Systems 1,000 6,750
------------
42,849
------------
COMPUTERS - NETWORKING 1.16%
Novell Inc* 600 4,500
------------
ELECTRICAL EQUIPMENT 6.05%
PCD Inc* 1,000 23,500
------------
ELECTRONICS - INSTRUMENTS 4.81%
SanDisk Corp* 400 8,125
Sawtek Inc* 400 10,550
------------
18,675
------------
ELECTRONICS - SEMICONDUCTOR 6.16%
Applied Micro Circuits* 500 6,188
MRV Communications* 200 4,775
National Semiconductor* 500 12,969
------------
23,932
------------
LEISURE TIME 6.29%
International Game Technology 800 20,200
WMS Industries* 200 4,225
------------
24,425
------------
OFFICE EQUIPMENT & SUPPLIES 5.70%
Xerox Corp 300 22,144
------------
RETAIL 7.51%
Creative Technology Ltd* SN 800 17,600
Tandy Corp 300 11,569
------------
29,169
------------
SERVICES 6.31%
Computer Learning Centers* 400 24,500
------------
<PAGE>
TELECOMMUNICATIONS -
LONG DISTANCE 8.15%
fONOROLA Inc* CA 800 $ 17,834
Premiere Technologies* 500 13,812
------------
31,646
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $405,497)
(Cost for Income Tax Purposes $405,866) $ 388,306
============
TOTAL RETURN Portfolio
COMMON STOCKS 62.85%
AEROSPACE & DEFENSE 2.59%
Boeing Co 4,500 220,219
Lockheed Martin 2,000 197,000
Raytheon Co Class B 3,500 176,750
------------
593,969
------------
AUTO PARTS 1.04%
Genuine Parts 7,000 237,563
------------
AUTOMOBILES 1.06%
Ford Motor 5,000 243,437
------------
BANKS 5.24%
Comerica Inc 1,900 171,475
First Chicago NBD 2,600 217,100
First of America Bank 3,300 254,512
First Union 3,000 153,750
State Street 4,200 244,388
Wachovia Corp 2,000 162,250
------------
1,203,475
------------
BEVERAGES 1.48%
Anheuser-Busch Cos 4,000 176,000
PepsiCo Inc 4,500 163,969
------------
339,969
------------
<PAGE>
BUILDING MATERIALS 1.87%
Hanson PLC Sponsored ADR
Representing 5 Shrs 9,000 $ 207,563
Sherwin-Williams Co 8,000 222,000
------------
429,563
------------
CHEMICALS 2.27%
AKZO Nobel NV Sponsored ADR
Representing 0.5 Ord Shr 1,600 139,000
Dow Chemical 2,000 203,000
Great Lakes Chemical 4,000 179,500
------------
521,500
------------
COMPUTER RELATED 3.25%
Compaq Computer 5,000 282,188
Electronic Data Systems 7,000 307,562
Hewlett-Packard Co 2,500 156,250
------------
746,000
------------
CONGLOMERATES 1.52%
National Service Industries 4,000 198,250
Textron Inc 2,400 150,000
------------
348,250
------------
DISTRIBUTION 1.10%
SuperValu Inc 6,000 251,250
------------
ELECTRIC UTILITIES 3.99%
CINergy Corp 3,700 141,756
Edison International 6,300 171,281
Entergy Corp 5,000 149,687
Texas Utilities 5,000 207,813
Unicom Corp 8,000 246,000
------------
916,537
------------
ELECTRICAL EQUIPMENT 0.83%
General Electric 2,600 190,775
------------
ELECTRONICS - SEMICONDUCTOR 1.14%
<PAGE>
Rockwell International 5,000 $ 261,250
------------
FOODS 3.36%
Archer-Daniels-Midland Co 6,452 139,928
General Mills 1,700 121,762
Heinz (H J) Co 3,550 180,384
Kellogg Co 2,600 129,025
Unilever NV New York Shrs 3,200 199,800
------------
770,899
------------
HARDWARE & TOOLS 0.95%
Snap-On Inc 5,000 218,125
------------
HEALTH CARE DRUGS -
PHARMACEUTICALS 3.19%
Abbott Laboratories 2,500 163,906
American Home Products 1,800 137,700
Bristol-Myers Squibb 2,200 208,175
Lilly (Eli) & Co 3,200 222,800
------------
732,581
------------
HEALTH CARE RELATED 1.03%
Columbia/HCA Healthcare 8,000 237,000
------------
HOUSEHOLD FURNITURE & APPLIANCES 0.96%
Whirlpool Corp 4,000 220,000
------------
INSURANCE 3.64%
Lincoln National 3,000 234,375
Loews Corp 2,000 212,250
Ohio Casualty 5,000 223,125
SAFECO Corp 3,400 165,750
------------
835,500
------------
INSURANCE BROKERS 0.78%
Marsh & McLennan 2,400 178,950
------------
INVESTMENT BANK/BROKER FIRM 0.81%
Morgan Stanley Dean Witter Discover & Co 3,135 185,357
------------
IRON & STEEL 1.05%
Nucor Corp 5,000 241,563
------------
<PAGE>
MANUFACTURING 0.57%
Minnesota Mining & Manufacturing 1,600 $ 131,300
------------
METALS MINING 0.95%
Phelps Dodge 3,500 217,875
------------
OIL & GAS RELATED 4.21%
Amoco Corp 1,300 110,662
Exxon Corp 3,500 214,156
Norsk Hydro A/S Sponsored ADR
Representing Ord Shrs 5,000 255,000
Repsol SA Sponsored ADR
Representing Ord Shrs 5,000 212,813
Royal Dutch Petroleum New York
Registry 1.25 Gldr Shrs 3,200 173,400
------------
966,031
------------
PAPER & FOREST PRODUCTS 0.53%
Westvaco Corp 3,900 122,606
------------
POLLUTION CONTROL 0.84%
Waste Management 7,000 192,500
------------
PUBLISHING 0.75%
Gannett Co 2,800 173,075
------------
RAILROADS 0.56%
Illinois Central 3,750 127,734
------------
RESTAURANTS 1.04%
McDonald's Corp 5,000 238,750
------------
RETAIL 2.77%
Circuit City Stores-Circuit City Group 3,500 124,469
Dillard's Inc Class A 5,000 176,250
Giant Food Class A 3,300 111,169
K mart Corp* 8,500 98,281
Penney (J C) Co 2,100 126,656
------------
636,825
------------
SERVICES 0.92%
Dun & Bradstreet 6,800 210,375
------------
<PAGE>
SPECIALTY PRINTING 0.75%
Deluxe Corp 5,000 $ 172,500
------------
TELECOMMUNICATIONS -
LONG DISTANCE 1.05%
British Telecommunications PLC
Sponsored ADR Representing 10
Ord Shrs 3,000 240,938
------------
TELEPHONE 2.42%
Bell Atlantic 2,000 182,000
Telefonica de Espana SA Sponsored
ADR Representing 3 Shrs 2,000 182,125
Telefonos de Mexico SA de CV Sponsored
ADR Representing Ord Series L Shrs 3,400 190,613
------------
554,738
------------
TEXTILE - APPAREL MANUFACTURING 0.36%
Liz Claiborne 2,000 83,625
------------
TEXTILE - HOME FURNISHINGS 0.56%
Shaw Industries 11,000 127,875
------------
TOBACCO 1.42%
Fortune Brands 2,700 100,069
Philip Morris 5,000 226,563
------------
326,632
------------
TOTAL COMMON STOCKS
(Cost $10,610,307) 14,426,892
------------
FIXED INCOME SECURITIES 21.67%
US Government Obligations 12.60%
US Treasury Bonds
8.125%, 8/15/2019 400,000 500,625
7.250%, 8/15/2022 300,000 346,500
US Treasury Notes
7.500%, 11/15/2001 300,000 318,188
6.500%, 8/15/2005 300,000 313,031
6.375%, 7/15/1999 200,000 202,125
6.375%, 1/15/2000 300,000 303,938
6.375%, 8/15/2002 400,000 410,375
<PAGE>
5.875%, 2/15/2000 495,000 $ 497,011
------------
TOTAL US GOVERNMENT OBLIGATIONS
(Cost $2,764,713) 2,891,793
------------
US Government Agency Obligations 5.75%
Federal Farm Credit Bank,
Medium-Term Notes
6.150%, 9/1/2000 500,000 503,269
Freddie Mac, Gold,
Participation Certificates
8.000%, 10/1/2010 59,166 61,163
6.500%, 7/1/2001 84,741 85,222
Fannie Mae, Gtd Mortgage Pass-Through
Certificates
8.500%, 3/1/2010 117,803 122,473
6.500%, 5/1/2026 138,701 137,141
6.000%, 5/1/2009 132,936 131,453
Fannie Mae, Medium-Term Notes
6.300%, 8/19/2002 200,000 202,822
Government National Mortgage Association I
Pass-Through Certificates,
7.500%, 3/15/2026 75,744 77,637
------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,301,858) 1,321,180
------------
Corporate Bonds 3.32%
BANKS 1.37%
ABN Amro Bank NV, Sub Notes,
7.550%, 6/28/2006 200,000 214,309
NationsBank Corp, Sub Notes,
6.500%, 3/15/2006 100,000 99,794
------------
314,103
------------
BEVERAGES 0.44%
PepsiCo Inc, Medium-Term Notes,
5.875%, 6/1/2000 100,000 99,908
------------
FOODS 0.65%
Campbell Soup, Notes,
6.150%, 12/1/2002 150,000 150,248
------------
POLLUTION CONTROL 0.86%
<PAGE>
WMX Technologies, Notes,
6.375%, 12/1/2003 200,000 $ 197,088
------------
TOTAL CORPORATE BONDS
(Cost $750,329) 761,347
------------
TOTAL FIXED INCOME SECURITIES
(Cost $4,816,900) 4,974,320
------------
SHORT-TERM INVESTMENTS 15.48%
US Government Obligations 4.38%
US Treasury Notes
7.125%, 10/15/1998 500,000 505,625
6.125%, 3/31/1998 500,000 500,781
------------
(Cost $1,006,211) 1,006,406
------------
Repurchase Agreements 11.10%
Repurchase Agreement with State Street
Bank & Trust Co dated 12/31/1997
due 1/2/1998 at 5.800%,
repurchased at $2,547,821
(Collateralized by US Treasury Bonds
due 5/15/2017 at 8.750%
value $2,623,199) (Cost $2,547,000) 2,547,000 2,547,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $3,553,211) 3,553,406
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $18,980,418) (Cost for Income
Tax Purposes $18,982,435) $ 22,954,618
============
UTILITIES Portfolio
COMMON STOCKS 89.68%
OIL & GAS RELATED 5.18%
Enron Corp 1,200 49,875
Sonat Inc 1,650 75,488
Union Pacific Resources Group 2,400 58,200
Williams Cos 1,900 53,913
------------
237,476
------------
<PAGE>
TELECOMMUNICATIONS - CELLULAR &
WIRELESS 1.59%
NEXTEL Communications Class A* 2,800 $ 72,800
------------
TELECOMMUNICATIONS -
LONG DISTANCE 19.64%
AT&T Corp 1,200 73,500
Brooks Fiber Properties* 1,300 71,500
COLT Telecom Group PLC Sponsored ADR
Representing 4 Ord Shrs* 1,400 59,675
France Telecom SA Sponsored ADR
Representing Ord Shrs* 2,000 72,000
ICG Communications* 3,100 84,475
LCI International* 2,200 67,650
MCI Communications 1,500 64,219
McLeodUSA Inc Class A* 1,950 62,400
Portugal Telecom SA Sponsored ADR
Representing Ord Shrs 1,600 75,200
Sprint Corp 1,200 70,350
Teleport Communications Group Class A* 1,500 82,313
US WEST Communications Group 1,000 45,125
Viatel Inc* 1,300 6,500
WorldCom Inc* 2,160 65,340
------------
900,247
------------
Utilities 63.27%
ELECTRIC 33.60%
Allegheny Energy 1,400 45,500
American Electric Power 1,200 61,950
CMS Energy 900 39,656
CalEnergy Co* 2,000 57,500
Carolina Power & Light 800 33,950
CINergy Corp 800 30,650
DTE Energy 1,000 34,687
Dominion Resources 700 29,794
Duke Energy 1,226 67,890
Edison International 1,300 35,344
Entergy Corp 1,100 32,931
FPL Group 600 35,512
Florida Progress 1,100 43,175
Florida Public Utilities 500 12,250
GPU Inc 900 37,912
IES Industries 1,700 62,581
Idaho Power 1,650 62,081
<PAGE>
Interstate Power 1,200 $ 44,925
New Century Energies 2,200 105,462
NIPSCO Industries 1,300 64,269
Northern States Power 900 52,425
OGE Energy 2,040 111,562
PG&E Corp 1,300 39,569
PP&L Resources 1,200 28,725
PacifiCorp 2,200 60,088
PECO Energy 2,100 50,925
Pinnacle West Capital 900 38,138
SCANA Corp 2,000 59,875
Southern Co 1,300 33,638
TNP Enterprises 1,500 49,875
Unicom Corp 1,400 43,050
Union Electric 800 34,600
------------
1,540,489
------------
NATURAL GAS 7.49%
Coastal Corp 1,250 77,422
Columbia Gas System 800 62,850
NGC Corp 4,000 70,000
New Jersey Resources 400 16,025
ONEOK Inc 1,350 54,506
TransCanada PipeLines Ltd 2,800 62,650
------------
343,453
------------
TELEPHONE 22.18%
ALLTEL Corp 1,400 57,488
Ameritech Corp 1,270 102,235
Bell Atlantic 2,517 229,047
BellSouth Corp 2,270 127,829
Century Telephone Enterprises 1,400 69,737
Cincinnati Bell 2,400 74,400
GTE Corp 1,750 91,437
MetroNet Communications Class B
Non-Voting Shrs* 6,000 104,250
SBC Communications 1,500 109,875
Southern New England Telecommunications 1,000 50,313
------------
1,016,611
------------
TOTAL UTILITIES $ 2,900,553
------------
<PAGE>
TOTAL COMMON STOCKS
(Cost $3,357,955) $ 4,111,076
------------
PREFERRED STOCKS 0.81%
UTILITIES - ELECTRIC 0.81%
Cia Paranaense de Energia Sponsored ADR
Representing 1,000 Pfd B Shrs
(Cost $45,387) 2,700 36,956
------------
SHORT-TERM INVESTMENTS -
REPURCHASE AGREEMENTS 9.51%
Repurchase Agreement with
State Street Bank & Trust Co
dated 12/31/1997
due 1/2/1998 at 5.800%,
repurchased at $436,140
(Collateralized by US Treasury
Bonds due 2/15/2023 at 7.125%, value
$449,682) (Cost $436,000) 436,000 436,000
------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $3,839,342#) $ 4,584,032
============
</TABLE>
* Security is non-income producing.
^ Securities are registered pursuant to Rule 144A and may be deemed to be
restricted for resale to institutional investors.
^^ 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.
# Also represents cost for income tax purposes.
~ The following are restricted securities at December 31, 1997:
<PAGE>
<TABLE>
<CAPTION>
Value as
Acquisition Acquisition % of
Description Date(s) Cost Net Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Yield Portfolio
Nextel Communications Class A 9/9/97-
9/15/97 $17,894 0.07%
========
Summary of Investments by Country
% of
Country Investment
Country Code Securities Value
- ---------------------------------------------------------------------------------------------
High Yield Portfolio
Australia AS 2.40% $704,250
Canada CA 7.95 2,328,747
Indonesia ID 0.44 129,000
Israel IS 0.96 282,500
Poland PL 0.96 282,500
United Kingdom UK 2.48 726,500
United States US 84.81 24,855,465
-------------------------
100.00% $29,308,962
=========================
Technology Portfolio
Canada CA 7.98% $31,000
Ireland EI 4.23 16,425
Singapore SN 4.53 17,600
United States US 83.26 323,281
-------------------------
100.00% $388,306
=========================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Assets and Liabilities
December 31, 1997
Health
Dynamics Growth Sciences
Portfolio Portfolio Portfolio
----------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost $ 242,022 $ 246,908 $ 309,027
==============================================
At Value $ 246,138 $ 264,438 $ 342,790
Cash 11,107 6,886 85,066
Receivable for Dividends and
Interest 172 319 194
----------------------------------------------
TOTAL ASSETS $ 257,417 $ 271,643 $ 428,050
----------------------------------------------
LIABILITIES
Payable for Investment Securities
Purchased 0 5,416 5,092
----------------------------------------------
Net Assets at Value $ 257,417 $ 266,227 $ 422,958
==============================================
NET ASSETS
Paid-in Capital* $ 249,000 $ 249,000 $ 401,492
Accumulated Undistributed Net
Investment Income 586 1,333 3,759
Accumulated Undistributed
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency Transactions 3,715 (1,636) (16,056)
Net Appreciation of Investment
Securities and Foreign Currency
Transactions 4,116 17,530 33,763
----------------------------------------------
Net Assets at Value $ 257,417 $ 266,227 $ 422,958
==============================================
Shares Outstanding 24,896 24,905 38,318
Net Asset Value, Offering and
Redemption Price per Share $ 10.34 $ 10.69 $ 11.04
==============================================
* The Fund has one billion 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)
December 31, 1997
Small
High Industrial Company
Yield Income Growth
Portfolio Portfolio Portfolio
----------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost~ $ 28,919,563 $ 36,224,200 $ 244,972
=================================================
At Value~ $ 29,308,962 $ 41,984,248 $ 242,606
Cash 333,956 2,205 27,667
Receivables:
Fund Shares Sold 1,120,392 27,618 0
Dividends and Interest 388,186 132,529 58
Organization Costs 3,682 3,682 0
Prepaid Expenses and
Other Assets 740 1,364 0
-------------------------------------------------
TOTAL ASSETS 31,155,918 42,151,646 270,331
-------------------------------------------------
LIABILITIES
Payables:
Investment Securities Purchased 230,500 1,911,831 23,769
Fund Shares Repurchased 30,349 136,233 0
Accrued Expenses and
Other Payables 14,155 10,113 0
-------------------------------------------------
TOTAL LIABILITIES 275,004 2,058,177 23,769
-------------------------------------------------
Net Assets at Value $ 30,880,914 $ 40,093,469 $ 246,562
=================================================
NET ASSETS
Paid-in Capital* $ 30,364,634 $ 33,741,127 $ 248,999
Accumulated Undistributed
Net Investment Income
(See Note 1) 24,007 28,673 580
Accumulated Undistributed
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency Transactions 102,874 563,621 (651)
Net Appreciation (Depreciation)
<PAGE>
of Investment Securities and
Foreign Currency Transactions
(See Note 1) 389,399 5,760,048 (2,366)
-------------------------------------------------
Net Assets at Value $ 30,880,914 $ 40,093,469 $ 246,562
=================================================
Shares Outstanding 2,478,386 2,353,217 24,884
Net Asset Value, Offering and
Redemption Price per Share $ 12.46 $ 17.04 $ 9.91
=================================================
~ Investment securities at cost and value at December 31, 1997 include
repurchase agreements of $634,000 and $3,706,000 for High Yield and Industrial
Income Portfolios, respectively.
* The Fund has one billion 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)
December 31, 1997
Total
Technology Return Utilities
Portfolio Portfolio Portfolio
-------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost~ $ 405,497 $ 18,980,418 $ 3,839,342
================================================
At Value~ $ 388,306 $ 22,954,618 $ 4,584,032
Cash 31,294 46,757 891
Receivables:
Fund Shares Sold 50 155,794 623
Dividends and Interest 157 135,710 8,872
Organization Costs 0 3,682 3,682
Prepaid Expenses and Other Assets 0 230 274
------------------------------------------------
TOTAL ASSETS 419,807 23,296,791 4,598,374
------------------------------------------------
LIABILITIES
Payable for Fund Shares
Repurchased 5,381 18,718 967
Accrued Expenses and Other
Payables 0 10,482 9,558
------------------------------------------------
TOTAL LIABILITIES 5,381 29,200 10,525
------------------------------------------------
Net Assets at Value $ 414,426 $ 23,267,591 $ 4,587,849
================================================
NET ASSETS
Paid-in Capital* $ 424,294 $ 19,208,272 $ 3,827,152
Accumulated Undistributed Net
Investment Income
(See Note 1) 1,686 5,271 2,424
Accumulated Undistributed Net
Realized Gain on Investment
Securities and Foreign
Currency Transactions 5,637 79,848 13,583
Net Appreciation (Depreciation)
of Investment Securities and
Foreign Currency Transactions
(See Note 1) (17,191) 3,974,200 744,690
------------------------------------------------
<PAGE>
Net Assets at Value $ 414,426 $ 23,267,591 $ 4,587,849
================================================
Shares Outstanding 36,077 1,471,825 318,697
Net Asset Value, Offering and
Redemption Price per Share $ 11.49 $ 15.81 $ 14.40
================================================
</TABLE>
~ Investment securities at cost and value at December 31, 1997 include
repurchase agreements of $2,547,000 and $436,000 for Total Return and Utilities
Portfolios, respectively.
* The Fund has one billion 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
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Operations
Period Ended December 31, 1997 (Note 1)
Health
Dynamics Growth Sciences
Portfolio Portfolio Portfolio
--------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 478 $ 1,237 $ 758
Interest 115 115 3,012
Foreign Taxes Withheld (7) (19) (11)
--------------------------------------------------
TOTAL INCOME 586 1,333 3,759
--------------------------------------------------
EXPENSES
Investment Advisory Fees 554 781 1,191
Transfer Agent Fees 5,000 3,333 5,000
Administrative Fees 10,014 6,680 10,024
Custodian Fees and Expenses 1,001 461 1,876
Directors' Fees and Expenses 0 0 0
Professional Fees and Expenses 14,865 14,860 15,874
Registration Fees and Expenses 0 0 0
Other Expenses 477 318 488
-------------------------------------------------
TOTAL EXPENSES 31,911 26,433 34,453
Fees and Expenses Absorbed
by Investment Adviser (31,429) (26,170) (33,488)
Fees and Expenses Paid
Indirectly (482) (263) (965)
-------------------------------------------------
NET EXPENSES 0 0 0
-------------------------------------------------
NET INVESTMENT INCOME 586 1,333 3,759
-------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency Transactions 3,715 (1,636) (16,056)
Change in Net Appreciation of
Investment Securities and
Foreign Currency Transactions 4,116 17,530 33,763
-------------------------------------------------
<PAGE>
NET GAIN ON INVESTMENT
SECURITIES 7,831 15,894 17,707
-------------------------------------------------
Net Increase in Net Assets
from Operations $ 8,417 $ 17,227 $ 21,466
=================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Operations (Continued)
Period Ended December 31, 1997 (Note 1)
Small
High Industrial Company
Yield Income Growth
Portfolio Portfolio Portfolio
-------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 11,212 $ 445,918 $ 256
Interest 1,789,476 477,209 224
Other Income 58,536 0 0
Foreign Taxes Withheld 0 (3,950) 0
------------------------------------------------
TOTAL INCOME 1,859,224 919,177 480
------------------------------------------------
EXPENSES
Investment Advisory Fees 117,624 223,880 684
Transfer Agent Fees 5,000 5,000 5,000
Administrative Fees 12,941 14,478 10,014
Custodian Fees and Expenses 11,950 11,417 1,146
Directors' Fees and Expenses 9,197 9,753 0
Organization Expenses 3,682 3,682 0
Professional Fees and Expenses 17,393 18,453 15,864
Registration Fees and Expenses 78 78 0
Other Expenses 6,603 3,255 476
-------------------------------------------------
TOTAL EXPENSES 184,468 289,996 33,184
Fees and Expenses Absorbed
by Investment Adviser (20,919) (16,285) (32,621)
Fees and Expenses Paid
Indirectly (6,950) (4,818) (563)
-------------------------------------------------
NET EXPENSES 156,599 268,893 0
-------------------------------------------------
NET INVESTMENT INCOME $ 1,702,625 $ 650,284 $ 480
-------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency Transactions 1,351,668 2,766,021 (551)
<PAGE>
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign Currency
Transactions 69,593 3,726,765 (2,366)
-------------------------------------------------
NET GAIN (LOSS) ON INVESTMENT
SECURITIES 1,421,261 6,492,786 (2,917)
-------------------------------------------------
Net Increase (Decrease) in Net
Assets from Operations $ 3,123,886 $ 7,143,070 $ (2,437)
=================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Operations (Continued)
Period Ended December 31, 1997 (Note 1)
Total
Technology Return Utilities
Portfolio Portfolio Portfolio
--------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 294 $ 280,001 $ 106,319
Interest 1,392 393,621 18,784
Foreign Taxes Withheld 0 (8,180) (491)
--------------------------------------------------
TOTAL INCOME 1,686 665,442 124,612
--------------------------------------------------
EXPENSES
Investment Advisory Fees 1,318 126,159 19,549
Transfer Agent Fees 5,000 5,000 5,000
Administrative Fees 10,026 12,534 10,489
Custodian Fees and Expenses 1,499 7,804 4,466
Directors' Fees and Expenses 0 9,110 8,403
Organization Expenses 0 3,682 3,682
Professional Fees and Expenses 15,874 17,161 15,106
Registration Fees and Expenses 0 78 78
Other Expenses 488 3,032 665
--------------------------------------------------
TOTAL EXPENSES 34,205 184,560 67,438
Fees and Expenses Absorbed
by Investment Adviser (33,352) (30,247) (35,201)
Fees and Expenses Paid Indirectly (853) (3,392) (2,862)
--------------------------------------------------
NET EXPENSES 0 150,921 29,375
--------------------------------------------------
NET INVESTMENT INCOME 1,686 514,521 95,237
--------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain on Investment
Securities and Foreign
Currency Transactions 5,637 208,618 27,459
Change in Net Appreciation
(Depreciation) of Investment
Securities and Foreign
<PAGE>
Currency Transactions (17,191) 2,541,805 643,128
--------------------------------------------------
NET GAIN ON INVESTMENT
SECURITIES (11,554) 2,750,423 670,587
--------------------------------------------------
Net Increase (Decrease) in
Net Assets from Operations $ (9,868) $ 3,264,944 $ 765,824
==================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets
Period Ended December 31, 1997 (Note 1)
Health
Dynamics Growth Sciences
Portfolio Portfolio Portfolio
------------- ----------------------------------
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 586 $ 1,333 $ 3,759
Net Realized Gain (Loss) on
Investment Securities and
Foreign Currency Transactions 3,715 (1,636) (16,056)
Change in Net Appreciation of
Investment Securities and
Foreign Currency Transactions 4,116 17,530 33,763
----------- ---------- ----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS 8,417 17,227 21,466
----------- ---------- ----------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 250,000 250,000 890,308
Reinvestment of Distributions 0 0 0
----------- ---------- ----------
250,000 250,000 890,308
Amounts Paid for Repurchases
of Shares (2,000) (2,000) (489,816)
----------- ---------- ----------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 248,000 248,000 400,492
----------- ---------- ----------
Total Increase in Net Assets 256,417 265,227 421,958
NET ASSETS
Initial Subscription (See Note 1) 1,000 1,000 1,000
Beginning of Period 0 0 0
----------- ---------- ----------
End of Period $ 257,417 $ 266,227 $ 422,958
=========== ========== ==========
Accumulated Undistributed
Net Investment Income Included
in Net Assets at End of Period $ 586 $ 1,333 $ 3,759
FUND SHARE TRANSACTIONS
Initial Subscription (See Note 1) 100 100 100
<PAGE>
Shares Sold 25,000 25,000 85,755
Shares Issued from Reinvestment
of Distributions 0 0 0
----------- ---------- ----------
25,100 25,100 85,855
Shares Repurchased (204) (195) (47,537)
----------- ---------- ----------
Net Increase in Fund Shares 24,896 24,905 38,318
=========== ========== ==========
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets (Continued)
Year Ended December 31
High Yield Industrial Income
Portfolio Portfolio
---------------------------------- --------------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 1,702,625 $ 776,704 $ 650,284 $ 405,528
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 1,351,668 412,110 2,766,021 1,122,522
Change in Net Appreciation of Investment
Securities and Foreign Currency
Transactions 69,593 260,801 3,726,765 1,369,048
---------------------------------- --------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS 3,123,886 1,449,615 7,143,070 2,897,098
---------------------------------- --------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (1,687,001) (768,178) (621,902) (405,328)
In Excess of Net Investment Income 0 0 0 (514)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (1,250,049) (407,604) (2,199,803) (1,121,678)
---------------------------------- --------------------------------
TOTAL DISTRIBUTIONS (2,937,050) (1,175,782) (2,821,705) (1,527,520)
---------------------------------- --------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 33,849,922 13,157,662 27,309,883 15,001,088
Reinvestment of Distributions 2,937,050 1,175,782 2,821,705 1,527,203
---------------------------------- --------------------------------
36,786,972 14,333,444 30,131,588 16,528,291
<PAGE>
Amounts Paid for Repurchases of Shares (20,131,245) (5,801,973) (16,701,751) (3,917,900)
---------------------------------- --------------------------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 16,655,727 8,531,471 13,429,837 12,610,391
---------------------------------- --------------------------------
Total Increase in Net Assets 16,842,563 8,805,304 17,751,202 13,979,969
NET ASSETS
Beginning of Period 14,038,351 5,233,047 22,342,267 8,362,298
End of Period $ 30,880,914 $ 14,038,351 $ 40,093,469 $ 22,342,267
================================== ================================
Accumulated Undistributed Net Investment
Income Included in Net Assets at End of
Period (See Note 1) 24,007 8,383 28,673 330
FUND SHARE TRANSACTIONS
Shares Sold 2,645,545 1,101,791 1,689,472 1,070,184
Shares Issued from Reinvestment
of Distributions 236,097 99,812 169,076 106,660
--------------------------------- --------------------------------
2,881,642 1,201,603 1,858,548 1,176,844
Shares Repurchased (1,594,764) (484,030) (1,064,382) (282,515)
--------------------------------- --------------------------------
Net Increase in Fund Shares 1,286,878 717,573 794,166 894,329
================================= =================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets (Continued)
Small Company Technology
Growth Portfolio Portfolio Total Return
Period Ended Period Ended Portfolio
December 31 December 31 Year Ended December 31
-------------- ------------- ----------------------------
1997 1997 1997 1996
(Note 1) (Note 1)
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 480 $ 1,686 $ 514,521 $ 357,380
Net Realized Gain (Loss) on Investment
Securities and Foreign Currency
Transactions (551) 5,637 208,618 (3,764)
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions (2,366) (17,191) 2,541,805 888,821
-------------- ------------- ------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS (2,437) (9,868) 3,264,944 1,242,437
-------------- ------------- -----------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 0 (465,401) (361,829)
In Excess of Net Investment Income 0 0 0 (43,701)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 0 0 (109,339) (781)
-------------- ------------- ------------------------------
TOTAL DISTRIBUTIONS 0 0 (574,740) (406,311)
-------------- ------------- ------------------------------
FUND SHARE TRANSACTIONS
<PAGE>
Proceeds from Sales of Shares 249,999 1,391,792 17,640,610 7,825,087
Reinvestment of Distributions 0 0 574,740 406,311
-------------- ------------- -------------------------------
249,999 1,391,792 18,215,350 8,231,398
Amounts Paid for Repurchases of Shares (2,000) (968,498) (11,151,066) (2,107,418)
-------------- ------------- -------------------------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 247,999 423,294 7,064,284 6,123,980
-------------- ------------- -------------------------------
Total Increase in Net Assets 245,562 413,426 9,754,488 6,960,106
NET ASSETS
Initial Subscription (See Note 1) 1,000 1,000 0 0
Beginning of Period 0 0 13,513,103 6,552,997
-------------- ------------- -------------------------------
End of Period $ 246,562 $ 414,426 $ 23,267,591 $ 13,513,103
============== ============= ===============================
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
Included in Net Assets at End of Period
(See Note 1) 580 1,686 5,271 (1,502)
FUND SHARE TRANSACTIONS
Initial Subscription (See Note 1) 100 100 0 0
Shares Sold 25,000 122,765 1,194,193 616,196
Shares Issued from Reinvestment
of Distributions 0 0 37,056 30,758
-------------- ------------- --------------------------------
25,100 122,865 1,231,249 646,954
Shares Repurchased (216) (86,788) (782,443) (163,597)
-------------- ------------- --------------------------------
Net Increase in Fund Shares 24,884 36,077 448,806 483,357
============== ============= ================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Statement of Changes in Net Assets (Continued)
Year Ended December 31
Utilities Portfolio
---------------------------------------
1997 1996
<S> <C> <C>
OPERATIONS
Net Investment Income $ 95,237 $ 27,768
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 27,459 30,198
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 643,128 87,087
---------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 765,824 145,053
---------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (91,300) (27,885)
In Excess of Net Investment Income 0 (1,508)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (13,881) (30,023)
---------------------------------------
TOTAL DISTRIBUTIONS (105,181) (59,416)
---------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 2,682,154 2,346,356
Reinvestment of Distributions 105,181 59,416
---------------------------------------
2,787,335 2,405,772
Amounts Paid for Repurchases of Shares (1,520,377) (120,953)
---------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS 1,266,958 2,284,819
---------------------------------------
Total Increase in Net Assets 1,927,601 2,370,456
NET ASSETS
Beginning of Period 2,660,248 289,792
---------------------------------------
End of Period 4,587,849 2,660,248
=======================================
Accumulated Undistributed (Distributions in
Excess of) Net Investment Income Included
in Net Assets at End of Period $ 2,424 $ (1,508)
FUND SHARE TRANSACTIONS
<PAGE>
Shares Sold 203,031 201,321
Shares Issued from Reinvestment of Distributions 7,481 4,972
--------------------------------------
210,512 206,293
Shares Repurchased (114,385) (10,467)
--------------------------------------
Net Increase in Fund Shares 96,127 195,826
======================================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Variable
Investment Funds, Inc. (the "Fund") is incorporated in Maryland and presently
consists of ten separate Portfolios: Dynamics Portfolio, Growth Portfolio,
Health Sciences Portfolio, High Yield Portfolio, Industrial Income Portfolio,
Realty Portfolio, Small Company Growth Portfolio, Technology Portfolio, Total
Return Portfolio and Utilities Portfolio. 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 (the "Portfolios") are presented herein. The investment
objectives of the Portfolios are: To seek appreciation of capital for Dynamics
Portfolio; to seek long-term capital growth for Growth and Small Company Growth
Portfolios; to seek capital appreciation and income on securities principally
engaged in specific business sectors for Health Sciences and Technology
Portfolios; to seek a high level of current income by investing primarily in
lower rated bonds and other debt securities and in preferred stock for High
Yield Portfolio; 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; and to seek capital
appreciation and income on securities of companies principally engaged in public
utilities for Utilities Portfolio. Dynamics, Growth and Small Company Growth
Portfolios commenced investment operations on August 25, 1997. Health Sciences
and Technology Portfolios commenced investment operations on May 22, 1997 and
May 21, 1997, respectively. Realty Portfolio has not yet commenced investment
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.
<PAGE>
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.
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. In the event of default
on the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. In the
event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral or proceeds may be subject
to legal proceedings.
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.
<PAGE>
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, market discount 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 accumulated undistributed
(distributions in excess of) net investment income and increase net
unrealized appreciation of investment securities by $3,333 and $15,034 for
High Yield and Total Return Portfolios, respectively, and insignificant or
not applicable for the remaining seven Portfolios. Such accounting change
had no effect on net asset value per share.
The Fund may have elements of risk due to concentrated investments in
specific industries or 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 investment securities includes
fluctuations from currency exchange rates and fluctuations in market
value.
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
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. At December 31, 1997, Health Sciences and
Small Company Growth Portfolios had $8,421 and $555, respectively, in net
capital loss carryovers which expire in the year 2005.
<PAGE>
Growth, Health Sciences and High Yield Portfolios incurred and elected
to defer post-October 31 net capital losses of $1,668, $5,592 and $9,906,
respectively, to the year ended December 31, 1998. To the extent future
capital gains are offset by capital loss carryovers, such gains will not
be distributed to shareholders.
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. Of the
ordinary income distributions declared for the year ended December 31,
1997, amounts qualifying for the dividends received deduction available to
the Fund's corporate shareholders were as follows:
Qualifying
Portfolio Percentages
--------------------------------------------------------------------------
Dynamics Portfolio 0.00%
Growth Portfolio 0.00%
Health Sciences Portfolio 0.00%
High Yield Portfolio 0.38%
Industrial Income Portfolio 19.20%
Small Company Growth Portfolio 0.00%
Technology Portfolio 0.00%
Total Return Portfolio 43.03%
Utilities Portfolio 87.77%
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.
For the year ended December 31, 1997, the effects of such differences
were as follows:
<PAGE>
Accumulated
Accumulated Undistributed
Undistributed Net Realized
Net Gain on
Investment Investment Paid-In
Portfolio Income Securities Capital
- -------------------------------------------------------------------------------
High Yield Portfolio $ 3,333 $ (3,333) $ 0
Industrial Income Portfolio (39) (2,597) 2,636
Small Company Growth Portfolio 100 (100) 0
Total Return Portfolio (27,313) 27,313 0
Utilities Portfolio (5) 5 0
Net investment income, net realized gains and net assets were not
affected.
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
paid monthly. The fee is based on the annual rate of each Portfolio's average
net assets as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
---------------------------------------------------------------------
$500
$0 to $0 to $350 to Million Over Over
$350 $500 $700 to $1 $700 $1
Portfolio Million Million Million Billion Million Billion
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dynamics Portfolio 0.60% - 0.55% - 0.50% -
Health Sciences
Portfolio 0.75% - 0.65% - 0.55% -
High Yield Portfolio - 0.60% - 0.55% - 0.45%
<PAGE>
Industrial Income
Portfolio - 0.75% - 0.65% - 0.55%
Small Company Growth
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>
The fee for Growth Portfolio is based on the annual rate of 0.85% of
average net assets.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of
Dynamics, Growth, Health Sciences, High Yield, Industrial Income, Small Company
Growth, Technology and Utilities Portfolios are made by ITC. Effective February
4, 1998, such responsibilities were transferred to IFG. 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 High Yield, Industrial Income, Total Return and Utilities
Portfolios.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year
ended December 31, 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
- --------------------------------------------------------------------------------
Dynamics Portfolio $ 306,765 $ 68,458
Growth Portfolio 277,552 29,006
Health Sciences Portfolio 540,702 215,619
High Yield Portfolio 77,680,078 63,760,047
Industrial Income Portfolio 35,845,532 23,397,120
Small Company Growth Portfolio 304,709 59,186
Technology Portfolio 705,986 306,130
Total Return Portfolio 4,738,362 884,685
Utilities Portfolio 1,994,733 968,667
<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 $ 508,047
Total Return Portfolio 4,262,517 3,176,195
NOTE 4 - APPRECIATION AND DEPRECIATION. At December 31, 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 (depreciation) by Portfolio were
as follows:
<TABLE>
<CAPTION>
Net
Gross Gross Appreciation
Portfolio Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dynamics Portfolio $ 20,044 $ 15,928 $ 4,116
Growth Portfolio 22,652 5,122 17,530
Health Sciences Portfolio 34,379 2,659 31,720
High Yield Portfolio 539,000 150,147 388,853
Industrial Income Portfolio 5,983,665 224,150 5,759,515
Small Company Growth Portfolio 20,116 22,578 (2,462)
Technology Portfolio 21,500 39,060 (17,560)
Total Return Portfolio 4,159,899 187,716 3,972,183
Utilities Portfolio 800,861 56,171 744,690
</TABLE>
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 year ended December 31, 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:
<TABLE>
<CAPTION>
Unfunded
Pension Accrued Pension
Portfolio Expenses Pension Costs Liability
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Yield Portfolio $ 219 $ 340 $ 637
Industrial Income Portfolio 342 537 981
<PAGE>
Total Return Portfolio 217 308 615
Utilities Portfolio 26 50 80
</TABLE>
Pension expenses, unfunded accrued pension costs and pension liability
were insignificant for the remaining Portfolios.
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.
At December 31, 1997, there were no such borrowings.
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights
(For a Fund Share Outstanding Throughout the Period)
Period
Ended
December 31
--------------
1997+
Dynamics Portfolio
PER SHARE DATA
Net Asset Value - Beginning of Period $ 10.00
--------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02
Net Gains on Securities (Both Realized
and Unrealized) 0.32
Total from Investment Operations 0.34
--------------
Net Asset Value - End of Period $ 10.34
==============
TOTAL RETURN> 3.40%*
RATIOS
Net Assets - End of Period ($000 Omitted) $257
Ratio of Expenses to Average Net Assets 0.52%@~
Ratio of Net Investment Income to
Average Net Assets 0.63%~
Portfolio Turnover Rate 28%*
Average Commission Rate Paid^^ $0.0588*
+ All of the expenses of the Portfolio were voluntarily absorbed by IFG from
August 25, 1997, commencement of investment operations, through December 31,
1997. If such expenses had not been voluntarily absorbed, ratio of expenses to
average net assets would have been 34.18% and ratio of net investment income to
average net assets would have been (33.03%).
> 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.
<PAGE>
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ 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.
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout the Period)
Period
Ended
December 31
--------------
1997+
Growth Portfolio
PER SHARE DATA
Net Asset Value - Beginning of Period $ 10.00
--------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05
Net Gains on Securities (Both Realized
and Unrealized) 0.64
Total from Investment Operations 0.69
--------------
Net Asset Value - End of Period $ 10.69
==============
TOTAL RETURN> 6.90%*
RATIOS
Net Assets - End of Period ($000 Omitted) $266
Ratio of Expenses to Average Net Assets 0.29%@~
Ratio of Net Investment Income to
Average Net Assets 1.45%~
Portfolio Turnover Rate 12%*
Average Commission Rate Paid^^ $0.0596*
+ All of the expenses of the Portfolio were voluntarily absorbed by IFG from
August 25, 1997, commencement of investment operations, through December 31,
1997. If such expenses had not been voluntarily absorbed, ratio of expenses to
average net assets would have been 28.76% and ratio of net investment income to
average net assets would have been (27.02%).
> 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.
<PAGE>
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed by
Investment Adviser, which is before any expenses 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.
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout the Period)
Period
Ended
December 31
--------------
1997+
Health Sciences Portfolio
PER SHARE DATA
Net Asset Value - Beginning of Period $ 10.00
--------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.10
Net Gains on Securities (Both Realized
and Unrealized) 0.94
--------------
Total from Investment Operations 1.04
--------------
Net Asset Value - End of Period $ 11.04
==============
TOTAL RETURN> 10.40%*
RATIOS
Net Assets - End of Period ($000 Omitted) 423
Ratio of Expenses to Average Net Assets 0.60%@~
Ratio of Net Investment Income to
Average Net Assets 2.34%~
Portfolio Turnover Rate 112%*
Average Commission Rate Paid^^ $0.0590*
+ All of the expenses of the Portfolio were voluntarily absorbed by IFG from May
22, 1997, commencement of investment operations, through December 31, 1997. If
such expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 21.45% and ratio of net investment income to average
net assets would have been (18.51%).
> 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.
<PAGE>
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
@ 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.
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period
Ended
Year Ended December 31 December 31
---------------------------------------- ------------
1997 1996 1995 1994^
<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 0.78 0.72 0.55 0.05
Net Gains on Securities
(Both Realized and Unrealized) 1.26 1.11 1.43 0.01
--------------------------------------- ------------
Total from Investment
Operations 2.04 1.83 1.98 0.06
--------------------------------------- ------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.78 0.71 0.55 0.05
Distributions from Capital
Gains 0.58 0.38 0.40 0.00
-------------------------------------- ------------
Total Distributions 1.36 1.09 0.95 0.05
-------------------------------------- ------------
Net Asset Value -
End of Period 12.46 11.78 11.04 10.01
====================================== ============
TOTAL RETURN> 17.33% 16.59% 19.76% 0.60%*
RATIOS
Net Assets - End of Period
($000 Omitted) $30,881 $14,033 $5,233 $624
Ratio of Expenses to Average
Net Assets# 0.83%@ 0.87%@ 0.97%@ 0.74%~
Ratio of Net Investment
<PAGE>
Income to Average Net
Assets# 8.67% 9.19% 8.79% 2.72%~
Portfolio Turnover Rate 344% 380% 310% 23%*
</TABLE>
^ From May 27, 1994, commencement of investment 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
years ended December 31, 1997, 1996 and 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 0.94%, 1.32%, 2.71% and 30.38%, respectively,
and ratio of net investment income to average net assets would have been 8.56%,
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
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
Year Ended December 31 December 31
--------------------------------------- ------------
1997 1996 1995 1994^
<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 0.30 0.28 0.19 0.03
Net Gains on Securities
(Both Realized and Unrealized) 3.71 2.52 2.76 0.09
--------------------------------------- ------------
Total from Investment
Operations 4.01 2.80 2.95 0.12
--------------------------------------- ------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.29 0.28 0.20 0.03
Distributions from Capital
Gains 1.01 0.77 0.26 0.00
--------------------------------------- ------------
Total Distributions 1.30 1.05 0.46 0.03
--------------------------------------- ------------
Net Asset Value -
End of Period 17.04 14.33 12.58 10.09
======================================= ============
TOTAL RETURN> 28.17% 22.28% 29.25% 1.23%*
RATIOS
Net Assets - End of Period
($000 Omitted) 40,093 22,342 8,362 525
Ratio of Expenses to Average
Net Assets# 0.91%@ 0.95%@ 1.03%@ 0.79%~
Ratio of Net Investment
Income to Average Net
<PAGE>
Assets# 2.18% 2.87% 3.50% 1.69%~
Portfolio Turnover Rate 87% 93% 97% 0%*
Average Commission Rate Paid^^ 0.1912 0.0867 - -
</TABLE>
^ From August 10, 1994, commencement of investment 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
years ended December 31, 1997, 1996 and 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 0.97%, 1.19%, 2.31% and 32.55%, respectively,
and ratio of net investment income to average net assets would have been 2.12%,
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.
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout the Period)
Period
Ended
December 31
--------------
1997+
Small Company Growth Portfolio
PER SHARE DATA
Net Asset Value - Beginning of Period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02
Net Loss on Securities (Both Realized
and Unrealized) (0.11)
Total from Investment Operations (0.09)
--------------
Net Asset Value - End of Period $9.91
==============
TOTAL RETURN> (0.90)%*
RATIOS
Net Assets - End of Period ($000 Omitted) $247
Ratio of Expenses to Average Net Assets 0.61%@~
Ratio of Net Investment Income to
Average Net Assets 0.52%~
Portfolio Turnover Rate 25%*
Average Commission Rate Paid^^ $0.1066*
+ All of the expenses of the Portfolio were voluntarily absorbed by IFG from
August 25, 1997, commencement of investment operations, through December 31,
1997. If such expenses had not been voluntarily absorbed, ratio of expenses to
average net assets would have been 35.99% and ratio of net investment income to
average net assets would have been (34.86%).
> 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.
<PAGE>
@ 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.
<PAGE>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
December 31
-------------
1997+
Technology Portfolio
PER SHARE DATA
Net Asset Value - Beginning of Period $10.00
-------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05
Net Gains on Securities (Both Realized
and Unrealized) 1.44
-------------
Total from Investment Operations 1.49
-------------
Net Asset Value - End of Period 11.49
=============
TOTAL RETURN> 14.80%*
RATIOS
Net Assets - End of Period ($000 Omitted) 414
Ratio of Expenses to Average Net Assets 0.48%@~
Ratio of Net Investment Income to Average
Net Assets 0.95%~
Portfolio Turnover Rate 102%*
Average Commission Rate Paid^^ $0.1503*
+ All of the expenses of the Portfolio were voluntarily absorbed by IFG from May
21, 1997, commencement of investment operations, through December 31, 1997. If
such expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 19.25% and ratio of net investment income to average
net assets would have been (17.82%).
> 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.
<PAGE>
* These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
@ 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.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
Year Ended December 31 December 31
------------------------------------------ ------------
1997 1996 1995 1994^
Total Return Portfolio
<S> <C> <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 0.36 0.36 0.25 0.09
Net Gains on Securities
(Both Realized and Unrealized) 2.66 1.12 2.05 0.09
------------------------------------------ ------------
Total from Investment
Operations 3.02 1.48 2.30 0.18
------------------------------------------ ------------
LESS DISTRIBUTIONS
Dividends from Net Investment
Income 0.34 0.36 0.24 0.09
In Excess of Net Investment
Income 0.00 0.05 0.00 0.00
Distributions from Capital Gains 0.08 0.00 0.01 0.00
------------------------------------------ ------------
Total Distributions 0.42 0.41 0.25 0.09
------------------------------------------ ------------
Net Asset Value -
End of Period 15.81 13.21 12.14 10.09
========================================== ============
TOTAL RETURN> 22.91% 12.18% 22.79% 1.75%*
RATIOS
Net Assets - End of Period
($000 Omitted) 23,268 13,513 6,553 1,055
Ratio of Expenses to Average
Net Assets# 0.92%@ 0.94%@ 1.01%@ 0.86%~
<PAGE>
Ratio of Net Investment Income
to Average Net Assets# 3.07% 3.44% 3.91% 3.86%~
Portfolio Turnover Rate 27% 12% 5% 0%*
Average Commission Rate Paid^^ 0.0540 0.0890 - -
</TABLE>
^ From June 2, 1994, commencement of investment 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
years ended December 31, 1997, 1996 and 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 1.10%, 1.30%, 2.51% and 16.44%, respectively,
and ratio of net investment income to average net assets would have been 2.89%,
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.
<PAGE>
<TABLE>
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INVESCO Variable Investment Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
Year Ended December 31 December 31
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1997 1996 1995 1994+
Utilities Portfolio
<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 11.95 $ 10.84 $ 10.00 $ 10.00
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INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.31 0.13 0.07 0.00
Net Gains on Securities
(Both Realized and Unrealized) 2.48 1.26 0.84 0.00
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Total from Investment
Operations 2.79 1.39 0.91 0.00
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LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.29 0.13 0.07 0.00
In Excess of Net Investment
Income 0.00 0.01 0.00 0.00
Distributions from Capital
Gains 0.05 0.14 0.00 0.00
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Total Distributions 0.34 0.28 0.07 0.00
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Net Asset Value -
End of Period 14.40 11.95 10.84 10.00
======================================== ===========
TOTAL RETURN> 23.41% 12.76% 9.08% 0.00%
RATIOS
Net Assets - End of Period
($000 Omitted) 4,588 2,660 290 25
Ratio of Expenses to Average
Net Assets# 0.99%@ 1.16%@ 1.80%@ 0.00%
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Ratio of Net Investment
Income to Average Net
Assets# 2.92% 2.92% 2.47% 0.00%
Portfolio Turnover Rate 33% 48% 24% 0%
Average Commission Rate Paid^^ 0.1564 0.1055 - -
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+ 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.
# Various expenses of the Portfolio were voluntarily absorbed by IFG for the
years ended December 31, 1997, 1996, and 1995. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
2.07%, 5.36% and 57.13%, respectively, and ratio of net investment income to
average net assets would have been 1.84%, (1.28%) and (52.86%), respectively.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
^^ 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.
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Report of Independent Accountants
To the Shareholders and Board of Directors of
INVESCO Variable Investment Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of each of the portfolios constituting
INVESCO Variable Investment Funds, Inc., (hereafter referred to as the "Fund")
at December 31, 1997, the results of each of their operations, the changes in
each of their net assets and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodian and the application of
alternative auditing procedures where securities purchased had not been
received, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
February 6, 1998
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INVESCO FUNDS
INVESCO Distributors, Inc., (SM)
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be
preceded or accompanied by a
current prospectus.
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