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INVESCO Variable
Investment Funds
No-load mutual funds seeking a high level of current income.
HIGH YIELD FUND
INDUSTRIAL INCOME FUND
TOTAL RETURN FUND
GROWTH FUND
DYNAMICS FUND
SMALL COMPANY GROWTH FUND
HEALTH SCIENCES FUND
TECHNOLOGY FUND
REALTY FUND
UTILITIES FUND
ANNUAL REPORT
INVESCO
ANNUAL REPORT/December 31, 1998
<PAGE>
Market Overview
1998 was a year few market veterans will forget. Just when the danger seemed
to have passed, the tidal wave of the Asian economic crisis finally pounded
American shores in late summer, swamping financial markets. Wall Street's sense
of gloom deepened as the headlines warned of one global economic calamity after
another: Russian loan default, the ominous near-collapse of the hedge fund
Long-Term Capital Management, tumbling currencies in Latin America, and a
perilous banking situation in Japan.
Following the gut-wrenching declines, however, the markets began an equally
dizzying rebound in October. A series of three interest rate cuts by the Fed,
along with those by other central banks, pumped liquidity and confidence into
the international financial system. Despite profit warnings from large
multinational corporations, investors began to focus on the many sectors of
strength within the American economy: robust consumer spending, low interest
rates and unemployment, and subdued inflation.
The mixed economic picture resulted in mixed market performance, as the
technology- and health care-heavy S&P 500 Index outperformed the
industrial-oriented Dow Jones, and large-capitalization stocks continued to be
favored over small-cap issues. Meanwhile, yield spreads widened to favor
low-risk bonds substantially.
By the end of the year, many investors enjoyed another round of sizeable
gains, but few could avoid a sense of trepidation as 1999 approached.
INVESCO Variable Investment Funds, Inc.
The line graphs on the following pages illustrate, for the period from
inception through 12/31/98, 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
For the one-year period ended 12/31/98, VIF--High Yield Fund achieved a total
return of 1.42%. This return lagged that of the Merrill Lynch High Yield Master
Index, which over the same period had a total return of 3.66%. (Of course, past
performance is not a guarantee of future results.)(1),(2)
Technical conditions within the high yield market appear to have been
improving over the past few weeks, and valuations possess the opportunity for
further increases on top of those experienced throughout the November rally. We
expect further positive technical influences as we move through January. This
sector is still undervalued and is extremely attractive on a
fundamental/historical basis. We believe that high-yield securities continue to
offer great total return potential for our shareholders.
VIF - High Yield Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 1.42%
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Since inception (5/94) 11.82%
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Performance is driven by the ability to choose companies within the High
Yield Fund's investment themes that are most likely to experience "positive
events." We focus on companies with improving credit profiles within industries
that possess improving fundamentals and the potential for increased
consolidation activity. Telecommunications and zero coupon bonds tend to be high
beta holdings and an area of focus for the manager. The manager's style of
thematic investing also shifts the focus away from cyclical issuers, an area
likely to experience fundamental credit impairment during an economic slowdown.
There is very limited emerging market exposure and no equity exposure within the
fund.
<PAGE>
We remain focused on credit risk analysis, and our themes of energy,
broadcasting, communications, "near death experience - born again deleveragers"
and special situations remain intact. We will also opportunistically trade in
the new issue market, as these issues are currently being priced inexpensively.
Graph: VIF - High Yield Fund Total Return from inception (5/94 through
12/31/98)
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 Master Index, assuming in each
case reinvestment of all dividends and capital gain distributions,
for the period from inception (5/94) through 12/31/98.
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 Annualized Total Return
as of 12/31/98(1)
1 year 15.30%
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Since inception (8/94) 21.63%
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For the one-year period ended 12/31/98, VIF--Industrial Income Fund had a
total return of 15.30%. During the same period, the S&P 500 had a total return
of 28.53%, and the Lehman Government/Corporate Bond index had a total return of
9.47%. (Of course, past performance is not a guarantee of future
results.)(1),(2)
Equity Strategy
Late 1998 marked a dramatic turn in the equity market as the third-quarter
slide reversed, and the indices climbed to new all time highs. Technology and
consumer cyclical stocks led the surge forward as investor recession anxiety
eased. The commodity-oriented sectors, energy and basic materials, continued to
perform poorly as commodity prices plunged. Large-cap stocks continued to
outperform, especially in the technology sector. The U.S. bond market ended the
month with 30 year Treasury yields at 5.10%. Our expected trading range for the
long bond through 1999 is still 4.5-5.5%. Corporate bonds, both high yield and
investment grade, remain extremely attractive relative to historical valuations
due to investors' concerns over a future economic slowdown. We feel that this
risk is fully represented by current valuations and presents an excellent buying
opportunity.
Graph: VIF - Industrial Income Fund Total Return from inception
(8/94 through 12/31/98)
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
Indices, assuming in each case reinvestment of all dividends and
capital gain distributions, for the period from inception (8/94) through
12/31/98.
<PAGE>
The fund's equity weighting closed December at approximately 76.6% of net
assets. Performance was aided by strong performance from its technology, health
care, financial service, consumer staples, and communication stocks, while the
fund's energy and utility stocks were weak. We increased our technology
weighting in November, which significantly enhanced performance. The fund's
energy holdings were weak during the quarter, though it is our belief that this
group should turn around in 1999.
The performance of the fixed-income portion of the portfolio can be
attributed to our use of high yield securities and the further development of
the "stranded cost" theme. Developments within the electric utility deregulation
environment continue to validate our large allocation to this sector.
U.S. economic and corporate profit growth should continue to slow heading
into 1999. However, the risk of an economic recession appears to be minimal at
this point, as consumer spending shows no sign of abating. The manager will
closely scrutinize the portfolio's holdings and continually strengthen the
underlying positions. We will continue to invest in high-quality companies that
exhibit healthy balance sheets, positive cash flow, and consistent earnings
growth, and which are led by superior management teams.
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 29
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
For the one-year period ended 12/31/98, VIF--Total Return Fund achieved a
total return of 9.56%. During the same period, the S&P 500 had a total return of
28.53%, and the Lehman Government/Corporate Bond index had a total return of
9.47%. (Of course, past performance is not a guarantee of future
results.)(1),(2)
The domestic equity markets closed the year with a phenomenal fourth quarter.
After the flight-to-safety in late summer, the market rebounded and breadth
improved. Increased liquidity bolstered the markets as much of the surplus
flowed into the financial markets. The fourth quarter saw the best returns from
stocks with higher betas, lower yields, larger market capitalizations, and
higher volumes. During the year the S&P 500 Index increased in value by more
than $2.4 trillion, with about half of that dollar gain coming from the top 30
stocks. The disparity in returns was not only evident with regard to size but
also style -- growth stocks dominated value names.
VIF - Total Return Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 9.56%
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Since inception (6/94) 14.87%
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The bond market posted its best year since 1995, even after a strong year in
1997. During the quarter, corporates and mortgages faired better than government
securities. Additionally, shorter-dated instruments posted gains, as those with
longer maturities actually lost ground. The Federal Reserve made no changes at
its late December meeting in light of good economic results, strong financial
markets and three prior easings.
<PAGE>
Consumer cyclicals performed well during the final quarter, helping the
fund's overweight position. Technology was the best-returning sector, and the
fund's return was hurt by its underexposure. On the other hand, returns were
aided by the underweight to energy, the lowest-returning economic sector, as
well the specific Fund holdings. The fund's overweight position to utilities and
basic materials, two of the worst-performing economic sectors during the
quarter, served as a drag on returns even though stock selection was positive.
Graph: VIF - Total Return Fund Total Return from inception (6/94 through
12/31/98)
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 Indices,
assuming in each case reinvestment of all dividends and capital gain
distributions, for the period from inception (6/94) through 12/31/98.
The historical spread between the expected return on stocks and the
yield-to-maturity of longer-term bonds has averaged 3% over time. At that level
the normal asset mix would be 60% stocks and 40% bonds. The current spread is
significantly wider than historic norms, and the fund is positioned 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.
VIF -- Growth Fund
VIF - Growth Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 38.99%
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Since inception (8/97) 33.98%
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For the one-year period ended 12/31/98, the fund's total return was 38.99%,
easily beating the 28.53% return for the S&P 500 index over the same period. (Of
course, past performance is not a guarantee of future results.)(1),(2)
1998 ended on a strongly positive note for the equity markets, helped in
large part by the interest rate cuts by the Fed. The narrowness of the markets'
advance in early summer has clearly broadened beyond the largest companies; in
general, the participation of secondary names in the advance is a bullish
indicator for the future direction of the markets. If, however, the Fed rate
cuts - in conjunction with rate cuts around the world do not lead to a rebound
in the global economies, equities are likely to resume the downward trend seen
throughout the past summer. On an historical basis, domestic equity markets are
towards the high end of their traditional valuation ranges, hence it is
important that companies' projected earnings (driven mainly by economic growth)
come through in order to support the current equity multiples.
Graph: VIF - Growth Fund Total Return from inception (9/97 through
12/31/98)
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 12/31/98.
<PAGE>
Our results are attributable to the fund's two-tier approach to portfolio
construction; that is, we aim to balance large-capitalization stocks - which
tend to perform well in times of uncertainty - with smaller-cap stocks, which
provide better opportunities for exposure upside.
We do not currently anticipate major changes in strategy for the foreseeable
future. VIF--Growth Fund will continue to run as a concentrated portfolio,
holding roughly 30 to 40 stocks. The core portion of the portfolio will focus on
high-quality, large-cap growth companies. We have increased the diversification
of the Fund without compromising the growth characteristics of the portfolio.
Despite the increased diversification of its holdings, the INVESCO Growth Fund
continues to be over-weighted in faster-growing industries such as technology
and health care as well as the more conservative consumer growth segment.
Slower-growth industries such as utilities and energy continue to be
under-weighted.
Fund Management
VIF--Growth Fund is managed by Vice President Trent E. May. 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.
Senior Vice President Timothy J. Miller is co-manager of the fund. He
received his MBA from the University of Missouri, and a BSBA from St. Louis
University. A 19-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.
VIF--Dynamics Fund
VIF - Dynamics Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 19.35%
------------------------------------------
Since inception (8/97) 16.81%
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The fund's return for the one-year period ended 12/31/98 was 19.35%. During
the same time period, in contrast, the S&P MidCap 400 Index returned 18.25%. (Of
course, past performance is not a guarantee of future results.)(1),(2)
The narrowness of the market's advance in early last summer has clearly
broadened beyond the largest companies; in general, the participation of
secondary names in the advance is a bullish indicator for the future direction
of the markets.
Graph: VIF - Dynamics Fund Total Return from inception (9/97 through 12/31/98)
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 (9/97) through 12/31/98.
1998 ended strongly with a big rally in the technology sector -- led by
nearly anything related to the Internet. As it is our style to own the leading
companies in high-growth sectors, the fund had exposure to both established,
profitable plays such as AOL, as well as more speculative, but leading
companies. Some have moved beyond the mid-cap focus of the portfolio and have
hence been sold.
The attraction of high-quality mid-cap growth companies should continue to
gain recognition now that there appears to be less concern about a global
economic crisis. Our strategy remains focused on the core: leading, high-return
mid-caps in the major growth sectors of technology, communications, consumer,
financial services, and health care.
<PAGE>
Fund Management
VIF--Dynamics Fund is managed by INVESCO Senior Vice President Timothy J.
Miller and Thomas R. Wald. Tim received his MBA from the University of Missouri,
and a BSBA from St. Louis University. A 19-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.
INVESCO Vice President 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--Small Company Growth Fund
VIF - Small Company Growth Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 16.38%
------------------------------------------
Since inception (8/97) 11.11%
------------------------------------------
The fund's return for the one-year period ended 12/31/98 was 16.38%. While
this performance clearly lagged the broad market, it was exceptionally strong
compared to smaller-capitalization stocks overall, as the Russell 2000 Index
dropped -2.55% over the same period. (Of course, past performance is not a
guarantee of future results.)(1),(2)
We use a bottom-up, analytical approach to uncover companies with
accelerating earnings growth due to rapid sales growth, and new products or
services. Consistency and stability of earnings will continue to be a central
theme in 1999, as we intend to focus on companies whose product lines can remain
strong even in the face of recent international market turmoil. Communication
services and equipment remain a strong area of focus as well as business
services companies. The financial sector continues to be driven by mergers and
consolidation. Our technology positions are focused on software, communications
equipment, and other areas that should exhibit sustainable earnings growth even
in a mild economic slowdown. Low unemployment, strong consumer confidence and
increasing disposable income are driving the consumer cyclical sector.
Graph: VIF - Small Company Growth Fund Total Return from inception (8/97
through 12/31/98)
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 12/31/98.
Fund Management
INVESCO Vice President 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.
<PAGE>
Tim, a senior vice president, heads up our growth investment team. He
received his MBA from the University of Missouri, and a BSBA from St. Louis
University. A 19-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, a vice president, 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--Health Sciences Fund
VIF - Health Sciences Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 42.85%
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Since inception (5/97) 32.62%
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For the one-year period ended 12/31/98, the fund achieved a total return of
42.85%, strongly outperforming the S&P 500's return of 28.53% over the same time
frame. (Of course, past performance is not a guarantee of future
results.)(1),(2)
The increased emphasis by investors on earnings and liquidity created a
two-tiered health care equity market in which market-leading, large-cap
pharmaceutical companies outperformed small-cap health care companies. These
large-cap pharmaceuticals remain a vital part of our portfolio strategy, and
they have produced strong returns year-to-date.
The Fund maintained its relative performance during the month of December.
Several companies in the medical device sector drove performance. Some companies
that outperformed during this period were Guidant Corp., Medtronic Inc., and
Sofamor/Danek Group. Management remains overweighted in the pharmaceutical
sector, which performed in line with the broader market over this period. We
continue to underweight biotech & managed care, due to a lack of positive
catalysts for these two groups. Instead, we're searching for investment
opportunities in companies that should meet or exceed expectations as a result
of new product launches and/or increased market share of existing products.
Graph: VIF - Health Sciences Fund Total Return from inception (5/97
through 12/31/98)
This line graph represents a comparison of the value of a $10,000
investment in VIF -- Health Sciences Portfolio to the value of a
$10,000 investment in the S&P 500 Index, assuming in each case reinvest-
ment of all dividends and capital gain distributions, for the period from
inception (5/97) through 12/31/98.
We continue to expect the pharmaceutical sector to be the largest sector of
the portfolio over the near-term. These companies are benefiting from an
improving regulatory environment and strong new product pipelines. Since new
drugs typically drive revenue and earnings growth for pharmaceutical companies,
management believes this environment should result in an acceleration of
earnings growth rates for the industry. Another area of interest is in the
medical devices area. This area has produced strong returns for the fund over
the last six months. Management believes that new product cycle introductions
will improve the fundamentals of this group over the long term.
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.
<PAGE>
VIF--Technology Fund
VIF - Technology Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 25.69%
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Since inception (5/97) 25.46%
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The fund's return for the one-year period ended 12/31/98 was 25.69%. During
the same time period, the S&P 500 Index returned 28.53%. (Of course, past
performance is not a guarantee of future results.)(1),(2)
Since the market bottom in October, technology stocks have been the market
leaders. Most sectors of the group have turned in stellar performances, with
Internet and semiconductor stocks being the most dynamic. The latter stocks,
particularly the equipment stocks, had been in their own bear market for much of
the past two years, broken only by several short-lived rallies. In addition, the
market broadened, with small- and mid-cap stocks performing very strongly along
with the larger-cap names. In most cases, the small-cap stocks had better
percentage gains, partly because smaller stocks have been under-performers for
so long.
Graph: VIF - Technology Fund Total Return from inception (5/97 through 12/31/98)
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 12/31/98.
1998 was an extremely volatile year with numerous dramatic market moves,
particularly in technology. After a strong start to the year, we suffered a
severe correction in the July-October time period, which in retrospect probably
marked the bottom of the technology bear market.
Much of the sector's strongest performance has come from the semiconductor
capital equipment and Internet sectors in technology; with respect to the
latter, many of these stocks are achieving valuations that are difficult, if not
impossible, to justify using conventional financial analysis. But we believe
that the Internet is a watershed phenomenon, which will continue to have a
dramatic impact on many aspects of the world economy and society at large. The
personal computer sector and its performance are also central drivers to much of
what happens in technology. For much of 1998, supply exceeded demand, causing
sales to slow at Intel and margins to constrict at many PC vendors. Orders are
starting to pick up in the semiconductor industry and in derivative industries.
We expect to augment our holdings in those companies, which are leaders in the
sectors benefiting from this trend.
In 1999, we intend to build the portfolio around industry leaders as it has
been done in the past. The changes that we make will be in the direction of
increasing the fund's exposure to somewhat more volatile, less-developed sectors
of the market where it is currently underweighted, thus making the portfolio
more aggressive. We also expect to reduce the concentration of certain holdings
and diversify more broadly within the sector, although our current top holdings
will remain a significant portion of the portfolio.
Fund Management
INVESCO is pleased to announce that William R. Keithler, a Chartered
Financial Analyst with 15 years experience in the investment industry, rejoined
INVESCO and assumed the responsibilities of portfolio manager for INVESCO
VIF--Technology Portfolio in January 1999. Bill has an MS from the University of
Wisconsin-Madison, and a BS from Webster College. An INVESCO senior vice
president and portfolio manager from 1986 to 1993, most recently he served as
Vice President and portfolio manager with Berger Associates.
<PAGE>
VIF--Realty Fund
VIF - Realty Fund
Average Annualized Total Return
as of 12/31/98(1)
Since inception (4/98) -15.88%
------------------------------------------
The fund's cumulative return since inception 4/98 through 12/31/98 was
- -15.88%. During the same time period, the NAREIT Composite had a total return of
- -17.12%, while the S&P 500 Index returned 12.82%. (Of course, past performance
is not a guarantee of future results.)(1),(2)
The fund is currently emphasizing equity Real Estate Investment Trusts
(REITs). These securities continued to exhibit weakness during December,
pressured by year-end tax-loss selling. Despite posting over 12% year-to-date
earnings growth, the highest in the last five years, REITs suffered throughout
1998, as investors remained concerned about new real estate construction and a
slowdown in property acquisitions.
Graph: VIF - Realty Fund Total Return from inception (4/98 through 12/31/98)
This line graph represents a comparison of the value of a $10,000
investment in VIF -- Realty Fund to the value of a $10,000 investment in
the S&P 500 and NAREIT Indices, assuming in each case reinvestment of
all dividends and capital gain distributions, for the period from
inception (4/98) through 12/31/98.
With expected 1999 forward earnings growth of between 9%-10%, we believe
REITs represent attractive values at current levels. Average dividend yields of
7.4% also make REITs attractive for income-oriented accounts. Furthermore,
dividend coverage levels have continued to increase over the past five years.
This margin also allows room for future dividend increases as company earnings
growth continues.
The fund is currently skewed toward office REITs, a sector which outperformed
the NAREIT Index during December. The decision to underweight lodging, the
weakest-performing property sector during the month, also aided performance.
We continue to look for companies with modest leverage, good dividend
coverage and steady internal earnings growth from their existing property
portfolios. As many excellent companies have fallen in price, their dividend
yields have increased to between 7.5% and 10%. We are selectively taking
advantage of these attractive dividend yields in order to boost the fund's
future dividend yield.
Fund Management
VIF--Realty fund's investments are selected by a team of INVESCO Realty
Advisors, Inc. (IRAI) portfolio managers, who are collectively responsible for
the investment decisions relating to the fund.
VIF--Utilities Fund
VIF - Utilities Fund
Average Annualized Total Return
as of 12/31/98(1)
1 year 25.48%
------------------------------------------
Since inception (1/95) 17.50%
------------------------------------------
For the one-year period ended 12/31/98, VIF--Utilities Fund achieved a total
return of 25.48%. During the same period, the Dow Jones Utilities Index had a
total return of 14.37%. (Of course, past performance is not a guarantee of
future results.)(1),(2)
<PAGE>
Long distance and select competitive local exchange carriers have been
posting very strong performance numbers. Towards the end of 1998, natural gas
stocks began to show stronger performance, with colder temperatures and
inventory drawdowns finally beginning to appear. Despite their defensive nature,
the incumbent local exchange carriers generally outperformed the broader market,
as investors continued to discount expected earnings strength relative to the
market in 1999. Wireless stocks continued their strong November rebound, pushed
by talk of merger and acquisition activity. Bell Atlantic announced that they
are in discussions to acquire AirTouch Communications, moving the latter's price
up strongly. Electric utility stocks continued to lag the market as investors
continued to rotate into higher-growth industry sectors.
Graph: VIF - Utilities Fund Total Return from inception (1/95 through 12/31/98)
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 Average Index, assuming in each case reinvestment
of all dividends and capital gain distributions, for the period from
inception (1/95) through 12/31/98.
Going forward, holdings in the electric utility sector will be skewed toward
high-quality, low-cost operators, with a bias toward companies that are exiting
the generation business. We will focus on states where regulatory visibility is
highest. We have moved to a market weight position in natural gas stocks until
there is better visibility on gas prices. The regional bell operating companies
continue to deliver good growth relative to the electric utility group, with
less regulatory uncertainty and better dividend growth potential.
Telecommunications stocks will be monitored for valuation and regulatory
changes, either one of which could prompt an increase or decrease in our
industry weighting.
Fund Management
The fund is managed by INVESCO Vice President Brian B. Hayward. 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.
(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 Average Index is an unmanaged index of utilities
stocks. The Lehman Government/Corporate Bond and Merrill Lynch High Yield Master
Index are unmanaged indexes indicative of the broad fixed-income and high-yield
markets, respectively. The NAREIT is an unmanaged index indicative of the U.S.
real estate investment-trust market.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF INVESTMENT SECURITIES
December 31, 1998
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
GROWTH FUND
100.00 COMMON STOCKS
3.07 BANKS
BB&T Corp 65 $ 2,620
State Street 40 2,783
US Bancorp 155 5,503
- ---------------------------------------------------------------------------------------------------
10,906
- ---------------------------------------------------------------------------------------------------
4.96 BEVERAGES
Coca-Cola Co 150 10,031
PepsiCo Inc 185 7,573
- ---------------------------------------------------------------------------------------------------
17,604
- ---------------------------------------------------------------------------------------------------
1.12 CHEMICALS
du Pont (E I) de Nemours 75 3,980
- ---------------------------------------------------------------------------------------------------
13.22 COMPUTER RELATED
Ascend Communications(a) 55 3,616
Compaq Computer 170 7,129
Dell Computer(a) 80 5,855
International Business Machines 50 9,238
Microsoft Corp(a) 125 17,336
Wind River Systems(a) 80 3,760
- ---------------------------------------------------------------------------------------------------
46,934
- ---------------------------------------------------------------------------------------------------
4.45 ELECTRICAL EQUIPMENT
General Electric 155 15,820
- ---------------------------------------------------------------------------------------------------
3.78 ELECTRONICS -- SEMICONDUCTOR
Intel Corp 80 9,485
Maxim Integrated Products(a) 90 3,932
- ---------------------------------------------------------------------------------------------------
13,417
- ---------------------------------------------------------------------------------------------------
3.79 ENTERTAINMENT
Disney (Walt) Co 345 10,350
Time Warner 50 3,103
- ---------------------------------------------------------------------------------------------------
13,453
- ---------------------------------------------------------------------------------------------------
8.59 FINANCIAL
Associates First Capital Class A 64 2,712
Citigroup Inc 270 13,365
Fannie Mae 195 14,430
- ---------------------------------------------------------------------------------------------------
30,507
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
20.01 HEALTH CARE DRUGS -- PHARMACEUTICALS
Bristol-Myers Squibb 110 14,719
Johnson & Johnson 175 14,678
Lilly (Eli) & Co 150 13,331
Merck & Co 90 13,292
Pfizer Inc 120 15,053
- ---------------------------------------------------------------------------------------------------
71,073
- ---------------------------------------------------------------------------------------------------
4.26 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 40 3,715
Procter & Gamble 125 11,414
- ---------------------------------------------------------------------------------------------------
15,129
- ---------------------------------------------------------------------------------------------------
3.67 INSURANCE
American International Group 135 13,044
- ---------------------------------------------------------------------------------------------------
4.03 OIL & GAS RELATED
Exxon Corp 150 10,969
Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 70 3,351
- ---------------------------------------------------------------------------------------------------
14,320
- ---------------------------------------------------------------------------------------------------
5.36 RETAIL
Home Depot 65 3,977
Wal-Mart Stores 185 15,066
- ---------------------------------------------------------------------------------------------------
19,043
- ---------------------------------------------------------------------------------------------------
3.38 SERVICES
America Online(a) 75 12,000
- ---------------------------------------------------------------------------------------------------
6.45 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 195 14,674
Qwest Communications International(a) 165 8,250
- ---------------------------------------------------------------------------------------------------
22,924
- ---------------------------------------------------------------------------------------------------
5.94 TELEPHONE
Bell Atlantic 125 6,625
SBC Communications 270 14,479
- ---------------------------------------------------------------------------------------------------
21,104
- ---------------------------------------------------------------------------------------------------
3.92 TOBACCO
Philip Morris 260 13,910
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $255,952)
(Cost for Income Tax Purposes $256,523) $ 355,168
===================================================================================================
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
DYNAMICS FUND
100.00 COMMON STOCKS
0.51 AUTO PARTS
O'Reilly Automotive(a) 30 $ 1,417
- ---------------------------------------------------------------------------------------------------
5.07 BANKS
Northern Trust 50 4,366
State Street 50 3,478
Zions Bancorp 100 6,238
- ---------------------------------------------------------------------------------------------------
14,082
- ---------------------------------------------------------------------------------------------------
0.90 BEVERAGES
Coca-Cola Enterprises 70 $ 2,502
- ---------------------------------------------------------------------------------------------------
1.92 BROADCASTING
Clear Channel Communications(a) 80 4,360
Sinclair Broadcast Group Class A(a) 50 978
- ---------------------------------------------------------------------------------------------------
5,338
- ---------------------------------------------------------------------------------------------------
5.72 CABLE
Cox Communications Class A(a) 50 3,456
TCA Cable TV 100 3,569
Tele-Communications Inc TCI Group Series A/(a)/ 160 8,850
- ---------------------------------------------------------------------------------------------------
15,875
- ---------------------------------------------------------------------------------------------------
4.18 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
CIENA Corp(a) 35 512
Northern Telecom Ltd 102 5,113
PairGain Technologies(a) 65 500
Tellabs Inc(a) 80 5,485
- ---------------------------------------------------------------------------------------------------
11,610
- ---------------------------------------------------------------------------------------------------
15.93 COMPUTER RELATED
Ascend Communications(a) 100 6,575
Autodesk Inc 45 1,921
BMC Software(a) 80 3,565
Cisco Systems(a) 67 6,218
Computer Horizons(a) 30 799
Electronic Arts(a) 95 5,332
FORE Systems(a) 100 1,831
HMT Technology(a) 80 1,025
i2 Technologies(a) 120 3,645
Keane Inc(a) 30 1,198
Learning Co(a) 64 1,660
Network Associates(a) 60 3,975
Parametric Technology(a) 100 1,637
PeopleSoft Inc(a) 120 2,272
RealNetworks Inc(a) 10 359
Remedy Corp(a) 80 1,115
Symantec Corp(a) 50 1,088
- ---------------------------------------------------------------------------------------------------
44,215
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
0.75 ELECTRICAL EQUIPMENT
SLI Inc(a) 75 2,081
- ---------------------------------------------------------------------------------------------------
6.10 ELECTRONICS -- SEMICONDUCTOR
Linear Technology 60 5,374
Maxim Integrated Products(a) 190 8,301
Xilinx Inc(a) 50 $ 3,256
- ---------------------------------------------------------------------------------------------------
16,931
- ---------------------------------------------------------------------------------------------------
0.94 EQUIPMENT -- SEMICONDUCTOR
KLA-Tencor Corp(a) 60 2,602
- ---------------------------------------------------------------------------------------------------
0.95 FINANCIAL
PIMCO Advisors Holdings 85 2,646
- ---------------------------------------------------------------------------------------------------
1.17 GAMING
Midway Games(a) 40 440
Mirage Resorts(a) 50 747
Sun International Hotels Ltd(a) 45 2,045
- ---------------------------------------------------------------------------------------------------
3,232
- ---------------------------------------------------------------------------------------------------
4.95 HEALTH CARE DRUGS -- PHARMACEUTICALS
Allergan Inc 45 2,914
ALZA Corp(a) 75 3,919
Watson Pharmaceuticals(a) 110 6,916
- ---------------------------------------------------------------------------------------------------
13,749
- ---------------------------------------------------------------------------------------------------
3.15 HEALTH CARE RELATED
Allegiance Corp 70 3,264
Sofamor/Danek Group(a) 45 5,479
- ---------------------------------------------------------------------------------------------------
8,743
- ---------------------------------------------------------------------------------------------------
1.40 INSURANCE
Nationwide Financial Services Class A 75 3,877
- ---------------------------------------------------------------------------------------------------
1.90 INVESTMENT BANK/BROKER FIRM
Legg Mason 80 2,525
Price (T Rowe) Associates 80 2,740
- ---------------------------------------------------------------------------------------------------
5,265
- ---------------------------------------------------------------------------------------------------
3.09 LEISURE TIME
International Game Technology 140 3,404
Royal Caribbean Cruises Ltd 140 5,180
- ---------------------------------------------------------------------------------------------------
8,584
- ---------------------------------------------------------------------------------------------------
0.52 MACHINERY
Milacron Inc 75 1,444
- ---------------------------------------------------------------------------------------------------
1.53 MANUFACTURING
Eaton Corp 60 4,241
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
4.40 OIL & GAS RELATED
Apache Corp 75 1,898
BJ Services(a) 40 625
Canadian Occidental Petroleum 120 1,253
Coflexip SA Sponsored ADR Representing 1/2 Ord Shrs 50 1,606
Cooper Cameron(a) 75 1,837
EEX Corp(a) 120 840
Global Industries Ltd(a) 60 367
Kerr-McGee Corp 25 $ 956
Nabors Industries(a) 75 1,017
National Energy Group(a) 190 44
Ocean Energy(a) 65 410
Oryx Energy(a) 100 1,344
- ---------------------------------------------------------------------------------------------------
12,197
- ---------------------------------------------------------------------------------------------------
2.06 POLLUTION CONTROL
Republic Services Class A(a) 100 1,844
Waste Management 83 3,870
- ---------------------------------------------------------------------------------------------------
5,714
- ---------------------------------------------------------------------------------------------------
1.51 RAILROADS
Kansas City Southern Industries 85 4,181
- ---------------------------------------------------------------------------------------------------
6.90 RETAIL
Costco Cos(a) 25 1,805
Home Depot 80 4,895
Meyer (Fred) Inc(a) 60 3,615
Nordstrom Inc 100 3,469
Tandy Corp 130 5,354
- ---------------------------------------------------------------------------------------------------
19,138
- ---------------------------------------------------------------------------------------------------
11.22 SERVICES
America Online(a) 120 19,200
Avis Rent A Car(a) 50 1,209
Omnicom Group 70 4,060
Professional Staff PLC Sponsored
ADR Representing Cmn Shrs(a) 100 788
Robert Half International(a) 75 3,352
Snyder Communications(a) 75 2,531
- ---------------------------------------------------------------------------------------------------
31,140
- ---------------------------------------------------------------------------------------------------
1.18 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Millicom International Cellular SA(a) 50 1,744
Western Wireless Class A(a) 70 1,540
- ---------------------------------------------------------------------------------------------------
3,284
- ---------------------------------------------------------------------------------------------------
4.15 TELECOMMUNICATIONS -- LONG DISTANCE
ADC Telecommunications(a) 70 2,432
AT&T Corp 70 5,267
ICG Communications(a) 85 1,827
Qwest Communications International(a) 40 2,000
- ---------------------------------------------------------------------------------------------------
11,526
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
6.50 TELEPHONE
Century Telephone Enterprises 90 6,075
COLT Telecom Group PLC Sponsored
ADR Representing 4 Ord Shrs(a) 200 11,975
- ---------------------------------------------------------------------------------------------------
18,050
- ---------------------------------------------------------------------------------------------------
0.78 TOYS
Hasbro Inc 60 $ 2,167
- ---------------------------------------------------------------------------------------------------
0.62 TRANSPORTATION
Laidlaw Inc 170 1,711
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $217,550)(b) $ 277,542
===================================================================================================
HEALTH SCIENCES FUND
86.64 COMMON STOCKS
2.63 BIOTECHNOLOGY
Genentech Inc Special Cmn(a) 835 $ 66,539
- ---------------------------------------------------------------------------------------------------
56.62 HEALTH CARE DRUGS -- PHARMACEUTICALS
Abbott Laboratories 1,960 96,040
Allergan Inc 600 38,850
American Home Products 425 23,933
Bristol-Myers Squibb 900 120,431
Glaxo Wellcome PLC Sponsored
ADR Representing 2 Ord Shrs 1,710 118,845
Johnson & Johnson 1,405 117,844
Lilly (Eli) & Co 1,300 115,538
Merck & Co 1,115 164,672
Novartis AG Registered Shrs 30 59,042
Pfizer Inc 960 120,420
Pharmacia & Upjohn 2,090 118,346
Schering-Plough Corp 2,125 117,406
Shire Pharmaceuticals Group PLC(a) 225 1,442
SmithKline Beecham PLC Sponsored
ADR Representing 5 Ord Shrs 1,375 95,562
Warner-Lambert Co 1,600 120,300
- ---------------------------------------------------------------------------------------------------
1,428,671
- ---------------------------------------------------------------------------------------------------
2.50 HEALTHCARE -- SERVICES
Bergen Brunswig Class A Shrs 1,810 63,124
- ---------------------------------------------------------------------------------------------------
24.44 MEDICAL EQUIPMENT & DEVICES
Allegiance Corp 2,100 97,912
Bausch & Lomb 600 36,000
Baxter International 370 23,796
Becton Dickinson 555 23,692
Boston Scientific(a) 100 2,681
Guidant Corp 1,085 119,621
IDEXX Laboratories(a) 335 9,014
Medtronic Inc 1,635 121,399
ResMed Inc(a) 1,220 55,357
Sofamor/Danek Group(a) 1,045 127,229
- ---------------------------------------------------------------------------------------------------
616,701
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
0.45 SERVICES
IMS Health 150 $ 11,316
- ---------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $1,782,610) 2,186,351
- ---------------------------------------------------------------------------------------------------
13.36 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated 12/31/1998
due 1/4/1999 at 4.850%, repurchased at $337,182
(Collateralized by US Treasury Bonds due
11/15/2015 at 9.875%,
value $349,494) (Cost $337,000) $ 337,000 337,000
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $2,119,610)
(Cost for Income Tax Purposes $2,128,540) $ 2,523,351
===================================================================================================
HIGH YIELD FUND
90.76 FIXED INCOME SECURITIES
90.76 CORPORATE BONDS
0.33 AIR FREIGHT
TBS Shipping International Ltd, 1st Pfd Ship
Mortgage Notes 10.000%, 5/1/2005 $ 250,000 $ 137,500
- ---------------------------------------------------------------------------------------------------
0.91 BIOTECHNOLOGY
Packard BioScience, Sr Sub Notes,
Series B, 9.375%, 3/1/2007 $ 400,000 380,000
- ---------------------------------------------------------------------------------------------------
3.52 BROADCASTING
Brill Media LLC/Brill Media Management
Appreciation Notes (Exp 2007) $ 7,143 214
Gtd Sr Step-Up Notes,
Series B, 7.500%(d), 12/15/2007 $ 250,000 222,500
Capstar Broadcasting Partners,
Sr Sub Notes, 9.250%, 7/1/2007 $ 250,000 258,750
Chancellor Media, Gtd Sr Sub Notes,
Series B 10.500%, 1/15/2007 $ 400,000 438,000
JCAC Inc, Gtd Sr Sub Notes, 10.125%,
6/15/2006 $ 250,000 278,750
Telemundo Holdings, Sr Discount
Step-Up Notes Zero Coupon(c)(d), 8/15/2008 $ 500,000 275,000
- ---------------------------------------------------------------------------------------------------
1,473,214
- ---------------------------------------------------------------------------------------------------
4.46 CABLE
NTL Inc
Sr Deferred Coupon Step-Up Notes, Series A
Zero Coupon(d), 4/15/2005 $ 1,275,000 1,153,875
Sr Deferred Coupon Step-Up Notes
Zero Coupon(c)(d), 10/1/2008 $ 600,000 375,750
Sr Notes, Series B, 10.000%, 2/15/2007 $ 330,000 338,250
- ---------------------------------------------------------------------------------------------------
1,867,875
- ---------------------------------------------------------------------------------------------------
2.17 CHEMICALS
Huntsman Corp, Sr Sub Notes(c),
9.500%, 7/1/2007 $ 500,000 497,500
Terra Industries, Sr Notes,
Series B, 10.500%, 6/15/2005 $ 400,000 412,000
- ---------------------------------------------------------------------------------------------------
909,500
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
1.82 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Metromedia Fiber Network, Sr Notes(c),
10.000%, 11/15/2008 $ 250,000 $ 256,875
Worldwide Fiber, Sr Notes(c),
12.500%, 12/15/2005 $ 500,000 505,000
- ---------------------------------------------------------------------------------------------------
761,875
- ---------------------------------------------------------------------------------------------------
3.75 COMPUTER RELATED
Rhythms NetConnections, Sr Discount
Step-Up Notes Zero Coupon(d), 5/15/2008 $ 1,000,000 480,000
Verio Inc
Sr Notes, 13.500%, 6/15/2004 $ 625,000 675,000
Sr Notes(c), 11.250%, 12/1/2008 $ 250,000 251,250
WAM!NET, Gtd Sr Discount Step-Up Notes,
Series B Zero Coupon(d), 3/1/2005 $ 300,000 163,500
- ---------------------------------------------------------------------------------------------------
1,569,750
- ---------------------------------------------------------------------------------------------------
0.60 ELECTRIC UTILITIES
Western Massachusetts Electric, 1st Mortgage,
Series V 7.750%, 12/1/2002 $ 250,000 252,009
- ---------------------------------------------------------------------------------------------------
0.48 ELECTRICAL EQUIPMENT
Alpine Group, Gtd Sr Secured Notes,
Series B 12.250%, 7/15/2003 $ 200,000 203,500
- ---------------------------------------------------------------------------------------------------
0.46 ENGINEERING & CONSTRUCTION
Ryland Group, Sr Sub Notes,
8.250%, 4/1/2008 $ 200,000 194,000
- ---------------------------------------------------------------------------------------------------
1.78 ENTERTAINMENT
Production Resource Group LLC/Program Finance
Sr Sub Notes, 11.500%, 1/15/2008 $ 250,000 245,000
SFX Entertainment, Sr Sub Notes(c),
9.125%, 12/1/2008 $ 500,000 500,625
- ---------------------------------------------------------------------------------------------------
745,625
- ---------------------------------------------------------------------------------------------------
3.16 GAMING
Circus Circus Enterprises,
Sr Sub Notes, 6.750%, 7/15/2003 $ 250,000 232,074
Grand Casinos
Gtd 1st Mortgage, 10.125%, 12/1/2003 $ 300,000 327,000
Gtd Sr Notes, Series B, 9.000%, 10/15/2004 $ 250,000 280,625
Players International,
Sr Notes, 10.875%, 4/15/2005 $ 450,000 482,625
- ---------------------------------------------------------------------------------------------------
1,322,324
- ---------------------------------------------------------------------------------------------------
0.93 HOUSEHOLD PRODUCTS
Home Products International,
Gtd Sr Sub Notes 9.625%, 5/15/2008 $ 400,000 392,000
- ---------------------------------------------------------------------------------------------------
2.40 IRON & STEEL
Inland Steel, 1st Mortgage,
Series R, 7.900%, 1/15/2007 $ 500,000 503,900
National Steel, 1st Mortgage,
8.375%, 8/1/2006 $ 500,000 500,000
- ---------------------------------------------------------------------------------------------------
1,003,900
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
1.17 LEISURE TIME
Bally Total Fitness Holdings, Sr Sub Notes,
Series B 9.875%, 10/15/2007 $ 500,000 $ 490,000
- ---------------------------------------------------------------------------------------------------
0.51 LODGING -- HOTELS
Signature Resorts, Sr Sub Notes,
9.750%, 10/1/2007 $ 250,000 212,500
- ---------------------------------------------------------------------------------------------------
0.68 METALS MINING
Glencore Nickel Property Ltd,
Gtd Sr Secured Notes 9.000%, 12/1/2014 $ 350,000 283,500
- ---------------------------------------------------------------------------------------------------
12.05 OIL & GAS RELATED
Belco Oil & Gas, Sr Sub Notes,
Series B, 8.875%, 9/15/2007 $ 400,000 363,000
Canadian Forest Oil Ltd,
Gtd Sr Sub Notes, 8.750%, 9/15/2007 $ 700,000 658,000
Chiles Offshore LLC/Chiles Offshore Finance,
Gtd Sr Notes 10.000%, 5/1/2008 $ 500,000 425,000
Cliffs Drilling, Gtd Sr Notes,
Series B, 10.250%, 5/15/2003 $ 360,000 379,800
Coda Energy, Gtd Sr Sub Notes,
Series B, 10.500%, 4/1/2006 $ 250,000 247,500
Continental Resources, Gtd Sr Sub Notes,
10.250%, 8/1/2008 $ 400,000 332,000
DeepTech International, Sr Secured Notes,
12.000%, 12/15/2000 $ 250,000 267,500
GulfMark Offshore, Gtd Sr Notes,
8.750%, 6/1/2008 $ 250,000 227,500
Houston Exploration, Sr Sub Notes,
Series B, 8.625%, 1/1/2008 $ 500,000 485,000
KCS Energy, Gtd Sr Sub Notes,
8.875%, 1/15/2008 $ 350,000 213,500
Northern Offshore ASA,
Gtd Sr Notes(c), 10.000%, 5/15/2005 $ 500,000 260,000
Nuevo Energy, Gtd Sr Sub Notes,
Series B, 8.875%, 6/1/2008 $ 200,000 190,000
Ocean Energy, Gtd Sr Sub Notes
10.375%, 10/15/2005 $ 250,000 260,000
Series B, 8.375%, 7/1/2008 $ 400,000 372,000
Petsec Energy, Sr Sub Notes,
Series B, 9.500%, 6/15/2007 $ 250,000 125,000
Stone Energy, Gtd Sr Sub Notes,
8.750%, 9/15/2007 $ 250,000 241,250
- ---------------------------------------------------------------------------------------------------
5,047,050
- ---------------------------------------------------------------------------------------------------
1.45 PAPER & FOREST PRODUCTS
Ainsworth Lumber Ltd,
Sr Secured Notes(e) 12.500%, 7/15/2007 $ 350,000 348,250
Doman Industries Ltd, Sr Notes,
Series B, 9.250%, 11/15/2007 $ 350,000 259,000
- ---------------------------------------------------------------------------------------------------
607,250
- ---------------------------------------------------------------------------------------------------
0.71 PERSONAL CARE
Revlon Consumer Products,
Sr Notes(c), 9.000%, 11/1/2006 $ 300,000 298,500
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
3.66 PUBLISHING
Affiliated Newspaper Investments,
Sr Discount Step-Up Notes Zero
Coupon(d), 7/1/2006 $ 1,000,000 1,030,000
Big Flower Press Holdings,
Sr Sub Notes(c), 8.625%, 12/1/2008 $ 500,000 505,000
- ---------------------------------------------------------------------------------------------------
1,535,000
- ---------------------------------------------------------------------------------------------------
0.69 RETAIL
Sonic Automotive, Gtd Sr Sub Notes,
Series B 11.000%, 8/1/2008 $ 300,000 288,000
0.86 SAVINGS & LOAN
Western Financial Savings Bank,
Sub Capital Deb 8.875%, 8/1/2007 $ 500,000 $ 359,193
- ---------------------------------------------------------------------------------------------------
6.70 SERVICES
Heritage Media, Sr Sub Notes,
8.750%, 2/15/2006 $ 500,000 512,500
Loewen Group International,
Gtd Sr Notes, Series 4 8.250%, 10/15/2003 $ 475,000 408,500
NationsRent Inc, Sr Sub Notes(c), 10.375%,
12/15/2008 $ 750,000 742,500
SpinCycle Inc, Sr Discount Step-Up Notes,
Zero Coupon(c)(d) 5/1/2005 $ 250,000 105,000
United Rentals
Gtd Sr Sub Notes, Series B,
9.500%, 6/1/2008$ 300,000 303,000
Sr Sub Notes/(c)/, 8.800%, 8/15/2008 $ 750,000 735,000
- ---------------------------------------------------------------------------------------------------
2,806,500
- ---------------------------------------------------------------------------------------------------
0.52 SHIPPING
Navigator Gas Transport PLC,
1st Priority Ship Mortgage Notes(c),
10.500%, 6/30/2007 $ 250,000 220,000
- ---------------------------------------------------------------------------------------------------
0.61 SPECIALTY PRINTING
MDC Communications, Sr Sub Notes(c),
Series B 10.500%, 12/1/2006 $ 250,000 255,000
- ---------------------------------------------------------------------------------------------------
9.25 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
AMSC Acquisition, Gtd Sr Notes,
Series B, 12.250%, 4/1/2008 $ 350,000 217,000
Cencall Communications, Sr Discount
Step-Up Notes Zero Coupon(d), 1/15/2004 $ 500,000 490,000
Centennial Cellular, Sr Notes,
10.125%, 5/15/2005 $ 550,000 687,500
Esat Holdings Ltd, Sr Deferred
Step-Up Notes Zero Coupon(d), 2/1/2007 $ 650,000 429,000
Nextel Communications, Sr Discount
Step-Up Notes Zero Coupon(d) 8/15/2004 $ 500,000 485,000
9/15/2007 $ 500,000 318,750
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance,
Sr Notes 11.000%, 8/15/2006 $ 360,000 415,800
Teligent Inc
Sr Discount Step-Up Notes,
Series B Zero Coupon(d), 3/1/2008 $ 500,000 247,500
Sr Notes, 11.500%, 12/1/2007 $ 250,000 233,750
Triton PCS, Gtd Sr Sub Discount
Step-Up Notes Zero Coupon(d), 5/1/2008 $ 750,000 350,625
- ---------------------------------------------------------------------------------------------------
3,874,925
- ---------------------------------------------------------------------------------------------------
9.40 TELECOMMUNICATIONS -- LONG DISTANCE
Call-Net Enterprises, Sr Discount
Step-Up Notes, Zero Coupon(d) 8/15/2007 $ 300,000 198,750
8/15/2008 $ 200,000 118,000
- ---------------------------------------------------------------------------------------------------
DTI Holdings, Sr Discount Step-Up Notes
Zero Coupon(d), 3/1/2008 $ 750,000 $ 195,000
Esat Telecom Group PLC, Sr Notes(c), 11.875%,
12/1/2008 $ 250,000 250,000
Esprit Telecom Group PLC, Sr Notes, 11.500%,
12/15/2007 $ 250,000 257,500
GCI Inc, Sr Notes, 9.750%, 8/1/2007 $ 495,000 490,050
GST Telecommunications/GST Network Funding,
Sr Secured Discount Step-Up
Notes, Zero Coupon(c)(d), 5/1/2008 $ 400,000 172,000
IDT Corp, Sr Notes, 8.750%, 2/15/2006 $ 250,000 237,500
Level 3 Communications
Sr Discount Step-Up Notes,
Zero Coupon(c)(d), 12/1/2008 $ 1,250,000 728,125
Sr Notes, 9.125%, 5/1/2008 $ 500,000 493,750
Primus Telecommunications Group,
Sr Notes, Series B 9.875%, 5/15/2008 $ 250,000 237,500
RSL Communications PLC, Gtd Sr Discount
Step-Up Notes Zero Coupon(d), 3/1/2008 $ 750,000 429,375
STARTEC Global Communications,
Sr Notes 12.000%, 5/15/2008 $ 150,000 129,000
- ---------------------------------------------------------------------------------------------------
3,936,550
- ---------------------------------------------------------------------------------------------------
14.73 TELEPHONE
Convergent Communications, Sr Notes,
13.000%, 4/1/2008 $ 250,000 120,000
Diamond Cable Communications PLC,
Sr Discount Step-Up Notes, Zero
Coupon(d), 2/15/2007 $ 400,000 282,000
e.spire Communications, Sr Discount
Step-Up Notes Zero Coupon(d), 7/1/2008 $ 400,000 156,000
Facilicom International, Sr Notes,
Series B, 10.500%, 1/15/2008 $ 500,000 400,000
Intermedia Communications, Sr Notes,
Series B 8.500%, 1/15/2008 $ 500,000 475,000
McLeodUSA Inc
Sr Discount Step-Up Notes,
Zero Coupon(d), 3/1/2007 $ 445,000 335,975
Sr Notes , 9.250%, 7/15/2007 $ 250,000 261,250
MetroNet Communications
Sr Discount Step-Up Notes,
Zero Coupon(d) 11/1/2007 $ 500,000 327,500
6/15/2008 $ 800,000 490,000
Sr Notes, 12.000%, 8/15/2007 $ 250,000 277,500
Sr Notes(c), 10.625%, 11/1/2008 $ 400,000 424,000
Netia Holdings BV, Gtd Sr Discount
Step-Up Notes, Series B Zero
Coupon(d), 11/1/2007 $ 350,000 199,500
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
NEXTLINK Communications
Sr Discount Step-Up Notes,
Zero Coupon(d), 4/15/2008 $ 500,000 285,000
Sr Notes, 9.625%, 10/1/2007 $ 250,000 238,750
NEXTLINK Communications LLC/NEXTLINK
Capital Sr Notes, 12.500%, 4/15/2006 $ 750,000 810,000
RCN Corp, Sr Discount Step-Up Notes,
Zero Coupon(d) 7/1/2008 $ 1,000,000 $ 545,000
Series B, 2/15/2008 $ 1,000,000 545,000
- ---------------------------------------------------------------------------------------------------
6,172,475
- ---------------------------------------------------------------------------------------------------
1.25 TEXTILE -- APPAREL MANUFACTURING
Haynes International, Sr Notes,
11.625%, 9/1/2004 $ 600,000 522,000
- ---------------------------------------------------------------------------------------------------
TOTAL FIXED INCOME SECURITIES (Cost $41,268,121) 38,121,515
- ---------------------------------------------------------------------------------------------------
4.50 PREFERRED STOCKS & WARRANTS
0.09 COMPUTER RELATED
Rhythms NetConnections Warrants(a)(c)(Exp 2008) 4,000 30,000
WAM!NET Warrants(a)(c)(Exp 2005) 900 7,200
- ---------------------------------------------------------------------------------------------------
37,200
- ---------------------------------------------------------------------------------------------------
0.81 PUBLISHING
PRIMEDIA Inc, Exchangeable Pfd, Series H, 8.625% 3,500 336,875
- ---------------------------------------------------------------------------------------------------
0.00 SERVICES
SpinCycle Inc Warrants(a)(c)(h)(Exp 2005) 250 0
- ---------------------------------------------------------------------------------------------------
0.06 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
American Mobile Satellite Warrants(a)(c)(Exp 2008) 350 1,358
Microcell Telecommunications Warrants(a)(c)(Exp 2006) 2,000 25,000
- ---------------------------------------------------------------------------------------------------
26,358
- ---------------------------------------------------------------------------------------------------
3.51 TELECOMMUNICATIONS -- LONG DISTANCE
DTI Holdings Warrants(a)(c)(Exp 2008) 3,750 188
Global Crossing Holdings Ltd, Pfd(a)(c)(e), 10.500% 15,000 1,470,000
STARTEC Global Communications Warrants(a)(c)(Exp 2008) 150 150
- ---------------------------------------------------------------------------------------------------
1,470,338
- ---------------------------------------------------------------------------------------------------
0.03 TELEPHONE
Convergent Communications Warrants(a)(c)(Exp 2008) 1,000 10
MetroNet Communications Warrants/(a)(c)/(Exp 2007) 250 13,287
- ---------------------------------------------------------------------------------------------------
13,297
- ---------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS & WARRANTS (Cost $1,857,711) 1,884,065
- ---------------------------------------------------------------------------------------------------
4.49 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street
dated 12/31/1998 due 1/4/1999 at
4.850%, repurchased at $1,884,015
(Collateralized by US Treasury Bonds due
8/15/2015 at 10.625%, value 1,924,224)
(Cost $1,883,000) $ 1,883,000 1,883,000
- --------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $45,008,832)
(Cost for Income Tax Purposes $45,013,095) $ 41,888,583
- --------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
INDUSTRIAL INCOME FUND
76.32 COMMON STOCK S
2.12 AEROSPACE & DEFENSE
General Dynamics 4,100 $ 240,362
Northrop Grumman 5,600 409,500
Sundstrand Corp 12,300 638,063
- ---------------------------------------------------------------------------------------------------
1,287,925
- ---------------------------------------------------------------------------------------------------
0.48 AUTOMOBILES
Ford Motor 5,000 293,437
- ---------------------------------------------------------------------------------------------------
9.12 BANKS
Bank of New York 30,000 1,207,500
Chase Manhattan 9,600 653,400
First Tennessee National 20,000 761,250
Fleet Financial Group 12,200 545,187
Mellon Bank 15,000 1,031,250
Summit Bancorp 20,000 873,750
US Bancorp 12,800 454,400
- ---------------------------------------------------------------------------------------------------
5,526,737
- ---------------------------------------------------------------------------------------------------
2.17 BEVERAGES
Anheuser-Busch Cos 20,000 1,312,500
- ---------------------------------------------------------------------------------------------------
1.55 CABLE
MediaOne Group(a) 20,000 940,000
- ---------------------------------------------------------------------------------------------------
0.40 CHEMICALS
Agrium Inc 15,000 130,313
Olin Corp 4,000 113,250
- ---------------------------------------------------------------------------------------------------
243,563
- ---------------------------------------------------------------------------------------------------
1.44 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Motorola Inc 14,300 873,194
- ---------------------------------------------------------------------------------------------------
6.95 COMPUTER RELATED
EMC Corp(a) 4,500 382,500
Edwards (J D) & Co(a) 20,000 567,500
Galileo International 25,000 1,087,500
International Business Machines 6,500 1,200,875
Microsoft Corp(a) 7,000 970,813
- ---------------------------------------------------------------------------------------------------
4,209,188
- ---------------------------------------------------------------------------------------------------
0.89 CONGLOMERATES
Textron Inc 7,100 539,156
- ---------------------------------------------------------------------------------------------------
0.11 CONTAINERS
Temple-Inland Inc 1,100 65,244
- ---------------------------------------------------------------------------------------------------
0.61 ELECTRIC UTILITIES
Interstate Energy 11,400 367,650
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
1.71 ELECTRICAL EQUIPMENT
Emerson Electric 7,000 $ 423,500
General Electric 6,000 612,375
- ---------------------------------------------------------------------------------------------------
1,035,875
- ---------------------------------------------------------------------------------------------------
3.93 ELECTRONICS -- SEMICONDUCTOR
Altera Corp(a) 11,300 687,887
Intel Corp 6,000 711,375
Texas Instruments 11,500 983,969
- ---------------------------------------------------------------------------------------------------
2,383,231
- ---------------------------------------------------------------------------------------------------
1.48 EQUIPMENT -- SEMICONDUCTOR
Applied Materials(a) 21,000 896,437
- ---------------------------------------------------------------------------------------------------
4.85 FOODS
General Mills 10,000 777,500
Heinz (H J) Co 9,725 550,678
Kellogg Co 10,000 341,250
Quaker Oats 10,000 595,000
Tasty Baking 44,250 672,047
- ---------------------------------------------------------------------------------------------------
2,936,475
- ---------------------------------------------------------------------------------------------------
0.21 GOLD & PRECIOUS METALS MINING
Newmont Mining 7,000 126,438
- ---------------------------------------------------------------------------------------------------
7.08 HEALTH CARE DRUGS -- PHARMACEUTICALS
American Home Products 5,500 309,719
Bristol-Myers Squibb 4,400 588,775
Lilly (Eli) & Co 7,500 666,562
Merck & Co 7,000 1,033,813
Pfizer Inc 4,000 501,750
SmithKline Beecham PLC Sponsored
ADR Representing 5 Ord Shrs 9,000 625,500
Warner-Lambert Co 7,500 563,906
- ---------------------------------------------------------------------------------------------------
4,290,025
- ---------------------------------------------------------------------------------------------------
1.53 HEALTH CARE RELATED
Arterial Vascular Engineering(a) 5,500 288,750
Becton Dickinson 8,000 341,500
Medtronic Inc 4,000 297,000
- ---------------------------------------------------------------------------------------------------
927,250
- ---------------------------------------------------------------------------------------------------
1.07 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 7,000 650,125
- ---------------------------------------------------------------------------------------------------
3.60 INSURANCE
Allmerica Financial 15,000 868,125
CIGNA Corp 7,700 595,306
Ohio Casualty 8,000 329,000
Travelers Property Casualty Class A 12,500 387,500
- ---------------------------------------------------------------------------------------------------
2,179,931
- ---------------------------------------------------------------------------------------------------
0.76 LODGING -- HOTELS
Hilton Hotels 24,000 459,000
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
1.06 MANUFACTURING
AlliedSignal Inc 14,500 $ 642,531
- ---------------------------------------------------------------------------------------------------
6.01 OIL & GAS RELATED
Apache Corp 15,000 379,687
Atlantic Richfield 7,000 456,750
Chevron Corp 5,000 414,687
Conoco Inc Class A(a) 22,000 459,250
Exxon Corp 8,000 585,000
Halliburton Co 15,400 456,225
USX-Marathon Group 15,000 451,875
Unocal Corp 15,000 437,813
- ---------------------------------------------------------------------------------------------------
3,641,287
- ---------------------------------------------------------------------------------------------------
0.40 PAPER & FOREST PRODUCTS
Fort James 6,000 240,000
- ---------------------------------------------------------------------------------------------------
0.94 PERSONAL CARE
Gillette Co 11,800 570,087
- ---------------------------------------------------------------------------------------------------
1.74 RAILROADS
Kansas City Southern Industries 21,500 1,057,531
- ---------------------------------------------------------------------------------------------------
3.68 RETAIL
CVS Corp 8,400 462,000
Dayton Hudson 16,000 868,000
Penney (J C) Co 6,000 281,250
Tandy Corp 15,000 617,813
- ---------------------------------------------------------------------------------------------------
2,229,063
- ---------------------------------------------------------------------------------------------------
2.33 SAVINGS & LOAN
Charter One Financial 21,525 597,319
St Paul Bancorp 30,000 816,563
- ---------------------------------------------------------------------------------------------------
1,413,882
- ---------------------------------------------------------------------------------------------------
7.22 TELEPHONE
Ameritech Corp 12,000 760,500
Bell Atlantic 16,144 855,632
BellSouth Corp 16,000 798,000
GTE Corp 8,500 552,500
SBC Communications 10,000 536,250
US WEST 13,500 872,438
- ---------------------------------------------------------------------------------------------------
4,375,320
- ---------------------------------------------------------------------------------------------------
0.88 TOBACCO
Philip Morris 10,000 535,000
- ---------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $36,193,641) 46,248,082
- ---------------------------------------------------------------------------------------------------
18.47 FIXED INCOME SECURITIES
0.45 US GOVERNMENT OBLIGATIONS
US Treasury Notes, 6.500%,
5/15/2005 (Cost $256,018) $ 250,000 273,984
- ---------------------------------------------------------------------------------------------------
1.89 US GOVERNMENT AGENCY OBLIGATIONS
Freddie Mac, Gold, Participation Certificates
6.500%, 8/1/2011 (Cost $1,100,790) $ 1,125,370 1,143,556
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
16.13 CORPORATE BONDS
0.51 BROADCASTING
CBS Inc, Deb, 8.875%, 6/1/2022 $ 300,000 $ 309,784
- ---------------------------------------------------------------------------------------------------
0.87 BUILDING MATERIALS
USG Corp, Sr Notes, 8.500%, 8/1/2005 $ 500,000 526,875
- ---------------------------------------------------------------------------------------------------
1.09 CABLE
Continental Cablevision, Sr Deb,
9.500%, 8/1/2013 $ 250,000 297,667
NTL Inc, Sr Deferred Coupon Step-Up Notes,
Series A Zero Coupon(d), 4/15/2005 $ 400,000 362,000
- ---------------------------------------------------------------------------------------------------
659,667
- ---------------------------------------------------------------------------------------------------
4.58 ELECTRIC UTILITIES
Boston Edison, Deb, 7.800%, 5/15/2010 $ 250,000 287,734
Connecticut Light & Power, 1st & Ref Mortgage,
Series D 7.875%, 10/1/2024 $ 250,000 261,632
Consumers Energy, 1st Mortgage,
7.375%, 9/15/2023 $ 500,000 523,012
DQU-II Funding, Collateral Lease,
8.700%, 6/1/2016 $ 199,000 225,109
Gulf States Utilities, 1st Mortgage,
8.700%, 4/1/2024 $ 250,000 276,408
Jersey Central Power & Light,
1st Mortgage, 6.750%, 11/1/2025 $ 200,000 199,489
New York State Electric & Gas,
1st Mortgage 8.300%, 12/15/2022 $ 200,000 217,032
Pacific Gas & Electric, 1st & Ref Mortgage,
Series 93D 7.250%, 8/1/2026 $ 500,000 530,615
Western Massachusetts Electric, 1st Mortgage,
Series V 7.750%, 12/1/2002 $ 250,000 252,009
- ---------------------------------------------------------------------------------------------------
2,773,040
- ---------------------------------------------------------------------------------------------------
0.35 GAMING
Players International,
Sr Notes, 10.875%, 4/15/2005 $ 200,000 214,500
- ---------------------------------------------------------------------------------------------------
0.91 INSURANCE
Aetna Services, Gtd Deb, 6.970%, 8/15/2036 $ 250,000 265,162
Equitable Cos, Sr Notes, 9.000%, 12/15/2004 $ 250,000 285,400
- ---------------------------------------------------------------------------------------------------
550,562
- ---------------------------------------------------------------------------------------------------
0.40 LODGING -- HOTELS
Hilton Hotels, Sr Notes, 7.200%, 12/15/2009 $ 250,000 241,834
- ---------------------------------------------------------------------------------------------------
2.05 OIL & GAS RELATED
Atlantic Richfield, Deb, 10.875%, 7/15/2005 $ 600,000 765,653
Belco Oil & Gas, Sr Sub Notes,
Series B, 8.875%, 9/15/2007 $ 150,000 136,125
Coda Energy, Gtd Sr Sub Notes,
Series B, 10.500%, 4/1/2006 $ 100,000 99,000
Gulf Canada Resources Ltd,
Sr Notes, 8.350%, 8/1/2006 $ 250,000 243,750
- ---------------------------------------------------------------------------------------------------
1,244,528
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
0.34 PUBLISHING
Affiliated Newspaper Investments,
Sr Discount Step-Up Notes Zero
Coupon(d), 7/1/2006 $ 200,000 206,000
- ---------------------------------------------------------------------------------------------------
0.84 RETAIL
Dayton Hudson, Sr Notes, 5.875%, 11/1/2008 $ 500,000 507,202
- ---------------------------------------------------------------------------------------------------
0.36 SERVICES
Loewen Group International, Gtd Sr Notes,
Series 4 8.250%, 10/15/2003 $ 250,000 $ 215,000
- ---------------------------------------------------------------------------------------------------
0.30 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
Centennial Cellular, Sr Notes,
10.125%, 5/15/2005 $ 145,000 181,250
- ---------------------------------------------------------------------------------------------------
1.16 TELECOMMUNICATIONS -- LONG DISTANCE
Level 3 Communications, Sr Notes,
9.125%, 5/1/2008 $ 250,000 246,875
Qwest Communications International,
Sr Notes(c) 7.250%, 11/1/2008 $ 200,000 204,000
Sprint Capital, Gtd Sr Notes,
6.125%, 11/15/2008 $ 250,000 255,088
- ---------------------------------------------------------------------------------------------------
705,963
- ---------------------------------------------------------------------------------------------------
1.57 TELEPHONE
Centel Capital, Deb, 9.000%, 10/15/2019 $ 250,000 313,289
Intermedia Communications, Sr Notes,
Series B 8.500%, 1/15/2008 $ 200,000 190,000
MetroNet Communications
Sr Discount Step-Up Notes,
Zero Coupon(d), 11/1/2007 $ 225,000 147,375
Sr Notes, 12.000%, 8/15/2007 $ 100,000 111,000
NEXTLINK Communications,
Sr Notes, 9.625%, 10/1/2007 $ 200,000 191,000
- ---------------------------------------------------------------------------------------------------
952,664
- ---------------------------------------------------------------------------------------------------
0.14 TEXTILE -- APPAREL MANUFACTURING
Haynes International,
Sr Notes, 11.625%, 9/1/2004 $ 100,000 87,000
- ---------------------------------------------------------------------------------------------------
0.66 UTILITIES TELEPHONE
Southwestern Bell Telephone,
Deb, 5.375%, 6/1/2006 $ 400,000 397,225
- ---------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (Cost $9,841,595) 9,773,094
- ---------------------------------------------------------------------------------------------------
TOTAL FIXED INCOME SECURITIES (Cost $11,198,403) 11,190,634
- ---------------------------------------------------------------------------------------------------
5.21 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street
dated 12/31/1998 due 1/4/1999 at
4.850%, repurchased at $ 3,160,702
(Collateralized by US Treasury Bonds due
8/15/2015 at 10.625%, value $3,228,783)
(Cost $3,159,000) $ 3,159,000 3,159,000
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $50,551,044)
(Cost for Income Tax Purposes $50,551,577) $ 60,597,716
===================================================================================================
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
REALTY FUND
100.00 COMMON STOCKS
3.99 LODGING -- HOTELS
Bristol Hotels & Resorts(a) 50 $ 306
Host Marriott 1,000 13,813
MeriStar Hospitality 93 1,726
- ---------------------------------------------------------------------------------------------------
15,845
94.43 REAL ESTATE INVESTMENT TRUST
Archstone Communities Trust 600 $ 12,150
Arden Realty 950 22,028
Avalonbay Communities 300 10,275
Brandywine Realty Trust SBI 500 8,937
CBL & Associates Properties 400 10,325
Cabot Industrial Trust 500 10,219
Cornerstone Properties 900 14,062
Crescent Real Estate Equities 300 6,900
Crestline Capital(a) 100 1,462
Duke Realty Investments 800 18,600
Equity Office Properties Trust SBI 300 7,200
Essex Property Trust 600 17,850
FelCor Lodging Trust 68 1,568
Glenborough Realty Trust 300 6,113
Highwoods Properties 700 18,025
Home Properties of New York 200 5,150
JDN Realty 400 8,625
Kilroy Realty 325 7,475
Liberty Property Trust SBI 400 9,850
Macerich Co 400 10,250
Meditrust Corp Paired Certificates 800 12,100
Post Properties 400 15,375
Prentiss Properties Trust 600 13,388
ProLogis Trust 500 10,375
Public Storage 300 8,119
Reckson Associates Realty 400 8,875
Regency Realty 200 4,450
SL Green Realty 700 15,138
Simon Property Group 500 14,250
Spieker Properties 200 6,925
Starwood Hotels & Resorts SBI 800 18,150
Sunstone Hotel Investors 675 6,370
Urban Shopping Centers 300 9,825
Vornado Realty Trust SBI 300 10,125
Weeks Corp 500 14,094
- ---------------------------------------------------------------------------------------------------
374,623
- ---------------------------------------------------------------------------------------------------
1.58 REAL ESTATE RELATED
TrizecHahn 300 6,150
Vornado Operating(a) 15 121
- ---------------------------------------------------------------------------------------------------
6,271
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $406,420)
(Cost for Income Tax Purposes $429,044) $ 396,739
===================================================================================================
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
81.30 COMMON STOCKS
4.22 AEROSPACE & DEFENSE
Aeroflex Inc(a) 970 $ 14,671
Moog Inc Class A(a) 385 15,063
Orbital Sciences(a) 430 19,028
- ---------------------------------------------------------------------------------------------------
48,762
- ---------------------------------------------------------------------------------------------------
1.09 AIR FREIGHT
Eagle USA Airfreight(a) 515 12,617
- ---------------------------------------------------------------------------------------------------
1.45 AUTO PARTS
CSK Auto(a) 450 12,009
O'Reilly Automotive(a) 100 4,725
- ---------------------------------------------------------------------------------------------------
16,734
- ---------------------------------------------------------------------------------------------------
1.49 BANKS
City National 140 5,827
US Trust 150 11,400
- ---------------------------------------------------------------------------------------------------
17,227
- ---------------------------------------------------------------------------------------------------
0.97 BIOTECHNOLOGY
Anesta Corp(a) 420 11,182
- ---------------------------------------------------------------------------------------------------
1.08 CABLE
TCA Cable TV 350 12,491
- ---------------------------------------------------------------------------------------------------
6.82 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Advanced Fibre Communications(a) 800 8,750
Comverse Technology(a) 150 10,650
Excel Switching(a) 200 7,600
Gilat Satellite Networks Ltd(a) 300 16,538
Melita International(a) 400 8,400
Power Integrations(a) 390 9,774
REMEC Inc(a) 950 17,100
- ---------------------------------------------------------------------------------------------------
78,812
- ---------------------------------------------------------------------------------------------------
14.81 COMPUTER RELATED
Citrix Systems(a) 80 7,765
Concentric Network(a) 300 9,975
GeoTel Communications(a) 150 5,587
Inso Corp(a) 500 12,500
Kronos Inc(a) 120 5,317
Lycos Inc(a) 220 12,224
MAPICS Inc(a) 655 10,808
Mercury Interactive(a) 120 7,590
Metro Information Services(a) 500 15,000
Micromuse Inc(a) 580 11,310
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
Mobius Management Systems(a) 320 $ 4,760
Peregrine Systems 125 5,797
QuadraMed Corp 140 2,870
Rational Software 400 10,600
SMART Modular Technologies(a) 500 13,875
Spyglass Inc 650 14,300
USWeb Corp 140 3,693
Verity Inc(a) 200 5,300
Wind River Systems(a) 250 11,750
- ---------------------------------------------------------------------------------------------------
171,021
- ---------------------------------------------------------------------------------------------------
1.22 CONTAINERS
Ivex Packaging(a) 605 14,066
- ---------------------------------------------------------------------------------------------------
1.05 DISTRIBUTION
Merkert American(a) 800 12,100
- ---------------------------------------------------------------------------------------------------
3.13 ELECTRONICS
Aehr Test Systems(a) 2,250 13,781
CerProbe Corp(a) 350 4,703
Level One Communications(a) 162 5,751
Mettler-Toledo International(a) 215 6,033
Uniphase Corp(a) 85 5,897
- ---------------------------------------------------------------------------------------------------
36,165
- ---------------------------------------------------------------------------------------------------
6.22 ELECTRONICS -- SEMICONDUCTOR
Applied Micro Circuits(a) 300 10,191
Flextronics International Ltd(a) 110 9,419
Galileo Technology Ltd(a) 400 10,800
Genesis Microchip(a) 230 5,578
PMC-Sierra Inc(a) 70 4,419
Photronics Inc(a) 500 11,984
QLogic Corp(a) 50 6,544
SIPEX Corp(a) 180 6,323
Unitrode Corp(a) 380 6,650
- ---------------------------------------------------------------------------------------------------
71,908
- ---------------------------------------------------------------------------------------------------
1.07 ENTERTAINMENT
SFX Entertainment Class A(a) 225 12,347
- ---------------------------------------------------------------------------------------------------
0.77 HEALTH CARE DRUGS -- PHARMACEUTICALS
Alkermes Inc(a) 400 8,875
- ---------------------------------------------------------------------------------------------------
5.70 HEALTH CARE RELATED
Capital Senior Living(a) 1,020 14,216
First Consulting Group(a) 250 5,125
HealthCare Financial Partners(a) 300 11,963
Laser Vision Centers(a) 300 6,647
Province Healthcare(a) 250 $ 8,969
Renal Care Group(a) 300 8,644
ResMed Inc(a) 130 5,899
Sunrise Assisted Living(a) 85 4,409
- ---------------------------------------------------------------------------------------------------
65,872
- ---------------------------------------------------------------------------------------------------
<PAGE>
2.64 LEISURE TIME
Action Performance(a) 380 13,442
Family Golf Centers(a) 285 5,629
Intrawest Corp 675 11,391
- ---------------------------------------------------------------------------------------------------
30,462
1.00 OIL & GAS RELATED
Newfield Exploration(a) 500 10,438
Precision Drilling/(a)/ 100 1,131
- ---------------------------------------------------------------------------------------------------
11,569
- ---------------------------------------------------------------------------------------------------
1.36 PERSONAL CARE
Helen of Troy Ltd(a) 280 4,113
Playtex Products(a) 725 11,645
- ---------------------------------------------------------------------------------------------------
15,758
- ---------------------------------------------------------------------------------------------------
4.16 RETAIL
Cost Plus(a) 250 7,844
Family Dollar Stores 225 4,950
Men's Wearhouse(a) 412 13,081
Rental Service(a) 660 10,354
Wild Oats Markets(a) 375 11,813
- ---------------------------------------------------------------------------------------------------
48,042
- ---------------------------------------------------------------------------------------------------
0.85 SAVINGS & LOAN
FirstFed Financial(a) 550 9,831
- ---------------------------------------------------------------------------------------------------
14.79 SERVICES
ACNielsen Corp(a) 425 12,006
AHL Services(a) 450 14,062
AXENT Technologies(a) 335 10,238
Concord EFS(a) 150 6,356
Cotelligent Group(a) 245 5,222
Documentum Inc(a) 125 6,680
HA-LO Industries(a) 420 15,802
Henry (Jack) & Associates 95 4,726
Integrated Electrical Services(a) 525 11,681
Interim Services(a) 615 14,376
Metzler Group(a) 290 14,119
NCO Group(a) 292 13,140
ProBusiness Services(a) 75 $ 3,413
Profit Recovery Group International(a) 115 4,305
Romac International(a) 475 10,569
Safeguard Scientifics(a) 450 12,347
Sylvan Learning Systems(a) 385 11,743
- ---------------------------------------------------------------------------------------------------
170,785
- ---------------------------------------------------------------------------------------------------
3.41 TELECOMMUNICATIONS -- LONG DISTANCE
Dycom Industries(a) 90 5,141
ICG Communications(a) 540 11,610
IDT Corp(a) 280 4,305
Pacific Gateway Exchange(a) 230 11,054
Viatel Inc(a) 320 7,320
- ---------------------------------------------------------------------------------------------------
39,430
- ---------------------------------------------------------------------------------------------------
1.01 TEXTILE -- APPAREL MANUFACTURING
Quiksilver Inc(a) 390 11,700
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
0.99 TEXTILE -- HOME FURNISHINGS
Linens 'n Things(a) 290 11,491
- ---------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $788,946) 939,247
- ---------------------------------------------------------------------------------------------------
18.70 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated
12/31/1998 due 1/4/1999 at
4.850%, repurchased at $216,116
(Collateralized by US Treasury Bonds due
11/15/2015 at 9.875%, value $227,960)
(Cost $216,000) $ 216,000 216,000
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $1,004,946)
(Cost for Income Tax Purposes $1,007,375) $ 1,155,247
===================================================================================================
TECHNOLOGY FUND
83.88 COMMON STOCKS
1.64 AEROSPACE & DEFENSE
Litton Industries(a) 400 $ 26,100
- ---------------------------------------------------------------------------------------------------
5.14 BIOTECHNOLOGY
Amgen Inc(a) 400 41,825
Genentech Inc(a) 500 39,844
- ---------------------------------------------------------------------------------------------------
81,669
- ---------------------------------------------------------------------------------------------------
6.94 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Carrier Access(a) 1,000 34,437
Nokia Corp Sponsored ADR Representing Class A Shrs 300 36,131
Pittway Corp Class A 1,200 39,675
- ---------------------------------------------------------------------------------------------------
110,243
- ---------------------------------------------------------------------------------------------------
7.11 COMPUTER SOFTWARE & SERVICE
Kronos Inc(a) 600 $ 26,588
Microsoft Corp(a) 300 41,606
Software AG Systems(a) 1,500 27,188
Spyglass Inc(a) 800 17,600
- ---------------------------------------------------------------------------------------------------
112,982
- ---------------------------------------------------------------------------------------------------
11.25 COMPUTERS -- HARDWARE
Compaq Computer 500 20,969
International Business Machines 200 36,950
Maxtor Corp(a) 2,000 28,000
Sun Microsystems(a) 600 51,375
Unisys Corp(a) 1,200 41,325
- ---------------------------------------------------------------------------------------------------
178,619
- ---------------------------------------------------------------------------------------------------
9.50 COMPUTERS -- NETWORKING
3Com Corp(a) 500 22,406
Concentric Network(a) 200 6,650
Newbridge Networks(a) 1,000 30,375
Novell Inc(a) 2,000 36,250
Whittman-Hart Inc(a) 2,000 55,250
- ---------------------------------------------------------------------------------------------------
150,931
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
1.52 COMPUTERS -- PERIPHERALS
Seagate Technology(a) 800 24,200
- ---------------------------------------------------------------------------------------------------
5.32 ELECTRONICS -- INSTRUMENTS
SCI Systems(a) 800 46,200
Symbol Technologies 600 38,362
- ---------------------------------------------------------------------------------------------------
84,562
- ---------------------------------------------------------------------------------------------------
2.11 ELECTRONICS -- SEMICONDUCTOR
Conexant Systems(a)(f) 2,000 33,500
- ---------------------------------------------------------------------------------------------------
4.83 EQUIPMENT -- SEMICONDUCTOR
Broadcom Corp Class A(a) 400 48,300
Taiwan Semiconductor Manufacturing Ltd
Sponsored ADR Representing 5 Ord Shrs(a) 2,000 28,375
- ---------------------------------------------------------------------------------------------------
76,675
- ---------------------------------------------------------------------------------------------------
0.42 LEISURE TIME
WMS Industries(a) 900 6,638
- ---------------------------------------------------------------------------------------------------
2.97 OFFICE EQUIPMENT & SUPPLIES
Xerox Corp 400 47,200
- ---------------------------------------------------------------------------------------------------
1.44 PHOTOGRAPHY & IMAGING
Gemstar International Group Ltd(a) 400 22,900
- ---------------------------------------------------------------------------------------------------
14.49 SERVICES
America Online(a) 500 80,000
BISYS Group(a) 800 $ 41,300
Paychex Inc 1,000 51,437
Safeguard Scientifics(a) 1,000 27,438
VERITAS Software(a) 500 29,969
- ---------------------------------------------------------------------------------------------------
230,144
- ---------------------------------------------------------------------------------------------------
4.54 TELECOMMUNICATIONS -- CELLULAR & WIRELESS
AirTouch Communications(a) 1,000 72,125
- ---------------------------------------------------------------------------------------------------
4.66 TELECOMMUNICATIONS -- LONG DISTANCE
General Instrument(a) 1,000 33,937
Qwest Communications International(a) 800 40,000
- ---------------------------------------------------------------------------------------------------
73,937
- ---------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $1,058,161) 1,332,425
- ---------------------------------------------------------------------------------------------------
16.12 SHORT-TERM INVESTMENTS
3.15 COMMERCIAL PAPER
3.15 FINANCIAL
American General Finance, 5.300%, 1/5/1999(g)
(Cost $50,000) $ 50,000 50,000
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
12.97 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street
dated 12/31/1998 due 1/4/1999 at
4.850%, repurchased at $206,111
(Collateralized by US Treasury Bonds due
11/15/2015 at 9.875%, value $212,736)
(Cost$206,000) $ 206,000 206,000
- ---------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (Cost $256,000) 256,000
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $1,314,161)
(Cost for Income Tax Purposes $1,319,795) $ 1,588,425
===================================================================================================
TOTAL RETURN FUND
63.86 COMMON STOCKS
2.55 AEROSPACE & DEFENSE
Boeing Co 4,500 $ 146,813
Lockheed Martin 2,000 169,500
Precision Castparts 7,000 309,750
Raytheon Co Class B 5,000 266,250
- ---------------------------------------------------------------------------------------------------
892,313
- ---------------------------------------------------------------------------------------------------
0.45 AIRLINES
Southwest Airlines 7,000 157,063
- ---------------------------------------------------------------------------------------------------
1.33 AUTO PARTS
Cooper Tire & Rubber 8,000 163,500
Genuine Parts 9,000 300,938
- ---------------------------------------------------------------------------------------------------
464,438
- ---------------------------------------------------------------------------------------------------
1.00 AUTOMOBILES
Ford Motor 6,000 352,125
- ---------------------------------------------------------------------------------------------------
4.10 BANKS
Bank One 6,000 $ 306,375
Comerica Inc 2,850 194,334
First Union 3,000 182,438
National City 3,960 287,100
State Street 4,200 292,162
Wachovia Corp 2,000 174,875
- ---------------------------------------------------------------------------------------------------
1,437,284
- ---------------------------------------------------------------------------------------------------
1.27 BEVERAGES
Anheuser-Busch Cos 4,000 262,500
PepsiCo Inc 4,500 184,219
- ---------------------------------------------------------------------------------------------------
446,719
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
1.71 BUILDING MATERIALS
Lowe's Cos 6,000 307,125
Sherwin-Williams Co 10,000 293,750
- ---------------------------------------------------------------------------------------------------
600,875
- ---------------------------------------------------------------------------------------------------
2.08 CHEMICALS
Dow Chemical 2,000 181,875
Great Lakes Chemical 7,000 280,000
Morton International 10,000 245,000
Octel Corp(a) 1,500 20,813
- ---------------------------------------------------------------------------------------------------
727,688
- ---------------------------------------------------------------------------------------------------
2.17 COMPUTER RELATED
Compaq Computer 10,000 419,375
Hewlett-Packard Co 5,000 341,562
- ---------------------------------------------------------------------------------------------------
760,937
- ---------------------------------------------------------------------------------------------------
2.54 CONGLOMERATES
Fortune Brands 4,000 126,500
Hanson PLC Sponsored ADR Representing 5 Shrs 10,000 390,000
National Service Industries 5,000 190,000
Textron Inc 2,400 182,250
- ---------------------------------------------------------------------------------------------------
888,750
- ---------------------------------------------------------------------------------------------------
0.96 DISTRIBUTION
Supervalu Inc 12,000 336,000
- ---------------------------------------------------------------------------------------------------
3.16 ELECTRIC UTILITIES
CINergy Corp 3,700 127,188
Edison International 5,000 139,375
Entergy Corp 10,000 311,250
GPU Inc 5,000 220,938
Unicom Corp 8,000 308,500
- ---------------------------------------------------------------------------------------------------
1,107,251
- ---------------------------------------------------------------------------------------------------
1.47 ELECTRICAL EQUIPMENT
General Electric 2,600 265,362
Grainger (W W) Inc 6,000 249,750
- ---------------------------------------------------------------------------------------------------
515,112
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
1.39 ELECTRONICS -- SEMICONDUCTOR
Rockwell International 10,000 $ 485,625
- ---------------------------------------------------------------------------------------------------
1.02 FINANCIAL
MGIC Investment 9,000 358,312
- ---------------------------------------------------------------------------------------------------
1.92 FOODS
Archer-Daniels-Midland Co 6,774 116,428
Heinz (H J) Co 3,550 201,019
Kellogg Co 2,600 88,725
Unilever NV New York Registered Shrs 3,200 265,400
- ---------------------------------------------------------------------------------------------------
671,572
- ---------------------------------------------------------------------------------------------------
0.70 HARDWARE & TOOLS
Snap-On Inc 7,000 243,687
- ---------------------------------------------------------------------------------------------------
2.93 HEALTH CARE DRUGS -- PHARMACEUTICALS
Abbott Laboratories 5,000 245,000
American Home Products 3,600 202,725
Bristol-Myers Squibb 2,200 294,387
Lilly (Eli) & Co 3,200 284,400
- ---------------------------------------------------------------------------------------------------
1,026,512
- ---------------------------------------------------------------------------------------------------
0.71 HEALTH CARE RELATED
Columbia/HCA Healthcare 10,000 247,500
- ---------------------------------------------------------------------------------------------------
1.55 HOUSEHOLD FURNITURE & APPLIANCES
Shaw Industries 11,000 266,750
Whirlpool Corp 5,000 276,875
- ---------------------------------------------------------------------------------------------------
543,625
- ---------------------------------------------------------------------------------------------------
3.96 INSURANCE
Lincoln National 3,000 245,437
Loews Corp 4,000 393,000
Ohio Casualty 7,000 287,875
Old Republic International 9,000 202,500
SAFECO Corp 6,000 257,625
- ---------------------------------------------------------------------------------------------------
1,386,437
- ---------------------------------------------------------------------------------------------------
0.60 INSURANCE BROKERS
Marsh & McLennan 3,600 210,375
- ---------------------------------------------------------------------------------------------------
0.63 INVESTMENT BANK/BROKER FIRM
Morgan Stanley Dean Witter & Co 3,135 222,585
- ---------------------------------------------------------------------------------------------------
1.48 IRON & STEEL
Nucor Corp 12,000 519,000
- ---------------------------------------------------------------------------------------------------
1.13 MACHINERY
Caterpillar Inc 5,000 230,000
Deere & Co 5,000 165,625
- ---------------------------------------------------------------------------------------------------
395,625
- ---------------------------------------------------------------------------------------------------
<PAGE>
1.78 MANUFACTURING
Federal Signal 7,000 191,625
Illinois Tool Works 5,000 290,000
Minnesota Mining & Manufacturing 2,000 $ 142,250
- ---------------------------------------------------------------------------------------------------
623,875
- ---------------------------------------------------------------------------------------------------
0.58 METALS MINING
Phelps Dodge 4,000 203,500
- ---------------------------------------------------------------------------------------------------
0.61 OFFICE EQUIPMENT & SUPPLIES
IKON Office Solutions 25,000 214,063
- ---------------------------------------------------------------------------------------------------
3.59 OIL & GAS RELATED
Exxon Corp 3,500 255,937
Norsk Hydro A/SA Sponsored ADR Representing Ord Shrs 7,000 239,312
Repsol SA Sponsored ADR Representing Ord Shrs 5,000 273,125
Royal Dutch Petroleum New York Registry 1.25 Gldr Shrs 3,200 153,200
Yacimientos Petroliferos Fiscades SA Sponsored
ADR Representing Class D Shrs 12,000 335,250
- ---------------------------------------------------------------------------------------------------
1,256,824
- ---------------------------------------------------------------------------------------------------
0.46 PAPER & FOREST PRODUCTS
Westvaco Corp 6,000 160,875
- ---------------------------------------------------------------------------------------------------
0.67 POLLUTION CONTROL
Waste Management 5,075 236,622
- ---------------------------------------------------------------------------------------------------
0.51 PUBLISHING
Gannett Co 2,800 180,600
- ---------------------------------------------------------------------------------------------------
0.83 RAILROADS
CSX Corp 7,000 290,500
- ---------------------------------------------------------------------------------------------------
1.09 RESTAURANTS
McDonald's Corp 5,000 383,125
- ---------------------------------------------------------------------------------------------------
2.04 RETAIL
Dillard's Inc Class A 8,000 227,000
K mart Corp(a) 8,500 130,156
Penney (J C) Co 4,000 187,500
Toys "R" Us(a) 10,000 168,750
- ---------------------------------------------------------------------------------------------------
713,406
- ---------------------------------------------------------------------------------------------------
2.34 SERVICES
Dun & Bradstreet 6,800 214,625
Electronic Data Systems 7,000 351,750
First Data 8,000 253,500
- ---------------------------------------------------------------------------------------------------
819,875
- ---------------------------------------------------------------------------------------------------
0.83 SPECIALTY PRINTING
Deluxe Corp 8,000 292,500
- ---------------------------------------------------------------------------------------------------
1.30 TELECOMMUNICATIONS -- LONG DISTANCE
British Telecommunications PLC Sponsored
ADR Representing 10 Ord Shrs 3,000 455,062
- ---------------------------------------------------------------------------------------------------
1.23 TELEPHONE
Bell Atlantic 5,000 265,000
Telefonos de Mexico SA de CV Sponsored Class L
ADR Representing 20 Series L Shrs 3,400 $ 165,538
- ---------------------------------------------------------------------------------------------------
430,538
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
2.12 TEXTILE -- APPAREL MANUFACTURING
Liz Claiborne 7,000 220,938
Unifi Inc 10,000 195,625
VF Corp 7,000 328,125
- ---------------------------------------------------------------------------------------------------
744,688
- ---------------------------------------------------------------------------------------------------
1.07 TOBACCO
Philip Morris 7,000 374,500
- ---------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $17,708,337) 22,377,963
- ---------------------------------------------------------------------------------------------------
26.48 FIXED INCOME SECURITIES
13.51 US GOVERNMENT OBLIGATIONS
US Treasury Bonds
8.125%, 8/15/2019 $ 400,000 534,875
7.625%, 2/15/2025 $ 100,000 131,656
7.250%, 8/15/2022 $ 500,000 623,281
US Treasury Notes
7.500%, 11/15/2001 $ 300,000 322,406
7.250%, 8/15/2004 $ 600,000 674,813
6.375%, 1/15/2000 $ 300,000 305,156
6.375%, 8/15/2002 $ 200,000 210,938
6.250%, 2/15/2003 $ 700,000 739,812
6.125%, 8/15/2007 $ 800,000 874,250
5.500%, 2/15/2008 $ 300,000 318,000
- ---------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT OBLIGATIONS (Cost $4,419,973) 4,735,187
- ---------------------------------------------------------------------------------------------------
4.60 US GOVERNMENT AGENCY OBLIGATIONS
Fannie Mae
Gtd Mortgage Pass-Through Certificates
8.500%, 3/1/2010 $ 72,467 75,554
7.000%, 12/1/2027 $ 169,479 172,931
6.500%, 5/1/2026 $ 118,712 119,545
6.000%, 5/1/2009 $ 106,944 107,365
Medium-Term Notes, 6.300%, 8/19/2002 $ 200,000 207,927
Federal Farm Credit Bank,
Medium-Term Notes 6.150%, 9/1/2000 $ 500,000 509,144
Freddie Mac, Gold, Participation Certificates
8.000%, 10/1/2010 $ 38,255 39,385
6.500%, 7/1/2001 $ 53,544 54,026
Government National Mortgage Association I
Pass-Through Certificates
7.500%, 3/15/2026 $ 58,280 60,055
7.000%, 4/15/2028 $ 260,135 266,152
- ---------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS (Cost $1,576,786) 1,612,084
===================================================================================================
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
8.37 CORPORATE BONDS
0.58 AUTOMOBILES
Ford Motor, 6.500%, 8/1/2018 $ 200,000 $ 204,351
- ---------------------------------------------------------------------------------------------------
2.12 BANKS
ABN Amro Bank NV, Sub Notes,
7.550%, 6/28/2006 $ 200,000 218,663
NationsBank Corp, Sub Notes,
6.500%, 3/15/2006 $ 100,000 104,511
SunTrust Banks, Sr Notes,
6.250%, 6/1/2008 $ 300,000 310,848
Wachovia Bank, Medium-Term Notes,
Series 3 7.000%, 10/17/2008 $ 100,000 109,000
- ---------------------------------------------------------------------------------------------------
743,022
- ---------------------------------------------------------------------------------------------------
0.29 BEVERAGES
PepsiCo Inc, Medium-Term Notes,
5.875%, 6/1/2000 $ 100,000 100,738
- ---------------------------------------------------------------------------------------------------
0.57 FINANCIAL
CIT Group, Notes,
5.625%, 10/15/2003 $ 200,000 198,256
- ---------------------------------------------------------------------------------------------------
0.45 FOODS
Campbell Soup, Notes,
6.150%, 12/1/2002 $ 150,000 155,697
- ---------------------------------------------------------------------------------------------------
0.86 HOUSEHOLD PRODUCTS
Procter & Gamble, Notes,
5.250%, 9/15/2003 $ 300,000 302,365
- ---------------------------------------------------------------------------------------------------
1.18 INSURANCE
CNA Financial, Notes,
6.450, 1/15/2008 $ 100,000 98,678
Travelers Property Casualty,
Sr Notes, 6.750%, 11/15/2006 $ 300,000 315,179
- ---------------------------------------------------------------------------------------------------
413,857
- ---------------------------------------------------------------------------------------------------
0.58 LEISURE TIME
Carnival Corp, Sr Notes,
6.150%, 4/15/2008 $ 200,000 203,516
- ---------------------------------------------------------------------------------------------------
0.59 MACHINERY
Cooper Industries, Medium-Term Notes,
Series 3 6.375%, 5/8/2008 $ 200,000 207,549
- ---------------------------------------------------------------------------------------------------
0.58 PERSONAL CARE
Colgate-Palmolive Co, Medium-Term Notes,
Series C 5.580%, 11/6/2008 $ 200,000 201,305
- ---------------------------------------------------------------------------------------------------
0.57 TELECOMMUNICATIONS -- LONG DISTANCE
GTE Northwest, Deb, 5.550%, 10/15/2008 $ 200,000 200,403
- ---------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (Cost $2,865,515) 2,931,059
- ---------------------------------------------------------------------------------------------------
TOTAL FIXED INCOME SECURITIES (Cost $8,862,274) 9,278,330
- ---------------------------------------------------------------------------------------------------
9.66 SHORT-TERM INVESTMENTS
<PAGE>
0.58 US GOVERNMENT OBLIGATIONS
US Treasury Notes, 6.375%, 7/15/1999
(Cost $200,545) $ 200,000 201,875
- ---------------------------------------------------------------------------------------------------
9.08 REPURCHASE AGREEMENTS
Repurchase Agreement with State Street
dated 12/31/1998 due 1/4/1999 at
4.850%, repurchased at $3,183,715
(Collateralized by US Treasury Notes due
5/15/2004 at 7.250%, value $3,244,862)
(Cost $3,182,000) $ 3,182,000 3,182,000
- ---------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (Cost $3,382,545) 3,383,875
- ---------------------------------------------------------------------------------------------------
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $29,953,156)
(Cost for Income Tax Purposes $29,955,111) $ 35,040,168
===================================================================================================
UTILITIES FUND
87.82 COMMON STOCKS
2.12 MACHINERY
Mannesmann AG 1,300 $ 149,129
- ---------------------------------------------------------------------------------------------------
0.76 SERVICES
Metzler Group(a) 1,100 53,556
- ---------------------------------------------------------------------------------------------------
17.40 TELECOMMUNICATIONS
AirTouch Communications(a) 3,300 238,012
ICG Communications(a) 6,200 133,300
IXC Communications(a) 2,200 73,975
MCI WorldCom(a) 6,430 461,352
Qwest Communications International(a) 3,165 158,250
Sprint Corp 1,900 159,838
- ---------------------------------------------------------------------------------------------------
1,224,727
- ---------------------------------------------------------------------------------------------------
67.54 UTILITIES
25.23 ELECTRIC
Ameren Corp 800 34,150
CMS Energy 2,500 121,094
Carolina Power & Light 800 37,650
Consolidated Edison 2,200 116,325
DTE Energy 2,500 107,187
Duke Energy 1,726 110,572
Edison International 3,800 105,925
FPL Group 1,600 98,600
Florida Progress 1,100 49,294
GPU Inc 900 39,769
Houston Industries 3,600 115,650
Interstate Energy 3,370 108,682
New Century Energies 2,800 136,500
NIPSCO Industries 2,600 79,137
Northern States Power 2,900 80,475
PG&E Corp 1,300 40,950
<PAGE>
- ---------------------------------------------------------------------------------------------------
Shares, Units
or Principal
% Description Amount Value
- ---------------------------------------------------------------------------------------------------
PP&L Resources 1,642 45,771
PacifiCorp 2,200 46,338
Pinnacle West Capital 1,700 72,038
SCANA Corp 2,000 64,500
TNP Enterprises 1,500 56,906
Unicom Corp 2,800 107,975
- ---------------------------------------------------------------------------------------------------
1,775,488
- ---------------------------------------------------------------------------------------------------
8.05 NATURAL GAS
Coastal Corp 2,500 87,344
Columbia Energy Group 1,400 80,850
Dynegy Inc 4,000 $ 43,750
Enron Corp 1,200 68,475
New Jersey Resources 1,500 59,250
ONEOK Inc 1,350 48,769
TransCanada PipeLines Ltd 3,400 50,150
Williams Cos 4,100 127,869
- ---------------------------------------------------------------------------------------------------
566,457
- ---------------------------------------------------------------------------------------------------
34.26 TELEPHONE
ALLTEL Corp 2,200 131,588
Ameritech Corp 3,640 230,685
Bell Atlantic 3,834 203,202
BellSouth Corp 4,540 226,432
Century Telephone Enterprises 2,800 189,000
Cincinnati Bell 5,400 204,187
COLT Telecom Group PLC Sponsored
ADR Representing 4 Ord Shrs(a) 3,800 227,525
GTE Corp 2,650 172,250
Intermedia Communications(a) 5,000 86,250
MetroNet Communications Class B
Non-Voting Shrs(a) 6,000 201,000
SBC Communications 4,100 219,863
Telefonica de Espana SA Sponsored
ADR Representing 3 Ord Shrs 1,112 150,510
US WEST 2,600 168,025
- ---------------------------------------------------------------------------------------------------
2,410,517
- ---------------------------------------------------------------------------------------------------
TOTAL UTILITIES 4,752,462
- ---------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS (Cost $4,241,711) 6,179,874
- ---------------------------------------------------------------------------------------------------
12.18 SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS
Repurchase Agreement with State Street dated
12/31/1998 due 1/4/1999 at
4.850%, repurchased at $857,462
(Collateralized by US Treasury Bonds due
11/15/2015 at 9.875%, value $881,333)
(Cost $857,000) $ 857,000 857,000
- ---------------------------------------------------------------------------------------------------
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $5,098,711)(b) $ 7,036,874
===================================================================================================
(a) Security is non-income producing.
(b) Also represents cost for income tax purposes.
(c) Securities are acquired pursuant to Rule 144A. The Fund deems such
securities to be "liquid" since an institutional market exists.
(d) Step-up bonds are obligations which increase the interest payment rate at a
specified point in time. Rate shown reflects current rate which may step up
at a future date.
</TABLE>
<PAGE>
(e) Security is a payment-in-kind (PIK) security. PIK securities may make
interest payments in additional securities.
(f) Security is a When-Issued security.
(g) Security has been designated as collateral for When-Issued securities.
(h) Security has no market value at December 31, 1998.
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
HEALTH HIGH
GROWTH DYNAMICS SCIENCES YIELD
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investment Securities:
At Cost(a) $ 255,952 $ 217,550 $ 2,119,610 $ 45,008,832
=========================================================================================================================
At Value(a) $ 355,168 $ 277,542 $ 2,523,351 $ 41,888,583
Cash 17,227 32,345 10,415 0
Receivables:
Investment Securities Sold 0 0 0 9,690
Fund Shares Sold 0 0 0 623,951
Dividends and Interest 325 177 1,192 672,701
Prepaid Expenses and Other Assets 161 161 227 1,456
- -------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 372,881 310,225 2,535,185 43,196,381
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Custodian 0 0 0 475,095
Investment Securities Purchased 0 0 145,252 490,000
Fund Shares Repurchased 0 0 10,331 200,333
Accrued Expenses and Other Payables 1,997 2,009 1,993 5,363
- -------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,997 2,009 157,576 1,170,791
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT VALUE $ 370,884 $ 308,216 $ 2,377,609 $ 42,025,590
=========================================================================================================================
NET ASSETS
Paid-in Capital(b) $ 258,380 $ 252,344 $ 1,982,521 $ 45,508,679
Accumulated Undistributed
(Distributions in Excess of) Net Investment Income 0 (2) 277 6,969
Accumulated Undistributed Net Realized Gain
(Loss) on Investment Securities and
Foreign Currency Transactions 13,288 (4,118) (8,930) (369,809)
Net Appreciation (Depreciation) of Investment
Securities and Foreign Currency Transactions 99,216 59,992 403,741 (3,120,249)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT VALUE $ 370,884 $ 308,216 $ 2,377,609 $ 42,025,590
=========================================================================================================================
Shares Outstanding 25,600 25,363 155,482 3,715,450
NET ASSET VALUE, Offering and Redemption
Price per Share $ 14.49 $ 12.15 $ 15.29 $ 11.31
=========================================================================================================================
(a) Investment securities at cost and value at December 31, 1998 include
repurchase agreements of $337,000 and $1,883,000 for Health Sciences and
High Yield Funds, respectively.
(b) The Fund has one billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to
each individual Fund.
See Notes to Financial Statements
<PAGE>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
December 31, 1998
SMALL
INDUSTRIAL COMPANY
INCOME REALTY GROWTH TECHNOLOGY
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 50,551,044 $ 406,420 $ 1,004,946 $ 1,314,161
=============================================================================================================================
At Value(a) $ 60,597,716 $ 396,739 $ 1,155,247 $ 1,588,425
Cash 0 45,186 105 758
Receivables:
Investment Securities Sold 0 0 0 7,888
Fund Shares Sold 297,445 56,460 199 18,460
Dividends and Interest 219,325 4,153 39 409
Prepaid Expenses and Other Assets 1,998 126 177 207
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 61,116,484 502,664 1,155,767 1,616,147
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Custodian 45,917 0 0 0
Investment Securities Purchased 713,138 0 107,261 36,620
Fund Shares Repurchased 7,063 0 10,319 257
Accrued Expenses and Other Payables 4,848 1,242 2,081 2,031
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 770,966 1,242 119,661 38,908
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT VALUE $ 60,345,518 $ 501,422 $ 1,036,106 $ 1,577,239
=============================================================================================================================
NET ASSETS
Paid-in Capital(b) $ 49,837,055 $ 573,473 $ 928,217 $ 1,394,003
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income 49,995 6,159 0 (3)
Accumulated Undistributed Net Realized Gain (Loss)
on Investment Securities and
Foreign Currency Transactions 411,796 (68,529) (42,412) (91,025)
Net Appreciation (Depreciation) of Investment
Securities and Foreign Currency Transactions 10,046,672 (9,681) 150,301 274,264
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT VALUE $ 60,345,518 $ 501,422 $ 1,036,106 $ 1,577,239
=============================================================================================================================
Shares Outstanding 3,243,059 60,980 89,981 109,960
NET ASSET VALUE, Offering and Redemption
Price per Share $ 18.61 $ 8.22 $ 11.51 $ 14.34
=============================================================================================================================
(a) Investment securities at cost and value at December 31, 1998 include
repurchase agreements of $3,159,000, $216,000 and $206,000 for Industrial
Income, Small Company Growth and Technology Funds, respectively.
(b) The Fund has one billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to each
individual Fund.
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
December 31, 1998
TOTAL
RETURN UTILITIES
FUND FUND
- --------------------------------------------------------------------------------
ASSETS
Investment Securities:
At Cost(a) $ 29,953,156 $ 5,098,711
================================================================================
At Value(a) $ 35,040,168 $ 7,036,874
Cash 13,831 5,278
Receivables:
Investment Securities Sold 152,500 0
Fund Shares Sold 233,066 15,635
Dividends and Interest 197,305 13,653
Prepaid Expenses and Other Assets 1,213 304
- --------------------------------------------------------------------------------
TOTAL ASSETS 35,638,083 7,071,744
- --------------------------------------------------------------------------------
LIABILITIES
Payables:
Investment Securities Purchased 0 73,060
Fund Shares Repurchased 2,492 197
Accrued Expenses and Other Payables 5,525 5,834
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 8,017 79,091
- --------------------------------------------------------------------------------
NET ASSETS AT VALUE $ 35,630,066 $ 6,992,653
================================================================================
NET ASSETS
Paid-in Capital(b) $ 30,416,968 $ 5,053,048
Accumulated Undistributed Net Investment Income 23,680 6,249
Accumulated Undistributed Net Realized Gain
(Loss) on Investment Securities and
Foreign Currency Transactions 102,406 (5,002)
Net Appreciation of Investment Securities
and Foreign Currency Transactions 5,087,012 1,938,358
- --------------------------------------------------------------------------------
NET ASSETS AT VALUE $ 35,630,066 $ 6,992,653
================================================================================
Shares Outstanding 2,149,126 393,365
NET ASSET VALUE, Offering and
Redemption Price per Share $ 16.58 $ 17.78
================================================================================
(a) Investment securities at cost and value at December 31, 1998 include
repurchase agreements of $3,182,000 and $857,000 for Total Return and
Utilities Funds, respectively.
(b) The Fund has one billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, 100 million have been allocated to each
individual Fund.
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF OPERATIONS
Year Ended December 31, 1998
HEALTH HIGH
GROWTH DYNAMICS SCIENCES YIELD
FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 4,012 $ 1,047 $ 9,970 $ 23,840
Interest 0 13 9,244 3,659,470
Foreign Taxes Withheld (48) (16) (243) 0
- -------------------------------------------------------------------------------------------------------------
TOTAL INCOME 3,964 1,044 18,971 3,683,310
- -------------------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees 2,589 1,652 9,945 224,864
Transfer Agent Fees 5,000 5,000 5,000 5,000
Administrative Fees 10,047 10,042 11,874 26,312
Custodian Fees and Expenses 1,225 1,657 6,060 14,114
Directors' Fees and Expenses 4,255 8,757 8,791 10,190
Organization Expenses 0 0 0 3,682
Professional Fees and Expenses 13,395 13,393 13,963 22,827
Registration Fees and Expenses 5 5 5 45
Reports to Shareholders 61 61 182 2,027
Other Expenses 255 224 377 8,462
- -------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 36,832 40,791 56,197 317,523
Fees and Expenses Absorbed by Investment Adviser (32,023) (36,773) (39,165) 0
Fees and Expenses Paid Indirectly (621) (1,216) (2,717) (7,595)
- -------------------------------------------------------------------------------------------------------------
NET EXPENSES 4,188 2,802 14,315 309,928
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (224) (1,758) 4,656 3,373,382
- -------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on Investment Securities
and Foreign Currency Transactions 22,394 (4,118) 63,995 694,287
Change in Net Appreciation (Depreciation) of
Investment Securities and Foreign Currency
Transactions 81,686 55,876 369,979 (3,509,648)
- -------------------------------------------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENT
SECURITIES AND FOREIGN CURRENCY
TRANSACTIONS 104,080 51,758 433,974 (2,815,361)
- -------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 103,856 $ 50,000 $ 438,630 $ 558,021
=============================================================================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF OPERATIONS (CONTINUED)
Period Ended December 31, 1998 (Note 1)
SMALL
INDUSTRIAL COMPANY
INCOME REALTY GROWTH TECHNOLOGY
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME
Dividends $ 592,218 $ 17,456 $ 296 $ 850
Interest 872,421 215 529 6,311
Foreign Taxes Withheld (1,676) 0 0 0
- -----------------------------------------------------------------------------------------------------------
TOTAL INCOME 1,462,963 17,671 825 7,161
- -----------------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees 377,741 2,558 2,726 5,670
Transfer Agent Fees 5,000 3,750 5,000 5,000
Administrative Fees 25,519 7,669 10,192 11,005
Custodian Fees and Expenses 15,885 2,939 4,552 4,566
Directors' Fees and Expenses 10,778 0 8,760 8,770
Organization Expenses 3,682 0 0 0
Professional Fees and Expenses 25,191 5,452 14,213 13,943
Registration Fees and Expenses 45 5 5 5
Reports to Shareholders 2,977 1,704 387 182
Other Expenses 5,319 204 224 309
- -----------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 472,137 24,281 46,059 49,450
Fees and Expenses Absorbed by Investment Adviser (245) (18,881) (39,139) (38,752)
Fees and Expenses Paid Indirectly (7,095) (1,768) (2,743) (2,472)
- -----------------------------------------------------------------------------------------------------------
NET EXPENSES 464,797 3,632 4,177 8,226
- -----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 998,166 14,039 (3,352) (1,065)
- -----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on Investment Securities
and Foreign Currency Transactions 1,862,509 (66,609) (41,761) (90,677)
Change in Net Appreciation (Depreciation) of
Investment Securities and Foreign Currency
Transactions 4,286,624 (9,681) 152,667 291,455
- -----------------------------------------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENT
SECURITIES AND FOREIGN CURRENCY
TRANSACTIONS 6,149,133 (76,290) 110,906 200,778
- -----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 7,147,299 $ (62,251) $ 107,554 $ 199,713
===========================================================================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF OPERATIONS (CONTINUED)
Year Ended December 31, 1998
TOTAL
RETURN UTILITIES
FUND FUND
- --------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 398,809 $ 121,653
Interest 633,673 29,349
Foreign Taxes Withheld (7,582) (2,322)
- --------------------------------------------------------------------------------
TOTAL INCOME 1,024,900 148,680
- --------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees 219,888 32,195
Transfer Agent Fees 5,000 5,000
Administrative Fees 19,501 11,535
Custodian Fees and Expenses 10,285 6,356
Directors' Fees and Expenses 9,914 8,968
Organization Expenses 3,682 3,682
Professional Fees and Expenses 21,515 16,693
Registration Fees and Expenses 44 45
Reports to Shareholders 2,742 1,113
Other Expenses 3,888 730
- --------------------------------------------------------------------------------
TOTAL EXPENSES 296,459 86,317
Fees and Expenses Absorbed by Investment Adviser (196) (28,048)
Fees and Expenses Paid Indirectly (4,677) (2,944)
- --------------------------------------------------------------------------------
NET EXPENSES 291,586 55,325
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 733,314 93,355
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on Investment Securities and
Foreign Currency Transactions 765,809 (4,109)
Change in Net Appreciation of Investment Securities
and Foreign Currency Transactions 1,112,812 1,193,668
- --------------------------------------------------------------------------------
NET GAIN ON INVESTMENT SECURITIES
AND FOREIGN CURRENCY TRANSACTIONS 1,878,621 1,189,559
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,611,935 $ 1,282,914
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS
GROWTH FUND DYNAMICS FUND
Year Period Year Period
Ended Ended Ended Ended
December 31 December 31 December 31 December 31
- -------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
(Note 1) (Note 1)
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ (224) $ 1,333 $ (1,758) $ 586
Net Realized Gain (Loss) on Investment Securities
and Foreign Currency Transactions 22,394 (1,636) (4,118) 3,715
Change in Net Appreciation of Investment
Securities and Foreign Currency Transactions 81,686 17,530 55,876 4,116
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 103,856 17,227 50,000 8,417
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (1,109) 0 (587) 0
In Excess of Net Investment Income (227) 0 0 0
Net Realized Gain on Investment Securities and
Foreign Currency Transactions (7,300) 0 (3,715) 0
- -------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (8,636) 0 (4,302) 0
- -------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 801 250,000 799 250,000
Reinvestment of Distributions 8,636 0 4,302 0
- -------------------------------------------------------------------------------------------------------------------
9,437 250,000 5,101 250,000
Amounts Paid for Repurchases of Shares 0 (2,000) 0 ( 2,000)
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 9,437 248,000 5,101 248,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 104,657 265,227 50,799 256,417
NET ASSETS
Initial Subscription (Note 1) 0 1,000 0 1,000
Beginning of Period 266,227 0 257,417 0
- -------------------------------------------------------------------------------------------------------------------
End of Period $ 370,884 $ 266,227 $ 308,216 $ 257,417
===================================================================================================================
Accumulated Undistributed (Distributions in Excess of)
Net Investment Income Included in Net Assets at
End of Period $ 0 $ 1,333 $ (2) $ 586
----------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1) 0 100 0 100
Shares Sold 61 25,000 74 25,000
Shares Issued from Reinvestment of Distributions 634 0 393 0
- -------------------------------------------------------------------------------------------------------------------
695 25,100 467 25,100
Shares Repurchased 0 (195) 0 (204)
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN FUND SHARES 695 24,905 467 24,896
===================================================================================================================
See Notes to Financial Statements
<PAGE>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
HEALTH SCIENCES FUND
Year Period
Ended Ended HIGH YIELD FUND
December 31 December 31 Year Ended December 31
- -------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
(Note 1)
OPERATIONS
Net Investment Income $ 4,656 $ 3,759 $ 3,373,382 $ 1,702,625
Net Realized Gain (Loss) on Investment Securities
and Foreign Currency Transactions 63,995 (16,056) 694,287 1,351,668
Change in Net Appreciation (Depreciation) of
Investment Securities and Foreign Currency
Transactions 369,979 33,763 (3,509,648) 69,593
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 438,630 21,466 558,021 3,123,886
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (4,154) 0 (3,379,839) (1,687,001)
Net Realized Gain on Investment Securities and
Foreign Currency Transactions (47,939) 0 (797,161) (1,250,049)
In Excess of Net Realized Gain on
Investment Securities and Foreign Currency
Transactions (13,061) 0 (380,864) 0
- -------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (65,154) 0 (4,557,864) (2,937,050)
- -------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 5,323,628 890,308 39,772,368 33,849,922
Reinvestment of Distributions 65,154 0 4,557,864 2,937,050
- -------------------------------------------------------------------------------------------------------------------
5,388,782 890,308 44,330,232 36,786,972
Amounts Paid for Repurchases of Shares (3,807,607) (489,816) (29,185,713) (20,131,245)
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 1,581,175 400,492 15,144,519 16,655,727
- -------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,954,651 421,958 11,144,676 16,842,563
NET ASSETS
Initial Subscription (Note 1) 0 1,000 0 0
Beginning of Period 422,958 0 30,880,914 14,038,351
- -------------------------------------------------------------------------------------------------------------------
End of Period $2,377,609 $ 422,958 $ 42,025,590 $ 30,880,914
===================================================================================================================
Accumulated Undistributed Net Investment
Income Included in Net Assets at End
of Period $ 277 $ 3,759 $ 6,969 $ 24,007
-------------------------------------------------------------
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1) 0 100 0 0
Shares Sold 403,110 85,755 3,145,683 2,645,545
Shares Issued from Reinvestment of Distributions 4,472 0 401,574 236,097
- -------------------------------------------------------------------------------------------------------------------
407,582 85,855 3,547,257 2,881,642
Shares Repurchased (290,418) (47,537) (2,310,193) (1,594,764)
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN FUND SHARES 117,164 38,318 1,237,064 1,286,878
===================================================================================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
REALTY FUND
INDUSTRIAL INCOME FUND Period Ended
Year Ended December 31 December 31
- ----------------------------------------------------------------------------------------------------------
1998 1997 1998
(Note 1)
<S> <C> <C> <C>
OPERATIONS
Net Investment Income $ 998,166 $ 650,284 $ 14,039
Net Realized Gain (Loss) on Investment Securities
and Foreign Currency Transactions 1,862,509 2,766,021 (66,609)
Change in Net Appreciation (Depreciation) of
Investment Securities and Foreign
Currency Transactions 4,286,624 3,726,765 (9,681)
- ----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS 7,147,299 7,143,070 (62,251)
- ----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (976,679) (621,902) (9,800)
Net Realized Gain on Investment Securities
and Foreign Currency Transactions (2,014,499) (2,199,803) 0
- ----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2,991,178) (2,821,705) (9,800)
- ----------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 24,505,640 27,309,883 604,356
Reinvestment of Distributions 2,989,373 2,821,705 9,800
- ----------------------------------------------------------------------------------------------------------
27,495,013 30,131,588 614,156
Amounts Paid for Repurchases of Shares (11,399,085) (16,701,751) (41,683)
- ----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 16,095,928 13,429,837 572,473
- ----------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 20,252,049 17,751,202 500,422
NET ASSETS
Initial Subscription (Note 1) 0 0 1,000
Beginning of Period 40,093,469 22,342,267 0
- ----------------------------------------------------------------------------------------------------------
End of Period $ 60,345,518 $40,093,469 $ 501,422
==========================================================================================================
Accumulated Undistributed Net Investment
Income Included in Net Assets at End of
Period $ 49,995 $ 28,673 $ 6,159
-------------------------------------------------------------
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1) 0 0 100
Shares Sold 1,350,082 1,689,472 64,719
Shares Issued from Reinvestment of Distributions 167,472 169,076 1,223
- ----------------------------------------------------------------------------------------------------------
1,517,554 1,858,548 66,042
Shares Repurchased (627,712) (1,064,382) (5,062)
- ----------------------------------------------------------------------------------------------------------
NET INCREASE IN FUND SHARES 889,842 794,166 60,980
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
SMALL COMPANY GROWTH FUND TECHNOLOGY FUND
Year Period Year Period
Ended Ended Ended Ended
December 31 December 31 December 31 December 31
- -----------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
(Note 1) (Note 1)
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ (3,352) $ 480 $ (1,065) $ 1,686
Net Realized Gain (Loss) on
Investment Securities and Foreign
Currency Transactions (41,761) (551) (90,677) 5,637
Change in Net Appreciation (Depreciation)
of Investment Securities and Foreign
Currency Transactions 152,667 (2,366) 291,455 (17,191)
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS 107,554 (2,437) 199,713 (9,868)
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 0 (621) 0
In Excess of Net Investment Income (579) 0 (1,061) 0
Net Realized Gain on Investment Securities
and Foreign Currency Transactions 0 0 (6,100) 0
- -----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (579) 0 (7,782) 0
- -----------------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 775,372 249,999 4,805,752 1,391,792
Reinvestment of Distributions 579 0 7,782 0
- -----------------------------------------------------------------------------------------------------------------------
775,951 249,999 4,813,534 1,391,792
Amounts Paid for Repurchases of Shares (93,382) (2,000) (3,842,652) (968,498)
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM FUND SHARE TRANSACTIONS 682,569 247,999 970,882 423,294
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 789,544 245,562 1,162,813 413,426
NET ASSETS
Initial Subscription (Note 1) 0 1,000 0 1,000
Beginning of Period 246,562 0 414,426 0
- -----------------------------------------------------------------------------------------------------------------------
End of Period $ 1,036,106 $ 246,562 $ 1,577,239 $ 414,426
=======================================================================================================================
Accumulated Undistributed (Distributions
in Excess of) Net Investment Income
Included in Net Assets at End of Period $ 0 $ 580 $ (3) $ 1,686
-------------------------------------------------------------
FUND SHARE TRANSACTIONS
Initial Subscription (Note 1) 0 100 0 100
Shares Sold 74,069 25,000 383,014 122,765
Shares Issued from Reinvestment of Distributions 55 0 607 0
- -----------------------------------------------------------------------------------------------------------------------
74,124 25,100 383,621 122,865
Shares Repurchased (9,027) (216) (309,738) (86,788)
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN FUND SHARES 65,097 24,884 73,883 36,077
=======================================================================================================================
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
TOTAL RETURN FUND UTILITIES FUND
- -----------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 733,314 $ 514,521 $ 93,355 $ 95,237
Net Realized Gain (Loss) on Investment Securities
and Foreign Currency Transactions 765,809 208,618 (4,109) 27,459
Change in Net Appreciation of Investment Securities
and Foreign Currency Transactions 1,112,812 2,541,805 1,193,668 643,128
- -----------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 2,611,935 3,264,944 1,282,914 765,824
- -----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (715,045) (465,401) (90,004) (91,300)
Net Realized Gain on Investment Securities and
Foreign Currency Transactions (742,991) (109,339) (9,475) (13,881)
In Excess of Net Realized Gain on Investment Securities
and Foreign Currency Transactions 0 0 (4,527) 0
- -----------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (1,458,036) (574,740) (104,006) (105,181)
- -----------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 16,770,585 17,640,610 2,414,172 2,682,154
Reinvestment of Distributions 1,458,036 574,740 104,006 105,181
- -----------------------------------------------------------------------------------------------------------------
18,228,621 18,215,350 2,518,178 2,787,335
Amounts Paid for Repurchases of Shares (7,020,045) (11,151,066) (1,292,282) (1,520,377)
- -----------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS 11,208,576 7,064,284 1,225,896 1,266,958
- -----------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 12,362,475 9,754,488 2,404,804 1,927,601
NET ASSETS
Beginning of Period 23,267,591 13,513,103 4,587,849 2,660,248
- -----------------------------------------------------------------------------------------------------------------
End of Period $ 35,630,066 $ 23,267,591 $6,992,653 $ 4,587,849
=================================================================================================================
Accumulated Undistributed Net Investment
Income Included in Net Assets at End of
Period $ 23,680 $ 5,271 $ 6,249 $ 2,424
-------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 1,020,295 1,194,193 152,400 203,031
Shares Issued from Reinvestment of Distributions 89,450 37,056 6,183 7,481
- -----------------------------------------------------------------------------------------------------------------
1,109,745 1,231,249 158,583 210,512
Shares Repurchased (432,444) (782,443) (83,915) (114,385)
- -----------------------------------------------------------------------------------------------------------------
NET INCREASE IN FUND SHARES 677,301 448,806 74,668 96,127
=================================================================================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
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 Funds: Growth Fund, Dynamics Fund, Health Sciences
Fund, High Yield Fund, Industrial Income Fund, Realty Fund, Small Company Growth
Fund, Technology Fund, Total Return Fund and Utilities Fund. On August 4, 1998,
the board of directors of the Fund approved a name change for each separate Fund
from Portfolio to Fund. The investment objectives of the Funds are: To seek
long-term capital growth for Growth and Small Company Growth Funds; to seek
appreciation of capital for Dynamics Fund; to seek capital appreciation and
income on securities principally engaged in specific business sectors for Health
Sciences, Realty and Technology Funds; to seek a high level of current income by
investing primarily in lower rated bonds, other debt securities and preferred
stock for High Yield Fund; to seek the best possible current income for
Industrial Income Fund; to seek a high total return on investment through
capital appreciation and current income for Total Return Fund; and to seek
capital appreciation and income on securities of companies principally engaged
in public utilities for Utilities Fund. Growth, Dynamics and Small Company
Growth Funds commenced investment operations on August 25, 1997. Health
Sciences, Realty and Technology Funds commenced investment operations on May 22,
1997, April 1, 1998 and May 21, 1997, respectively. The Fund is registered under
the Investment Company Act of 1940 (the "Act") as a diversified, open-end
management investment company. The Fund's shares are not offered directly to the
public but are sold exclusively to life insurance companies ("Participating
Insurance Companies") as a pooled funding vehicle for variable annuity and
variable life insurance contracts issued by separate accounts of the
Participating Insurance Companies.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A.SECURITY VALUATION -- Equity securities traded on national securities
exchanges or in the over-the- counter market are valued at the last sales
price in the market where such securities are primarily traded. If last sales
prices are not available, securities are valued at the highest closing bid
price obtained from one or more dealers making a market for such securities or
by a pricing service approved by the Fund's board of directors.
Debt securities are valued at evaluated bid prices as determined by a
pricing service approved by the Fund's board of directors. If evaluated bid
prices are not available, debt securities are valued by averaging the bid
prices obtained from one or more dealers making a market for such securities.
Foreign securities are valued at the closing price on the principal stock
exchange on which they are traded. In the event that closing prices are not
available for foreign securities, prices will be obtained from the principal
stock exchange at or prior to the close of the New York Stock Exchange.
Foreign currency exchange rates are determined daily prior to the close of the
New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
under procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which approximates
market value) if maturity is 60 days or less at the time of purchase, or
market value if maturity is greater than 60 days.
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.
B.WHEN-ISSUED SECURITIES -- When-issued securities held by the Fund are fully
collateralized by other securities which are notated in the Statement of
Investment Securities. Such collateral is in the possession of the Fund's
custodian. The collateral is evaluated daily to ensure its market value equals
or exceeds the current market value of the when-issued securities.
<PAGE>
C.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.
D.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. Income and expenses on foreign
securities are translated into U.S dollars at rates of exchange prevailing
when accrued. Interest on payment-in-kind debt securities is accrued based on
the yield to maturity at purchase date based on the effective interest method.
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. The cost of foreign
securities is translated into U.S. dollars at the rates of exchange prevailing
when such securities are acquired.
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 Fund 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.
A 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 US. Government.
E.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, 1998, Dynamics, Realty, Small Company Growth,
Technology and Utilities Funds had $1,818, $30,852, $39,306, $85,392 and
$5,000, respectively, in net capital loss carryovers which expire in the year
2006 and Small Company Growth Fund had $555 in net capital loss carryovers
which expire in the year 2005.
Dynamics, High Yield, Realty and Small Company Growth Funds incurred and
elected to defer post-October 31 net capital losses of $2,300, $369,771,
$15,053 and $121, respectively, to the year ended December 31, 1999. To the
extent future capital gains are offset by capital loss carryovers, such gains
will not be distributed to shareholders.
<PAGE>
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, 1998, amounts
qualifying for the dividends received deduction available to the Fund's
corporate shareholders were as follows:
Qualifying
Fund Percentage
- --------------------------------------------------------------------------------
Growth Fund 12.82%
Dynamics Fund 9.77%
Health Sciences Fund 1.58%
High Yield Fund 0.37%
Industrial Income Fund 29.90%
Realty Fund 13.31%
Small Company Growth Fund 34.66%
Technology Fund 2.34%
Total Return Fund 42.54%
Utilities Fund 86.54%
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.
F.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 period ended December 31, 1998, the effects of such differences were
as follows:
Accumulated
Accumulated Undistributed
Undistributed Net Realized
Net Gain on
Investment Investment Paid-in
Fund Income Securities Capital
- --------------------------------------------------------------------------------
Growth Fund $ 227 $ (170) $ (57)
Dynamics Fund 1,757 0 (1,757)
Health Sciences Fund (3,984) 4,131 (147)
High Yield Fund (10,581) 11,055 (474)
Industrial Income Fund (165) 165 0
Realty Fund 1,920 (1,920) 0
Small Company Growth Fund 3,351 0 (3,351)
Technology Fund 1,058 115 (1,173)
Total Return Fund 140 (260) 120
Utilities Fund 474 (474) 0
Net investment income, net realized gains and net assets were not affected.
<PAGE>
G.ORGANIZATION COSTS -- In accordance with Statement of Position 98-5
"Reporting on the Costs of Start-Up Activities", organization costs of $73,640
advanced by INVESCO Funds Group, Inc. ("IFG") for High Yield, Industrial
Income, Total Return and Utilities Funds 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.
H.EXPENSES -- Each of the Funds bears expenses incurred specifically on its
behalf and, in addition, each Fund bears a portion of general expenses, based
on the relative net assets of each Fund.
Under an agreement between each Fund 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 Funds'
investment adviser. As compensation for its services to each 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 Fund's average net
assets as follows:
<TABLE>
<CAPTION>
AVERAGE NET ASSETS
- --------------------------------------------------------------------------------------------------
$0 to $0 to $350 to $500 Million Over Over
$350 $500 $700 to $1 $700 $1
Fund Million Million Million Billion Million Billion
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dynamics Fund 0.60% -- 0.55% -- 0.50% --
Health Sciences Fund 0.75% -- 0.65% -- 0.55% --
High Yield Fund -- 0.60% -- 0.55% -- 0.45%
Industrial Income Fund -- 0.75% -- 0.65% -- 0.55%
Realty Fund -- 0.90% -- 0.75% -- 0.65%
Small Company Growth Fund 0.75% -- 0.65% -- 0.55% --
Technology Fund 0.75% -- 0.65% -- 0.55% --
Total Return Fund -- 0.75% -- 0.65% -- 0.55%
Utilities Fund -- 0.60% -- 0.55% -- 0.45%
</TABLE>
The fee for Growth Fund 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
Growth, Dynamics, Health Sciences, High Yield, Industrial Income, Small Company
Growth, Technology and Utilities Funds were made by ITC. Fees for such
sub-advisory services were paid by IFG. Effective February 4, 1998, such
responsibilities were transferred to IFG. A separate Sub-Advisory Agreement
between IFG and INVESCO Realty Advisors, Inc. ("IRAI"), an affiliate of IFG,
provides that investment decisions of Realty Fund are made by IRAI. A separate
Sub-Advisory Agreement between IFG and INVESCO Capital Management, Inc. ("ICM"),
an affiliate of IFG, provides that investment decisions of Total Return Fund are
made by ICM. Fees for such sub-advisory services are paid by IFG.
IFG receives a transfer agent fee of $5,000 per Fund per year. The fee is paid
monthly at one-twelfth of the annual fee.
In accordance with an Administrative Agreement, each Fund pays IFG an annual
fee of $10,000 (the "Base Fee"), plus an additional amount computed at an annual
rate of 0.015% of average net assets plus, effective July 6, 1998, an additional
amount computed at an annual rate of 0.25% of gross new sales (the "Incremental
Fees") to provide administrative, accounting and clerical services. The fee is
accrued daily and paid monthly. IFG may pay all or a portion of the Base Fee and
the Incremental Fees to other companies that assist in providing the services.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by each Fund.
<PAGE>
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the period ended
December 31, 1998, 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:
Fund Purchases Sales
- --------------------------------------------------------------------------------
Growth Fund $ 231,618 $ 244,969
Dynamics Fund 140,015 160,368
Health Sciences Fund 2,680,748 1,271,071
High Yield Fund 100,962,280 87,854,859
Industrial Income Fund 47,951,159 34,692,790
Realty Fund 1,176,846 703,817
Small Company Growth Fund 912,432 326,696
Technology Fund 2,243,353 1,500,032
Total Return Fund 10,394,828 1,858,163
Utilities Fund 2,571,332 1,720,301
For the year ended December 31, 1998, the aggregate cost of purchases and
proceeds from sales of U.S. Government securities for Total Return Fund were
$4,577,872 and $2,790,063, respectively. There were no purchases or sales of
U.S. Government securities in any other Fund.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At December 31, 1998, 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 Fund were as
follows:
Net
Gross Gross Appreciation
Fund Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------
Growth Fund $ 100,075 $ 1,430 $ 98,645
Dynamics Fund 88,436 28,444 59,992
Health Sciences Fund 395,801 990 394,811
High Yield Fund 381,282 3,505,794 (3,124,512)
Industrial Income Fund 11,449,197 1,403,058 10,046,139
Realty Fund 6,534 38,839 (32,305)
Small Company Growth Fund 159,673 11,801 147,872
Technology Fund 280,365 11,735 268,630
Total Return Fund 6,325,651 1,240,594 5,085,057
Utilities Fund 2,002,770 64,607 1,938,163
NOTE 5 -- TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG, ICM or IRAI.
The Fund has adopted an unfunded defined benefit 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 were based on an annual rate equal to 40% of the
retainer fee at the time of retirement. As of July 1, 1998, benefits are based
on an annual rate of 50% of the sum of the retainer fee at the time of
retirement plus the annual meeting fee.
<PAGE>
Pension expenses for the period ended December 31, 1998, included in
Directors' Fees and Expenses in the Statement of Operations, and unfunded
accrued pension costs and pension liability included in Prepaid Expenses and
Accrued Expenses, respectively, in the Statement of Assets and Liabilities were
as follows:
Unfunded
Pension Accrued Pension
Fund Expenses Pension Costs Liability
- --------------------------------------------------------------------------------
Growth Fund $ 1 $ 7 $ 8
Dynamics Fund 1 5 6
Health Sciences Fund 6 47 53
High Yield Fund 493 738 1,524
Industrial Income Fund 745 1,064 2,245
Small Company Growth Fund 1 9 10
Technology Fund 2 16 19
Total Return Fund 417 643 1,363
Utilities Fund 81 107 217
Pension expenses, unfunded accrued pension costs and pension liability were
insignificant for Realty Fund.
The independent directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of selected INVESCO
Funds. The deferred amounts are being invested in the shares of certain of the
INVESCO and Treasurer's Series Trust Funds.
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
Fund. Each Fund 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, 1998, there were no such borrowings.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders 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. (the "Fund") at December 31, 1998, the
results of each of their operations for each of the periods indicated, the
changes in each of their net assets for each of the periods indicated 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, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
/s/PricewaterhouseCoopers LLP
- -------------------------------
Denver, Colorado
January 29, 1999
<PAGE>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS -- GROWTH FUND
(For a Fund Share Outstanding Throughout Each Period)
Year Period
Ended Ended
December 31 December 31
- --------------------------------------------------------------------------------
1998 1997(a)
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 10.69 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.00 0.05
Net Gains on Securities (Both Realized and Unrealized) 4.14 0.64
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 4.14 0.69
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.04 0.00
In Excess of Net Investment Income 0.01 0.00
Distributions from Capital Gains 0.29 0.00
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.34 0.00
- --------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 14.49 $ 10.69
================================================================================
TOTAL RETURN(b) 38.99% 6.90%(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 371 $ 266
Ratio of Expenses to Average Net Assets(d)(e) 1.57% 0.29%(f)
Ratio of Net Investment Income (Loss) to
Average Net Assets(d) (0.07%) 1.45%(f)
Portfolio Turnover Rate 78% 12%(c)
(a) From August 25, 1997, commencement of investment operations, through
December 31, 1997.
(b) 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.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended December 31, 1998 and all of the expenses of the Fund were
voluntarily absorbed by IFG for the period ended December 31, 1997. If such
expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 12.04% and 28.76% (annualized), respectively,
and ratio of net investment loss to average net assets would have been
(10.54%) and (27.02%) (annualized), respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
<PAGE>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- DYNAMICS FUND
(For a Fund Share Outstanding Throughout Each Period)
Year Period
Ended Ended
December 31 December 31
- --------------------------------------------------------------------------------
1998 1997(a)
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 10.34 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.00 0.02
Net Gains on Securities (Both Realized and Unrealized) 1.98 0.32
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.98 0.34
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.02 0.00
Distributions from Capital Gains 0.15 0.00
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.17 0.00
- --------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 12.15 $ 10.34
================================================================================
TOTAL RETURN(b) 19.35% 3.40%(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 308 $ 257
Ratio of Expenses to Average Net Assets(d)(e) 1.45% 0.52%(f)
Ratio of Net Investment Income (Loss) to
Average Net Assets(d) (0.64%) 0.63%(f)
Portfolio Turnover Rate 55% 28%(c)
(a) From August 25, 1997, commencement of investment operations, through
December 31, 1997.
(b) 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.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended December 31, 1998 and all of the expenses of the Fund were
voluntarily absorbed by IFG for the period ended December 31, 1997. If such
expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 14.76% and 34.18% (annualized), respectively,
and ratio of net investment loss to average net assets would have been
(13.95%) and (33.03%) (annualized), respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
<PAGE>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- HEALTH SCIENCES FUND
(For a Fund Share Outstanding Throughout Each Period)
Year Period
Ended Ended
December 31 December 31
- --------------------------------------------------------------------------------
1998(a) 1997(b)
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 11.04 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.05 0.10
Net Gains on Securities
(Both Realized and Unrealized) 4.66 0.94
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 4.71 1.04
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.03 0.00
Distributions from Capital Gains 0.34 0.00
In Excess of Net Realized Gains 0.09 0.00
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.46 0.00
- --------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 15.29 $ 11.04
================================================================================
TOTAL RETURN(c) 42.85% 10.40%(d)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 2,378 $ 423
Ratio of Expenses to Average Net Assets(e)(f) 1.27% 0.60%(g)
Ratio of Net Investment Income to
Average Net Assets(e) 0.35% 2.34%(g)
Portfolio Turnover Rate 107% 112%(d)
(a) The per share information was computed based on average shares.
(b) From May 22, 1997, commencement of investment operations, through December
31, 1997.
(c) 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.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended December 31, 1998 and all of the expenses of the Fund were
voluntarily absorbed by IFG for the period ended December 31, 1997. If such
expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 4.20% and 21.45% (annualized), respectively, and
ratio of net investment loss to average net assets would have been (2.58%)
and (18.51%) (annualized), respectively.
(f) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(g) Annualized
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- HIGH YIELD FUND
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
Year Ended December 31 December 31
- -------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 12.46 $ 11.78 $ 11.04 $ 10.01 $ 10.00
- -------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.97 0.78 0.72 0.55 0.05
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.80) 1.26 1.11 1.43 0.01
- -------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.17 2.04 1.83 1.98 0.06
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.98 0.78 0.71 0.55 0.05
Distributions from Capital Gains 0.23 0.58 0.38 0.40 0.00
In Excess of Net Realized Gains 0.11 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 1.32 1.36 1.09 0.95 0.05
- -------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 11.31 $ 12.46 $ 11.78 $ 11.04 $ 10.01
=======================================================================================================
TOTAL RETURN(b) 1.42% 17.33% 16.59% 19.76% 0.60%(c)
RATIOS
Net Assets -- End of Period
($000 Omitted) $ 42,026 $ 30,881 $ 14,033 $ 5,233 $ 624
Ratio of Expenses to
Average Net Assets(d) 0.85%(e) 0.83%(e) 0.87%(e) 0.97%(e) 0.74%(f)
Ratio of Net Investment Income to
Average Net Assets(d) 8.99% 8.67% 9.19% 8.79% 2.72%(f)
Portfolio Turnover Rate 245% 344% 380% 310% 23%(c)
(a) From May 27, 1994, commencement of investment operations, through December
31, 1994.
(b) 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 periods shown.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund 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 (loss) to average net
assets would have been 8.56%, 8.74%, 7.05% and (26.92%), respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- INDUSTRIAL INCOME FUND
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
Year Ended December 31 December 31
- -------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 17.04 $ 14.33 $ 12.58 $ 10.09 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.33 0.30 0.28 0.19 0.03
Net Gains on Securities
(Both Realized and Unrealized) 2.23 3.71 2.52 2.76 0.09
- -------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.56 4.01 2.80 2.95 0.12
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.32 0.29 0.28 0.20 0.03
Distributions from Capital Gains 0.67 1.01 0.77 0.26 0.00
- -------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.99 1.30 1.05 0.46 0.03
- -------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 18.61 $ 17.04 $ 14.33 $ 12.58 $ 10.09
=============================================================================================================
TOTAL RETURN(b) 15.30% 28.17% 22.28% 29.25% 1.23%(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 60,346 $ 40,093 $ 22,342 $ 8,362 $ 525
Ratio of Expenses to Average Net Assets(d) 0.93%(e) 0.91%(e) 0.95%(e) 1.03%(e) 0.79%(f)
Ratio of Net Investment
Income to Average Net Assets(d) 1.98% 2.18% 2.87% 3.50% 1.69%(f)
Portfolio Turnover Rate 73% 87% 93% 97% 0%(c)
(a) From August 10, 1994, commencement of investment operations, through
December 31, 1994.
(b) 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 periods shown.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended December 31, 1998, 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 0.93%, 0.97%, 1.19%, 2.31%
and 32.55% (annualized), respectively, and ratio of net investment income
(loss) to average net assets would have been 1.98%, 2.12%, 2.63%, 2.22% and
(30.07%) (annualized), respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
</TABLE>
<PAGE>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- REALTY FUND
(For a Fund Share Outstanding Throughout the Period)
Period
Ended
December 31
- --------------------------------------------------------------------------------
1998(a)
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.29
Net Losses on Securities (Both Realized and Unrealized) (1.88)
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (1.59)
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.19
- --------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 8.22
================================================================================
TOTAL RETURN(b) (15.88%)(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 501
Ratio of Expenses to Average Net Assets(d)(e) 1.90%(f)
Ratio of Net Investment Income to Average Net Assets(d) 4.94%(f)
Portfolio Turnover Rate 200%(c)(g)
(a) From April 1, 1998, commencement of investment operations, through December
31, 1998.
(b) 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.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the
period ended December 31, 1998. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 8.54%
(annualized) and ratio of net investment loss to average net assets would
have been (1.70%) (annualized).
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
(g) Portfolio turnover was greater than expected during this period due to
active trading undertaken in response to market conditions at a time when
the Fund's assets were still relatively small and before the Fund was fully
invested.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- SMALL COMPANY GROWTH FUND
(For a Fund Share Outstanding Throughout Each Period)
Year Period
Ended Ended
December 31 December 31
- ---------------------------------------------------------------------------------------------------------------
1998 1997(a)
<S> <C> <C>
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 9.91 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.01) 0.02
Net Gains or (Losses) on Securities (Both Realized and Unrealized) 1.62 (0.11)
- ---------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.61 (0.09)
- ---------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS-
In Excess of Net Investment Income 0.01 0.00
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 11.51 $ 9.91
===============================================================================================================
TOTAL RETURN(b) 16.38% (0.90%)(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 1,036 $ 247
Ratio of Expenses to Average Net Assets(d)(e) 1.87% 0.61%(f)
Ratio of Net Investment Income (Loss) to Average Net Assets(d) (0.90%) 0.52%(f)
Portfolio Turnover Rate 92% 25%(c)
(a) From August 25, 1997, commencement of investment operations, to December
31, 1997.
(b) 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.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended December 31, 1998 and all of the expenses of the Fund were
voluntarily absorbed by IFG for the period ended December 31, 1997. If such
expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 12.46% and 35.99%, respectively, and ratio of
net investment loss to average net assets would have been (11.49%) and
(34.86%), respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- TECHNOLOGY FUND
(For a Fund Share Outstanding Throughout Each Period)
Year Period
Ended Ended
December 31 December 31
- --------------------------------------------------------------------------------------------------------------
1998 1997(a)
<S> <C> <C>
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 11.49 $ 10.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.03) 0.05
Net Gains on Securities (Both Realized and Unrealized) 2.96 1.44
- --------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.93 1.49
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.01 0.00
In Excess of Net Investment Income 0.01 0.00
Distributions from Capital Gains 0.06 0.00
- --------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.08 0.00
- --------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 14.34 $ 11.49
==============================================================================================================
TOTAL RETURN(b) 25.69% 14.80%(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 1,577 $ 414
Ratio of Expenses to Average Net Assets(d)(e) 1.40% 0.48%(f)
Ratio of Net Investment Income (Loss) to Average Net Assets(d) (0.14%) 0.95%(f)
Portfolio Turnover Rate 239% 102%(c)
(a) From May 21, 1997, commencement of investment operations, to December 31,
1997.
(b) 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.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the year
ended December 31, 1998 and all of the expenses of the Fund were
voluntarily absorbed by IFG for the period ended December 31, 1997. If such
expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 6.47% and 19.25%, respectively, and ratio of net
investment loss to average net assets would have been (5.21%) and (17.82%),
respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- TOTAL RETURN FUND
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
Year Ended December 31 December 31
- -------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 15.81 $ 13.21 $ 12.14 $ 10.09 $ 10.00
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.37 0.36 0.36 0.25 0.09
Net Gains on Securities
(Both Realized and Unrealized) 1.13 2.66 1.12 2.05 0.09
- -------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.50 3.02 1.48 2.30 0.18
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.36 0.34 0.36 0.24 0.09
In Excess of Net Investment Income 0.00 0.00 0.05 0.00 0.00
Distributions from Capital Gains 0.37 0.08 0.00 0.01 0.00
- -------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.73 0.42 0.41 0.25 0.09
- -------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 16.58 $ 15.81 $ 13.21 $ 12.14 $ 10.09
=============================================================================================================
TOTAL RETURN(b) 9.56% 22.91% 12.18% 22.79% 1.75%(c)
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 35,630 $ 23,268 $ 13,513 $ 6,553 $ 1,055
Ratio of Expenses to Average Net Assets(d) 1.01%(e) 0.92%(e) 0.94%(e) 1.01%(e) 0.86%(f)
Ratio of Net
Investment Income to Average Net Assets(d) 2.50% 3.07% 3.44% 3.91% 3.86%(f)
Portfolio Turnover Rate 17% 27% 12% 5% 0%(c)
(a) From June 2, 1994, commencement of investment operations, through December
31, 1994.
(b) 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 periods shown.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended December 31, 1998, 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 1.01%, 1.10%, 1.30%, 2.51%
and 16.44% (annualized), respectively, and ratio of net investment income
(loss) to average net assets would have been 2.50%, 2.89%, 3.08%, 2.41% and
(11.72%) (annualized), respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Variable Investment Funds, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED) -- UTILITIES FUND
(For a Fund Share Outstanding Throughout Each Period)
Period
Ended
Year Ended December 31 December 31
- -------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994(a)
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 14.40 $ 11.95 $ 10.84 $ 10.00 $ 10.00
- -------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.25 0.31 0.13 0.07 0.00
Net Gains on Securities
(Both Realized and Unrealized) 3.41 2.48 1.26 0.84 0.00
- -------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.66 2.79 1.39 0.91 0.00
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.24 0.29 0.13 0.07 0.00
In Excess of Net Investment Income 0.00 0.00 0.01 0.00 0.00
Distributions from Capital Gains 0.03 0.05 0.14 0.00 0.00
In Excess of Net Realized Gains 0.01 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.28 0.34 0.28 0.07 0.00
- -------------------------------------------------------------------------------------------------------------
Net Asset Value -- End of Period $ 17.78 $ 14.40 $ 11.95 $ 10.84 $ 10.00
TOTAL RETURN(b) 25.48% 23.41% 12.76% 9.08% 0.00%
RATIOS
Net Assets -- End of Period ($000 Omitted) $ 6,993 $ 4,588 $ 2,660 $ 290 $ 25
Ratio of Expenses to Average Net Assets(c) 1.08%(d) 0.99%(d) 1.16%(d) 1.80%(d) 0.00%
Ratio of Net Investment Income
to Average Net Assets(c) 1.73% 2.92% 2.92% 2.47% 0.00%
Portfolio Turnover Rate 35% 33% 48% 24% 0%
</TABLE>
(a) All of the expenses for the Fund were voluntarily absorbed by IFG for the
period ended December 31, 1994, since investment operations did not
commence during 1994.
(b) 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 periods shown.
(c) Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended December 31, 1998, 1997, 1996 and 1995. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have
been 1.60%, 2.07%, 5.36% and 57.13%, respectively, and ratio of net
investment income (loss) to average net assets would have been 1.21%,
1.84%, (1.28%) and (52.86%), respectively.
(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
<PAGE>
INVESCO
YOU SHOULD
KNOW WHAT
INVESCO KNOWS (TM)
INVESCO Distributors, Inc., (SM) Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied by a
current prospectus.
Printed on recycled paper.
