As filed with the Securities and Exchange Commission on April 12, 2001
1933 Act Registration No. 33-57340
1940 Act Registration No. 811-7452
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
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Post-Effective Amendment No. 19 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 19 X
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(Check appropriate box or boxes.)
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Copy to:
Nancy L. Martin, Esquire
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective (check appropriate box)
If appropriate, check the following:
X This post-effective amendment designates a new effective date for a ----- previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
AIM VARIABLE INSURANCE
FUNDS
AIM--REGISTERED TRADEMARK--
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. High Yield Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Value Fund
Shares of the funds are currently offered only to insurance company separate accounts. The investment objective of each fund is described under the heading "Investment Objectives and Strategies."
PROSPECTUS
MAY 1, 2001
This prospectus contains important
information. Please
read it before investing and keep it
for future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this Prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the
AIM V.I. Money Market Fund will be
able to maintain a stable net asset
value of $1.00 per share.
Investments in the funds:
- are not FDIC insured;
- may lose value; and
- are not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
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INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUNDS 5 ------------------------------------------------ PERFORMANCE INFORMATION 9 ------------------------------------------------ Annual Total Returns 9 Performance Tables 18 FUND MANAGEMENT 24 ------------------------------------------------ The Advisors 24 Advisor Compensation 24 Portfolio Managers 24 OTHER INFORMATION 27 ------------------------------------------------ Purchase and Redemption of Shares 27 Pricing of Shares 27 Taxes 27 Dividends and Distributions 27 Future Fund Closure 27 FINANCIAL HIGHLIGHTS 28 ------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------ |
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet Connect are service marks of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
The investment objective(s) of each fund may be changed by the Board of Trustees without shareholder approval. Any percentage limitations with respect to assets of a fund are applied at the time of purchase.
AIM V.I. AGGRESSIVE GROWTH FUND
The fund's investment objective is to achieve long-term growth of capital.
The fund seeks to meet its objective by investing primarily in common stocks, convertible bonds, convertible preferred stocks and warrants of small- and medium-sized companies whose earnings the fund's portfolio managers expect to grow more than 15% per year. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on companies they believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. BALANCED FUND
The fund's investment objective is to achieve as high a total return as possible, consistent with preservation of capital.
The fund seeks to meet its objective by investing in a broadly diversified portfolio of high-yielding securities, including common stocks, preferred stocks, convertible securities and bonds. The fund normally invests a minimum of 30% and a maximum of 70% of its total assets in equity securities and a minimum of 30% and a maximum of 70% of its total assets in non-convertible debt securities. The fund may also invest up to 25% of its total assets in convertible securities. The fund may invest up to 10% of its total assets in lower-quality debt securities, i.e., "junk bonds." The fund may also invest up to 25% of its total assets in foreign securities.
In selecting the percentages of assets to be invested in equity or debt securities, the portfolio managers consider such factors as general market and economic conditions, as well as trends, yields, interest rates and changes in fiscal and monetary policies. The portfolio managers will primarily purchase equity securities for growth of capital and debt securities for income purposes. However, the portfolio managers will focus on companies whose securities have the potential for both growth of capital and income generation. The portfolio managers consider whether to sell a particular security when they believe that security no longer has that potential.
AIM V.I. BLUE CHIP FUND
The fund's primary investment objective is long-term growth of capital with a secondary objective of current income.
The fund seeks to meet its objectives by investing at least 65% of its total assets in the common stocks of blue chip companies. Blue chip companies are those companies that the fund's portfolio managers believe have the potential for above-average growth in earnings and that are well-established in their respective industries. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. The fund may invest in United States government securities, convertible securities and high-quality debt securities when the portfolio managers believe securities other than common stocks offer the opportunity for long-term growth of capital and current income. The fund may also invest up to 25% of its total assets in foreign securities.
AIM V.I. CAPITAL APPRECIATION FUND
The fund's investment objective is growth of capital.
The fund seeks to meet its objective by investing principally in common stocks of companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes as well as those that have experienced above-average, long-term growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes. The fund may also invest up to 25% of its total assets in foreign securities.
AIM V.I. CAPITAL DEVELOPMENT FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing primarily in securities, including common stocks, convertible securities and bonds, of small- and medium-sized companies. The fund may also invest up to 25% of its total assets in foreign securities.
Among factors which the portfolio managers may consider when purchasing these securities are: (1) the growth prospects for a company's products; (2) the economic outlook for its industry; (3) a company's new product development; (4) its operating management capabilities; (5) the relationship between the price of the security and its estimated fundamental value; (6) relevant market, economic and political environments; and (7) financial characteristics, such as balance sheet analysis and return on assets. The portfolio managers consider whether to sell a particular security when any one of these factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing in securities of companies that are likely to benefit from changing demographic, economic and lifestyle trends. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers purchase securities of companies that have experienced, or that they believe have the potential for, above-average, long-term growth in revenues and earnings. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential.
AIM V.I. DIVERSIFIED INCOME FUND
The fund's investment objective is to achieve a high level of current income.
The fund seeks to meet its objective by investing primarily in (1) domestic and foreign corporate debt securities; (2) U.S. Government securities, including U.S. Government agency mortgage-backed securities; (3) securities issued by foreign governments, their agencies or instrumentalities; and (4) lower-quality debt securities, i.e., "junk bonds," of U.S. and foreign companies. The fund's assets will normally be invested in each of these four sectors, however the fund may invest up to 100% of its total assets in U.S. Government securities.
The fund may invest up to 50% of its total assets in foreign securities, including securities of issuers located in developing countries. The fund may invest up to 25% of its total assets in government securities of any one foreign country. The fund may also invest up to 10% of its total assets in equity securities and convertible debt securities of U.S. and foreign companies. The fund may invest in debt obligations issued by certain supranational entities, such as the World Bank.
The portfolio managers focus on securities that they believe have favorable prospects for current income, whether denominated in the U.S. dollar or in other currencies. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. GLOBAL UTILITIES FUND
The fund's investment objective is to achieve a high total return.
The fund seeks to meet its objective by investing, normally, at least 65% of its total assets in securities of domestic and foreign public utility companies. The fund may also invest in non-utility securities, but generally will invest in securities of companies that derive revenues from utility-related activities such as providing services, equipment or fuel sources to utilities. Such companies may include those that provide maintenance services to electric, telephone or natural gas utilities, companies that provide energy sources such as coal or uranium, fuel service and equipment companies, companies that provide pollution control for water utilities, and companies that build pipelines or turbines which help produce electricity.
The fund may invest up to 80% of its total assets in foreign securities, including securities of issuers located in developing countries. Developing countries are those countries that are in the initial stages of their industrial cycles. The fund will normally invest in the securities of companies located in at least four different countries, including the United States. The fund may invest up to 25% of its total assets in convertible securities. The fund may also invest up to 25% of its total assets in non-convertible bonds. The fund may invest up to 10% of its total assets in lower-quality debt securities, i.e., "junk bonds."
The fund is a non-diversified portfolio. With respect to 50% of its total assets, it is permitted to invest more than 5% of its assets in the securities of any one issuer. The portfolio managers focus on securities that have favorable prospects for high total return. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions the fund may invest up to 100% of its total assets in securities of U.S. issuers.
AIM V.I. GOVERNMENT SECURITIES FUND
The fund's investment objective is to achieve a high level of current income consistent with reasonable concern for safety of principal.
The fund seeks to meet its objective by investing in debt securities issued, guaranteed or otherwise backed by the United States Government. The fund may invest in securities of all maturities issued or guaranteed by the U.S. Government or its agencies and instrumentalities, including: (1) U.S. Treasury obligations, and (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities and supported by (a) the full faith and credit of the U.S. Treasury, (b) the right of the issuer to borrow from the U.S. Treasury, or (c) the credit of the agency or instrumentality. The fund intends to maintain a dollar-weighted average portfolio maturity of between three and ten years. The fund may invest in high-coupon U.S. Government agency mortgage-backed securities, which consist of interests in underlying mortgages with maturities of up to thirty years. The fund may also invest up to 20% of its total assets in foreign securities.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concern for safety of principal. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. GROWTH FUND
The fund's investment objective is to seek growth of capital.
The fund seeks to meet its objective by investing principally in seasoned and better capitalized companies considered to have strong earnings momentum. The fund may also invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. GROWTH AND INCOME FUND
The fund's primary investment objective is growth of capital with a secondary objective of current income.
The fund seeks to meet its objectives by investing at least 65% of its total assets in securities of established companies that have long-term above-average growth in earnings and dividends, and growth companies that the portfolio managers believe have the potential for above-average growth in earnings and dividends. The portfolio managers consider whether to sell a particular security when they believe the security no longer has that potential. The fund may also invest up to 25% of its total assets in foreign securities.
AIM V.I. HIGH YIELD FUND
The fund's investment objective is to achieve a high level of current income.
The fund seeks to meet its objective by investing at least 65% of the value of its assets in publicly traded, lower-quality debt securities, i.e., "junk bonds." The fund will invest principally in junk bonds rated B or above by Moody's Investors Service, Inc. or Standard & Poor's Ratings Services or deemed by the portfolio managers to be of comparable quality. The fund will invest at least 80% of its total assets in debt securities, including convertible debt securities and/or cash or cash equivalents. The fund may also invest in preferred stock. The fund may invest up to 25% of its total assets in foreign securities.
Although the portfolio managers focus on debt securities that they believe have favorable prospects for high current income, they also consider the possibility of growth of capital of the security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs and brokerage commissions, both of which can lower the actual return on your investment.
AIM V.I. INTERNATIONAL EQUITY FUND
The fund's investment objective is to provide long-term growth of capital.
The fund seeks to meet its objective by investing in a diversified portfolio of international equity securities whose issuers are considered to have strong earnings momentum. The fund intends to invest at least 70% of its total assets in marketable equity securities of foreign companies that are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. The fund will normally invest in companies located in at least four countries outside of the United States, emphasizing investment in companies in the developed countries of Western Europe and the Pacific Basin. The fund may invest up to 20% of its total assets in securities of issuers located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of foreign companies.
The portfolio managers focus on companies that have experienced above-average, long-term growth in earnings and have strong prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes.
AIM V.I. MONEY MARKET FUND
The fund's investment objective is to provide as high a level of current income as is consistent with the preservation of capital and liquidity.
The fund seeks to meet its objective by investing only in high-quality U.S. dollar-denominated short-term obligations, including:
- securities issued by the U.S. Government or its agencies
- foreign government obligations
- bankers' acceptances, certificates of deposit, and time deposits from U.S. or foreign banks
- repurchase agreements
- commercial paper
- taxable municipal securities
- master notes
- cash equivalents
The fund may invest up to 50% of its total assets in U.S. dollar-denominated securities of foreign issuers. The fund may invest up to 100% of its total assets in obligations issued by banks.
The portfolio managers focus on securities that they believe have favorable prospects for current income, consistent with their concerns for preservation of capital and liquidity. The portfolio managers usually hold portfolio securities to maturity, but may sell a particular security when they deem it advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash or shares of affiliated money market funds. As a result, the fund may not achieve its investment objective.
AIM V.I. NEW TECHNOLOGY FUND (FORMERLY, AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND)
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing at least 65% of its total assets in equity securities of technology and science
companies the portfolio managers believe are likely to benefit from new or innovative products, services or processes. Such companies include those that develop, manufacture, or sell computer and electronic components and equipment, software, semiconductors, Internet technology, communications services and equipment, mobile communications, broadcasting, healthcare and medical technology, and biotechnology and medical devices. The securities may include common stocks, convertible bonds, convertible preferred stocks and warrants. While the fund will invest without regard to market capitalization, the fund expects to invest a significant portion of its assets in securities of small cap companies. Under normal conditions, the top 10 holdings may comprise up to one third of the fund's total assets. The fund may also invest up to 25% of its total assets in foreign securities.
In analyzing specific companies for possible investment, the portfolio
managers ordinarily look for several of the following characteristics:
above-average per share earnings growth; high return on invested capital; a
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research; product
development and marketing; development of new technologies; efficient service;
pricing flexibility; strong management; and general operating characteristics
that will enable the companies to compete successfully in their respective
markets. The portfolio managers consider whether to sell a particular security
when any of these factors materially changes.
The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment.
AIM V.I. VALUE FUND
The fund's investment objective is to achieve long-term growth of capital. Income is a secondary objective.
The fund seeks to meet its objectives by investing primarily in equity securities judged by the fund's investment advisor to be undervalued relative to the investment advisor's appraisal of the current or projected earnings of the companies issuing the securities, or relative to current market values of assets owned by the companies issuing the securities or relative to the equity market generally. The fund also may invest in preferred stocks and debt instruments that have prospects for growth of capital. The fund also may invest up to 25% of its total assets in foreign securities.
The portfolio managers focus on undervalued equity securities of (1) out-of-favor cyclical growth companies; (2) established growth companies that are undervalued compared to historical relative valuation parameters; (3) companies where there is early but tangible evidence of improving prospects that are not yet reflected in the price of the company's equity securities; and (4) companies whose equity securities are selling at prices that do not reflect the current market value of their assets and where there is reason to expect realization of this potential in the form of increased equity values. The portfolio managers consider whether to sell a particular security when they believe the company no longer fits into any of the above categories.
ALL FUNDS (EXCEPT AIM V.I. MONEY MARKET FUND)
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, each fund may not achieve its investment objective(s).
AIM V.I. AGGRESSIVE GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. BALANCED FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from the fund may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Interest rate increases may cause the price of a debt security to decrease; the longer a debt security's duration, the more sensitive it is to this risk. The issuer of a security may default or otherwise be unable to honor a financial obligation.
The values of convertible securities in which the fund invests may also be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest or dividends, their values may fall if interest rates rise. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. BLUE CHIP FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer of the stock, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. CAPITAL APPRECIATION FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. CAPITAL DEVELOPMENT FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to common stocks of smaller companies, whose prices may go up and down more than common stocks of larger, more-established companies. Also, since common stocks of smaller companies may not be traded as often as common stocks of larger, more-established companies, it may be difficult or impossible for the fund to sell securities in the fund at a desirable price.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these
securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. DIVERSIFIED INCOME FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases may cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds. Some of the securities purchased by the fund are not guaranteed by the U.S. Government. The agency or instrumentality issuing such security may default or otherwise be unable to honor a financial obligation.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times the bonds could be difficult to value or sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
U.S. Government agency mortgage-backed securities provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund may purchase such securities at a premium, which means that a faster principal prepayment rate than expected will reduce both the market value of and income from such securities.
The prices of equity securities fluctuate in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. GLOBAL UTILITIES FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from the fund may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Interest rate increases may cause the price of a debt security to decrease; the longer a debt security's duration, the more sensitive it is to this risk. The issuer of a security may default or otherwise be unable to honor a financial obligation.
The value of the fund's shares is particularly vulnerable to factors affecting the utility company industry, such as substantial economic, operational, competitive, or regulatory changes. Such changes may, among other things, increase compliance costs or the costs of doing business. In addition, increases in fuel, energy and other prices have historically limited the growth potential of utility companies. Because the fund focuses its investments in the public utility industry, the value of your shares may rise and fall more than the value of shares of a fund that invests more broadly.
Because it is non-diversified, the fund may invest in fewer issuers than if it were a diversified fund. The value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly.
AIM V.I. GOVERNMENT SECURITIES FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. The longer a debt security's duration, the more sensitive it is to this risk. The prices of high-coupon U.S. Government agency mortgage-backed securities fall more slowly when interest rates rise than do prices of other fixed-rate securities. Some of the securities purchased by the fund are not guaranteed by the U.S. Government. The agency or instrumentality issuing such security may default or otherwise be unable to honor a financial obligation.
High-coupon U.S. Government agency mortgage-backed securities provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund may purchase such securities at a premium. If the securities experience a faster principal prepayment rate than expected, both the market value of, and income from, such securities will decrease.
AIM V.I. GROWTH FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. GROWTH AND INCOME FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the
fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
AIM V.I. HIGH YIELD FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Debt securities are particularly vulnerable to credit risk and interest rate fluctuations. Interest rate increases can cause the price of a debt security to decrease. Junk bonds are less sensitive to this risk than are higher-quality bonds.
Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic growth developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times, the bonds could be difficult to value or to sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk.
AIM V.I. INTERNATIONAL EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. MONEY MARKET FUND
An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Additionally, the fund's yield will vary as the short-term securities in its portfolio mature and the proceeds are reinvested in securities with different interest rates.
The following factors could reduce the fund's income and/or share price:
- interest rates could rise sharply, causing the value of the fund's securities, and share price, to drop
- any of the fund's holdings could have its credit rating downgraded or could default
- the risks generally associated with concentrating investments in the banking industry, such as interest rate risk, credit risk and regulatory developments relating to the banking and financial services industries
- the risks generally associated with U.S. dollar-denominated foreign investments, including political and economic upheaval, seizure or nationalization of deposits, imposition of taxes or other restrictions on the payment of principal and interest.
AIM V.I. NEW TECHNOLOGY FUND
There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions, and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since many equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price.
Because the fund focuses its investments in the technology and science industries, the value of your fund shares may rise and fall more than the value of shares of a fund that invests more broadly.
The value of the fund's shares is particularly vulnerable to factors affecting the technology and science industries, such as substantial government regulations and the need for governmental approvals, dependency on consumer and business acceptance as new technologies evolve, and large and rapid price movements resulting from, among other things, fierce competition in these industries. Additional factors affecting the technology and science industries and the value of your shares include rapid obsolescence of products and services, short product cycles, and aggressive pricing. Many technology and science companies are small and at an early state of development and,
therefore, may be subject to risks such as limited product lines, markets, and financial and managerial resources.
The values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund.
Because a large percentage of the fund's assets may be invested in a limited number of securities, a change in the value of these securities could significantly affect the value of your investment in the fund.
AIM V.I. VALUE FUND
There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
ALL FUNDS (EXCEPT AIM V.I. MONEY MARKET FUND)
The prices of foreign securities may be further affected by other factors, including:
- Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded.
- Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries.
- Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies.
- Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devaluated their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
ALL FUNDS
If the seller of a repurchase agreement in which the fund invests defaults on its obligation or declares bankruptcy, the fund may experience delays in selling the securities underlying the repurchase agreement. As a result, the fund may incur losses arising from decline in the value of those securities, reduced levels of income and expenses of enforcing its rights.
Some of the funds (except AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund and AIM V.I. Money Market Fund) may participate in the initial public offering (IPO) market. For AIM V.I. Capital Development Fund, AIM V.I. Global Utilities Fund and AIM V.I. New Technology Fund (funds that have a small asset base) any investment a fund may make in IPOs may significantly increase its total returns. As a fund's assets grow, the impact of IPO investments will decline, which may reduce its total returns.
The bar charts and tables shown below provide an indication of the risks of investing in each fund. A fund's past performance is not necessarily an indication of its future performance. The bar charts and performance tables shown below do not reflect charges at the separate account level. If they did, the performance shown would be lower. Total return information in the bar charts and tables below may be affected by special market factors, including investments by certain funds in initial public offerings, which may have a magnified impact on those funds that have a small asset base. There is no guarantee that, as those funds' assets grow, they will continue to experience substantially similar performance.
AIM V.I. AGGRESSIVE GROWTH FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................. 44.67%
2000................................................................. 2.60%
|
During the periods shown in the bar chart, the highest quarterly return was 29.55% (quarter ended December 31, 1999) and the lowest quarterly return was -16.36% (quarter ended December 31, 2000).
AIM V.I. BALANCED FUND
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................ 19.31%
2000................................................................ -4.20%
|
During the periods shown in the bar chart, the highest quarterly return was 15.67% (quarter ended December 31, 1999) and the lowest quarterly return was -7.40% (quarter ended December 31, 2000).
AIM V.I. BLUE CHIP FUND
The following bar chart shows the performance of the fund's shares for the year ended December 31, 2000.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................ -8.18%
|
During the period shown in the bar chart, the highest quarterly return was 7.60% (quarter ended March 31, 2000) and the lowest quarterly return was -10.86% (quarter ended December 31, 2000).
AIM V.I. CAPITAL APPRECIATION FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................. 2.50%
1995................................................................. 35.69%
1996................................................................. 17.58%
1997................................................................. 13.50%
1998................................................................. 19.30%
1999................................................................. 44.61%
2000................................................................. -10.91%
|
During the periods shown in the bar chart, the highest quarterly return was 35.78% (quarter ended December 31, 1999) and the lowest quarterly return was -22.15% (quarter ended December 31, 2000).
AIM V.I. CAPITAL DEVELOPMENT FUND
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................. 29.10%
2000................................................................. 9.25%
|
During the periods shown in the bar chart, the highest quarterly return was 29.66% (quarter ended December 31, 1999) and the lowest quarterly return was -7.39% (quarter ended June 30, 2000).
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
The following bar chart shows the performance of the fund's shares for the year ended December 31, 2000.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................. -17.90%
|
During the period shown in the bar chart, the highest quarterly return was 11.10% (quarter ended March 31, 2000) and the lowest quarterly return was -23.77% (quarter ended December 31, 2000).
AIM V.I. DIVERSIFIED INCOME FUND
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................ -5.07%
1995................................................................ 19.02%
1996................................................................ 10.19%
1997................................................................ 9.39%
1998................................................................ 3.58%
1999................................................................ -1.92%
2000................................................................ 0.69%
|
During the periods shown in the bar chart, the highest quarterly return was 5.54% (quarter ended June 30, 1995) and the lowest quarterly return was -3.16% (quarter ended March 31, 1994).
AIM V.I. GLOBAL UTILITIES FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995................................................................. 26.74%
1996................................................................. 12.07%
1997................................................................. 21.63%
1998................................................................. 16.49%
1999................................................................. 33.56%
2000................................................................. -2.28%
|
During the periods shown in the bar chart, the highest quarterly return was 25.88% (quarter ended December 31, 1999) and the lowest quarterly return was -9.73% (quarter ended June 30, 2000).
AIM V.I. GOVERNMENT SECURITIES FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................. -3.73%
1995................................................................. 15.56%
1996................................................................. 2.29%
1997................................................................. 8.16%
1998................................................................. 7.73%
1999................................................................. -1.32%
2000................................................................. 10.12%
|
During the periods shown in the bar chart, the highest quarterly return was 5.48% (quarter ended June 30, 1995) and the lowest quarterly return was -2.82% (quarter ended March 31, 1994).
AIM V.I. GROWTH FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................. -2.48%
1995................................................................. 34.77%
1996................................................................. 18.09%
1997................................................................. 26.87%
1998................................................................. 34.12%
1999................................................................. 35.24%
2000................................................................. -20.49%
|
During the periods shown in the bar chart, the highest quarterly return was 27.80% (quarter ended December 31, 1998) and the lowest quarterly return was -22.25% (quarter ended December 31, 2000).
AIM V.I. GROWTH AND INCOME FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995................................................................. 33.86%
1996................................................................. 19.94%
1997................................................................. 25.72%
1998................................................................. 27.68%
1999................................................................. 34.25%
2000................................................................. -14.56%
|
During the periods shown in the bar chart, the highest quarterly return was 26.48% (quarter ended December 31, 1998) and the lowest quarterly return was -16.33% (quarter ended December 31, 2000).
AIM V.I. HIGH YIELD FUND
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................. 10.52%
2000................................................................. -19.01%
|
During the periods shown in the bar chart, the highest quarterly return was 5.06% (quarter ended December 31, 1999) and the lowest quarterly return was -14.05% (quarter ended December 31, 2000).
AIM V.I. INTERNATIONAL EQUITY FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................. -1.61%
1995................................................................. 17.24%
1996................................................................. 20.05%
1997................................................................. 6.94%
1998................................................................. 15.49%
1999................................................................. 55.04%
2000................................................................. -26.40%
|
During the periods shown in the bar chart, the highest quarterly return was 41.88% (quarter ended December 31, 1999) and the lowest quarterly return was -13.81% (quarter ended September 30, 1998).
AIM V.I. MONEY MARKET FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................. 3.64%
1995................................................................. 5.70%
1996................................................................. 4.95%
1997................................................................. 5.13%
1998................................................................. 5.06%
1999................................................................. 4.66%
2000................................................................. 5.83%
|
During the periods shown in the bar chart, the highest quarterly return was 1.49% (quarter ended September 30, 2000) and the lowest quarterly return was 0.58% (quarter ended March 31, 1994).
AIM V.I. NEW TECHNOLOGY FUND
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................. 7.15%
1995................................................................. 23.66%
1996................................................................. 19.34%
1997................................................................. 14.56%
1998................................................................. 22.11%
1999................................................................. 106.52%
2000................................................................. -36.29%
|
During the periods shown in the bar chart, the highest quarterly return was 63.10% (quarter ended December 31, 1999) and the lowest quarterly return was -38.83% (quarter ended December 31, 2000). For periods prior to October 15, 1999, the performance shown relates to a predecessor fund. In addition, for periods prior to May 1, 2000 performance shown above relates to the fund before changing its investment strategy to emphasize securities of companies in the technology industry as well as the telecommunications industry. Effective May 1, 2001, the fund changed its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
AIM V.I. VALUE FUND
The following bar chart shows changes in the performance of the fund's shares from year to year.
[GRAPH]
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................. 4.04%
1995................................................................. 36.25%
1996................................................................. 15.02%
1997................................................................. 23.69%
1998................................................................. 32.41%
1999................................................................. 29.90%
2000................................................................. -14.65%
|
During the periods shown in the bar chart, the highest quarterly return was 27.04% (quarter ended December 31, 1998) and the lowest quarterly return was -12.00% (quarter ended September 30, 1998).
AIM V.I. AGGRESSIVE GROWTH FUND
The following performance table compares the fund's performance to that of broad-based securities market indices.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------------------ AIM V.I. Aggressive Growth Fund 2.60% 15.54% 05/01/98 Russell 2000--Registered Trademark-- Index(1) (3.02)% 1.32%(3) 04/30/98(3) Russell 2500(TM) Index(2) 4.27% 6.20%(3) 04/30/98(3) ------------------------------------------------------------------------------------------ |
(1) The Russell 2000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 2,000
smallest companies in the Russell 3000--Registered Trademark-- Index, which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization. The fund has elected to use the Russell 2500(TM)
Index as its primary index rather than the Russell 2000--Registered
Trademark-- Index since the Russell 2500(TM) Index more closely reflects the
performance of the securities in which the fund invests.
(2) The Russell 2500(TM) Index measures the performance of the 2,500 smallest
companies in the Russell 3000--Registered Trademark-- Index, which
represents approximately 17% of the total market capitalization of the
Russell 3000--Registered Trademark-- Index.
(3) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. BALANCED FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Balanced Fund (4.20)% 10.07% 05/01/98 Standard & Poor's 500 Index(1) (9.10)% 8.04%(2) 04/30/98(2) ----------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. BLUE CHIP FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------------------ AIM V.I. Blue Chip Fund (8.18)% (8.14)% 12/29/99 Russell 1000--Registered Trademark-- Index(1) (7.79)% (7.79)%(2) 12/31/99(2) ------------------------------------------------------------------------------------------ |
(1) The Russell 1000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 1,000
largest companies in the Russell 3000--Registered Trademark-- Index, which
measures the performance of the 3,000 largest U.S. companies based on total
market capitalization.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. CAPITAL APPRECIATION FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund (10.91)% 15.45% 17.37% 05/05/93 Standard & Poor's 500 Index(1) (9.10)% 18.33% 17.72%(2) 04/30/93(2) ------------------------------------------------------------------------------------------ |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. CAPITAL DEVELOPMENT FUND
The following performance table compares the fund's performance to that of broad-based securities market indices.
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Capital Development Fund 9.25% 10.48% 05/01/98 Standard & Poor's 500 Index(1) (9.10)% 8.04%(3) 04/30/98(3) Russell 2500(TM) Index(2) 4.27% 6.20%(3) 04/30/98(3) -------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance. The
fund has elected to use the Russell 2500(TM) Index as its primary index
rather than the Standard & Poor's 500 Index since the Russell 2500(TM) Index
more closely reflects the performance of the securities in which the fund
invests.
(2) The Russell 2500(TM) Index measures the performance of the 2,500 smallest
companies in the Russell 3000--Registered Trademark-- Index, which
represents approximately 17% of the total market capitalization of the
Russell 3000--Registered Trademark-- Index.
(3) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. Dent Demographic Trends Fund (17.90)% (17.81)% 12/29/99 Russell 3000--Registered Trademark-- Index(1) (7.46)% (7.46)%(2) 12/31/99(2) --------------------------------------------------------------------------------- |
(1) The Russell 3000--Registered Trademark-- Index is a widely recognized,
unmanaged index of common stocks that measures the performance of the 3,000
largest U.S. companies based on total market capitalization.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. DIVERSIFIED INCOME FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Diversified Income Fund 0.69% 4.28% 5.23% 05/05/93 Lehman Aggregate Bond Index(1) 11.63% 6.46% 6.72%(2) 04/30/93(2) ----------------------------------------------------------------------------------------- |
(1) The Lehman Aggregate Bond Index is an unmanaged index generally considered
representative of treasury issues, agency issues, corporate bond issues and
mortgage-backed securities.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. GLOBAL UTILITIES FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------ AIM V.I. Global Utilities Fund (2.28)% 15.69% 15.08% 05/02/94 Standard & Poor's 500 Index(1) (9.10)% 18.33% 19.70%(3) 04/30/94(3) Lipper Utility Fund Index(2) 8.57% 15.14% 14.51%(3) 04/30/94(3) ------------------------------------------------------------------------------------------ |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) Lipper Utility Fund Index measures the performance of the 30 largest
utilities funds charted by Lipper Inc., an independent mutual funds
performance monitor.
(3) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. GOVERNMENT SECURITIES FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Government Securities Fund 10.12% 5.31% 5.37% 05/05/93 Lehman Intermediate Government Bond Index(1) 10.47% 6.19% 6.06%(2) 04/30/93(2) ----------------------------------------------------------------------------------------- |
(1) The Lehman Intermediate Government Bond Index is an unmanaged composite
generally considered representative of intermediate publicly issued debt of
U.S. Government agencies and quasi-federal corporations, and corporate debt
guaranteed by the U.S. Government.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. GROWTH FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Growth Fund (20.49)% 16.66% 16.13% 05/05/93 Standard & Poor's 500 Index(1) (9.10)% 18.33% 17.72%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. GROWTH AND INCOME FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Growth and Income Fund (14.56)% 17.17% 17.66% 05/02/94 Standard & Poor's 500 Index(1) (9.10)% 18.33% 19.70%(2) 04/30/94(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. HIGH YIELD FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR INCEPTION DATE --------------------------------------------------------------------------------- AIM V.I. High Yield Fund (19.01)% (6.87)% 05/01/98 Lehman High Yield Index(1) (5.86)% (2.05)%(2) 04/30/98(2) --------------------------------------------------------------------------------- |
(1) The Lehman High Yield Index is an index that includes all fixed-income
securities having a maximum quality rating of Ba1 (including defaulted
issues), a minimum amount outstanding of $100 mm, and at least one year to
maturity.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. INTERNATIONAL EQUITY FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. International Equity Fund (26.40)% 11.09% 11.62% 05/05/93 Morgan Stanley Capital International EAFE Index(1) (14.17)% 7.13% 8.19%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International Europe, Australasia and Far East
Index measures performance of global stock markets in 20 developed
countries.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. MONEY MARKET FUND
The following performance table reflects the fund's performance over the periods indicated.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------------------- AIM V.I. Money Market Fund 5.83% 5.13% 4.76% 05/05/93 ----------------------------------------------------------------------------------------- |
The AIM V.I. Money Market Fund's seven day yield on December 31, 2000 was 5.96%. For the current seven day yield, call (800) 347-4246.
AIM V.I. NEW TECHNOLOGY FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. New Technology Fund(1) (36.29)% 17.04% 17.37% 10/18/93 Standard & Poor's 500 Index(2) (9.10)% 18.33% 17.83%(3) 10/31/93(3) ------------------------------------------------------------------------------------------- |
(1) For periods prior to October 15, 1999, the performance shown relates to a
predecessor fund. In addition, for periods prior to May 1, 2000 performance
shown above relates to the fund before changing its investment strategy to
include securities of companies in the technology industry. Effective May 1,
2001, the fund changed its investment strategy to increase its emphasis on
the technology industry and decrease its emphasis on the telecommunications
industry.
(2) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(3) The average annual total return given is since the date closest to the
inception date of the fund.
AIM V.I. VALUE FUND
The following performance table compares the fund's performance to that of a broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 2000) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------------------- AIM V.I. Value Fund (14.65)% 15.87% 17.33% 05/05/93 Standard & Poor's 500 Index(1) (9.10)% 18.33% 17.72%(2) 04/30/93(2) ------------------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as each fund's investment advisor. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of each fund's operations and provides investment advisory services to the funds, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the funds. H.S. Dent Advisors, Inc. (the subadvisor) serves as the subadvisor for AIM V.I. Dent Demographic Trends Fund, and is located at 6515 Gwin Road, Oakland, California 94611. The subadvisor is responsible for providing the advisor with macroeconomic, thematic, demographic, lifestyle trends and sector research, custom reports and investment and market capitalization recommendations for the fund. The subadvisor has acted as an investment advisor since 1999.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 135 investment portfolios, including the funds, encompassing a broad range of investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2000, the advisor received compensation from the following funds as a percentage of each fund's average daily net assets as follows:
ADVISORY
FUND FEE
---- --------
AIM V.I. Aggressive Growth Fund 0.70%
AIM V.I. Balanced Fund 0.75%
AIM V.I. Blue Chip Fund 0.00%
AIM V.I. Capital Appreciation Fund 0.61%
AIM V.I. Capital Development Fund 0.56%
AIM V.I. Dent Demographic Trends Fund 0.62%
AIM V.I. Diversified Income Fund 0.60%
AIM V.I. Global Utilities Fund 0.65%
AIM V.I. Government Securities Fund 0.50%
AIM V.I. Growth Fund 0.61%
AIM V.I. Growth and Income Fund 0.60%
AIM V.I. High Yield Fund 0.57%
AIM V.I. International Equity Fund 0.73%
AIM V.I. Money Market Fund 0.40%
AIM V.I. New Technology Fund 1.00%
AIM V.I. Value Fund 0.61%
|
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of each fund's portfolio are as follows:
AIM V.I. AGGRESSIVE GROWTH FUND
- Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst with Prudential Securities.
AIM V.I. BALANCED FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1992.
- Claude C. Cody, IV, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1989.
- Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1991.
AIM V.I. BLUE CHIP FUND
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1986.
AIM V.I. CAPITAL APPRECIATION FUND
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1982.
- Ryan E. Crane, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1994.
- Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jay K. Rushin, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor
and/or its affiliates since 1998. From 1996 to 1998, he was an associate equity analyst with Prudential Securities.
- Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990.
AIM V.I. CAPITAL DEVELOPMENT FUND
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1996. From 1981 to 1996, he was, among other offices, Senior Vice President of John Hancock Advisers, Inc. and its predecessors.
- Paul J. Rasplicka, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
- Edgar M. Larsen, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996. From 1981 to 1996, he was, among other offices, Senior Vice President of John Hancock Advisers, Inc. and its predecessors.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1987.
AIM V.I. DIVERSIFIED INCOME FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1992.
AIM V.I. GLOBAL UTILITIES FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 1994 and has been associated with the advisor and/or its affiliates since 1992.
- Claude C. Cody, IV, Senior Portfolio Manager, who has been responsible for the fund since 1994 and has been associated with the advisor and/or its affiliates since 1992.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 1996 and has been associated with the advisor and/or its affiliates since 1989.
- Meggan M. Walsh, Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1991.
AIM V.I. GOVERNMENT SECURITIES FUND
- Laurie F. Bignac, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1992.
- Clint Dudley, Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the advisor and/or its affiliates since 1998. Prior to 1998, he was a full time student.
- Scot W. Johnson, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1994.
- Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Lyman Missimer III, Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been affiliated with the advisor and/or its affiliates since 1995.
AIM V.I. GROWTH FUND
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1982.
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1995.
- Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1986.
AIM V.I. GROWTH AND INCOME FUND
- Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1995.
- Lanny H. Sachnowitz, Senior Portfolio Manager, who has been responsible for the fund since 1994, and has been associated with the advisor and/or its affiliates since 1987.
AIM V.I. HIGH YIELD FUND
- Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Peter Ehret, Senior Portfolio Manager, who has been responsible for the fund since 2001 and has been associated with the
advisor and/or its affiliates since 2001. From 1992 to 2001, he was director of high yield research and portfolio manager for Van Kampen Investment Advisory Corp.
- Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management.
- Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1992.
- Craig A. Smith, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1989.
AIM V.I. INTERNATIONAL EQUITY FUND
- A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since 1993 and has been associated with the advisor and/or its affiliates since 1989.
- Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996 he was an associate with JMB Realty.
- Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1994.
- Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990.
AIM V.I. NEW TECHNOLOGY FUND
- David P. Barnard, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1982.
- Abel Garcia, Senior Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 2000. From 1984 to 2000, he was a Senior Portfolio Manager for Waddell & Reed.
AIM V.I. VALUE FUND
- Joel E. Dobberpuhl, Senior Portfolio Manager, who has been responsible for the fund since 1993, and has been associated with the advisor and/or its affiliates since 1990.
- Evan G. Harrel, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and portfolio manager of Van Kampen American Capital Asset Management, Inc. and portfolio manager of various growth and equity funds.
- Robert A. Shelton, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1995.
PURCHASE AND REDEMPTION OF SHARES
Each fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Life insurance companies participating in each fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund.
Shares of the funds are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated life insurance
companies funding variable annuity contracts and variable life insurance
policies. The funds currently offers shares only to insurance company separate
accounts. In the future, the funds may offer them to pension and retirement
plans that qualify for special federal income tax treatment. Due to differences
in tax treatment and other considerations, the interests of variable contract
owners investing in separate accounts investing in the funds, and the interests
of plan participants investing in the funds, may conflict.
Mixed and shared funding may present certain conflicts of interest. The Board of Trustees of the funds will monitor for the existence of any material conflicts and determine what action, if any, should be taken. A fund's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account (or plan) withdrawing because of a conflict.
PRICING OF SHARES
Each of the funds prices its shares based on its net asset value. The funds, except AIM V.I. Money Market Fund, value portfolio securities for which market quotations are readily available at market value. The funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM V.I. Money Market Fund values all of its securities based on the amortized cost method. The funds, except AIM V.I. Money Market Fund, value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the New York Stock Exchange (NYSE), events occur that materially affect the value of the security, the funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Trustees. The effect of using fair value pricing is that a fund's net asset value will be subject to the judgment of the Board of Trustees or its designee instead of being determined by the market. Because some of the funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' shares may change on days when the separate account will not be able to purchase or redeem shares. The fund determines the net asset value of its shares as of the close of the customary trading session of the NYSE on each day the NYSE is open for business.
TAXES
The amount, timing and character of distributions to the separate account may be affected by special tax rules applicable to certain investments purchased by the funds. Holders of variable contracts should refer to the prospectus for their contracts for information regarding the tax consequences of owning such contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
Each fund other than AIM V.I. Money Market Fund generally declares and pays dividends, if any, annually to separate accounts of participating life insurance companies. AIM V.I. Money Market Fund generally declares on each business day and pays any dividends daily. All of the fund's distributions will consist primarily of capital gains, except for AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund and AIM V.I. Money Market Fund which consist primarily of ordinary income.
CAPITAL GAINS DISTRIBUTIONS
Each fund other than AIM V.I. Money Market Fund generally distributes long-term and short-term capital gains, if any, annually to separate accounts of participating life insurance companies. AIM V.I. Money Market Fund may distribute net realized short-term gains, if any, more frequently.
At the election of participating life insurance companies, dividends and distributions are automatically reinvested at net asset value in shares of that fund.
FUTURE FUND CLOSURE
Due to the sometime limited availability of common stocks of small-cap companies that meet the investment criteria for AIM V.I. Aggressive Growth Fund, the fund may periodically suspend or limit the offering of its shares and it will be closed to new participants when fund assets reach $200 million.
During closed periods, the fund will accept additional investments from existing participants.
The financial highlights table is intended to help you understand each fund's financial performance. Certain information reflects financial results for a single fund share.
The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in each fund (assuming reinvestment of all dividends and distributions).
The table shows the financial highlights for a share of each fund outstanding during each of the fiscal years (or periods) indicated.
This information has been audited by Tait, Weller & Baker, whose report, along with the fund's financial statements, is included in each fund's annual report, which is available upon request.
Total return information in the following tables may have been affected by special market factors, including investments by certain funds in initial public offerings, which have had a magnified impact on those funds that had a small asset base during the period shown. There is no guarantee that, as those funds' assets grow, they will continue to experience substantially similar performance.
AIM V.I. AGGRESSIVE GROWTH FUND
FOR THE PERIOD
YEAR ENDED MAY 1,
DECEMBER 31, (DATE OPERATIONS
---------------------- COMMENCED) THROUGH
2000(a) 1999(a) DECEMBER 31, 1998
-------- ------- ------------------
Net asset value, beginning of period $ 14.25 $ 9.85 $10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.04) 0.04
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.47 4.44 (0.14)
============================================================================================================
Total from investment operations 0.37 4.40 (0.10)
============================================================================================================
Less distributions from net investment income -- -- (0.05)
============================================================================================================
Net asset value, end of period $ 14.62 $ 14.25 $ 9.85
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) 2.60% 44.67% (0.94)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $103,181 $17,326 $4,399
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.16%(c) 1.19% 1.16%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers 1.26%(c) 2.42% 4.62%(d)
============================================================================================================
Ratio of net investment income (loss) to average net assets (0.59)%(c) (0.41)% 0.96%(d)
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 65% 89% 30%
____________________________________________________________________________________________________________
============================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $50,446,304.
(d) Annualized.
AIM V.I. BALANCED FUND
FOR THE PERIOD
YEAR ENDED MAY 1,
DECEMBER 31, (DATE OPERATIONS
--------------------- COMMENCED) THROUGH
2000(a) 1999(a) DECEMBER 31, 1998
------- ------- ------------------
Net asset value, beginning of period $13.04 $11.14 $ 10.00
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.37 0.31 0.12
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.93) 1.83 1.18
=========================================================================================================
Total from investment operations (0.56) 2.14 1.30
=========================================================================================================
Less distributions:
Dividends from net investment income (0.02) (0.17) (0.14)
---------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.07) (0.02)
=========================================================================================================
Total distributions (0.02) (0.24) (0.16)
=========================================================================================================
Net asset value, end of period $12.46 $13.04 $ 11.14
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) (4.28)% 19.31% 13.02%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $85,693 $48,307 $10,343
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.10%(c) 1.21% 1.18%(d)
---------------------------------------------------------------------------------------------------------
Without fee waivers 1.10%(c) 1.31% 2.83%(d)
=========================================================================================================
Ratio of net investment income to average net assets 2.80%(c) 2.66% 3.71%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 49% 57% 9%
_________________________________________________________________________________________________________
=========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $69,450,457.
(d)Annualized.
AIM V.I. BLUE CHIP FUND
FOR THE PERIOD
DECEMBER 29,
YEAR ENDED (DATE OPERATIONS
DECEMBER 31, COMMENCED) THROUGH
2000(a) DECEMBER 31, 1999
------------ ------------------
Net asset value, beginning of period $ 10.00 $10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02 --
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.84) --
================================================================================================
Total from investment operations (0.82) --
================================================================================================
Less distributions paid from net investment income 0.00 --
================================================================================================
Net asset value, end of period $ 9.18 $10.00
________________________________________________________________________________________________
================================================================================================
Total return(d) (8.18)% --
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $29,787 $1,000
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.31%(b) 1.30%(c)
------------------------------------------------------------------------------------------------
Without fee waivers 2.13%(b) 12.49%(c)
================================================================================================
Ratio of net investment income to average net assets 0.07%(b) 3.07%(c)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 15% --
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $11,006,982.
(c) Annualized.
(d) Total return does not reflect charges at the separate account level.
AIM V.I. CAPITAL APPRECIATION FUND
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- -------- -------- --------
Net asset value, beginning of period $ 35.58 $ 25.20 $ 21.75 $ 19.43 $ 16.55
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05) (0.02) 0.02 0.03 0.02
------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.79) 11.17 4.12 2.58 2.89
========================================================================================================================
Total from investment operations (3.84) 11.15 4.14 2.61 2.91
========================================================================================================================
Less distributions:
Dividends from net investment income -- (0.02) (0.04) (0.02) (0.03)
------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.90) (0.75) (0.65) (0.27) --
========================================================================================================================
Total distributions (0.90) (0.77) (0.69) (0.29) (0.03)
========================================================================================================================
Net asset value, end of period $ 30.84 $ 35.58 $ 25.20 $ 21.75 $ 19.43
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(b) (10.91)% 44.61% 19.30% 13.51% 17.58%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,534,209 $1,131,217 $647,248 $522,642 $370,063
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 0.82%(a) 0.73% 0.67% 0.68% 0.73%
========================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.17)%(a) (0.06)% 0.11% 0.18% 0.18%
________________________________________________________________________________________________________________________
========================================================================================================================
Portfolio turnover rate 98% 65% 83% 65% 59%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Ratios are based on average daily net assets of $1,477,199,248.
(b) Total return does not reflect charges at the separate account level.
AIM V.I. CAPITAL DEVELOPMENT FUND
FOR THE PERIOD
YEAR ENDED MAY 1,
DECEMBER 31, (DATE OPERATIONS
--------------------- COMMENCED) THROUGH
2000(a) 1999(a) DECEMBER 31, 1998(a)
------- ------- --------------------
Net asset value, beginning of period $11.89 $ 9.21 $10.00
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01) (0.03) 0.03
-----------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 1.11 2.71 (0.78)
===========================================================================================================
Total from investment operations 1.10 2.68 (0.75)
===========================================================================================================
Less distributions from net investment income -- -- (0.04)
===========================================================================================================
Net asset value, end of period $12.99 $11.89 $ 9.21
___________________________________________________________________________________________________________
===========================================================================================================
Total return(b) 9.25% 29.10% (7.51)%
___________________________________________________________________________________________________________
===========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $74,874 $11,035 $3,172
___________________________________________________________________________________________________________
===========================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.19%(c) 1.23% 1.21%(d)
-----------------------------------------------------------------------------------------------------------
Without fee waivers 1.38%(c) 3.42% 5.80%(d)
===========================================================================================================
Ratio of net investment income (loss) to average net assets (0.07)%(c) (0.32)% 0.62%(d)
___________________________________________________________________________________________________________
===========================================================================================================
Portfolio turnover rate 110% 132% 45%
___________________________________________________________________________________________________________
===========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $39,776,995.
(d) Annualized.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FOR THE PERIOD
DECEMBER 29,
(DATE OPERATIONS
YEAR ENDED COMMENCED) THROUGH
DECEMBER 31, DECEMBER 31,
2000(a) 1999
------------ ------------------
Net asset value, beginning of period $ 10.00 $10.00
---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.07) --
---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.72) --
===================================================================================================
Total from investment operations (1.79) --
===================================================================================================
Less distributions from net investment income 0.00 --
===================================================================================================
Net asset value, end of period $ 8.21 $10.00
___________________________________________________________________________________________________
===================================================================================================
Total return(b) (17.90)% --
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $41,300 $1,000
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.40%(c) 1.40%(d)
---------------------------------------------------------------------------------------------------
Without fee waivers 1.63%(c) 12.58%(d)
===================================================================================================
Ratio of net investment income (loss) to average net assets (0.69)%(c) 2.96%(d)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 92% --
___________________________________________________________________________________________________
===================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
(c) Ratios are based on average daily net assets of $20,711,350.
(d) Annualized.
AIM V.I. DIVERSIFIED INCOME FUND
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2000(a) 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period $ 10.06 $ 10.94 $ 11.29 $ 10.33 $ 10.00
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.76 0.64 0.75 0.73 0.73
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.69) (0.85) (0.35) 0.24 0.28
============================================================================================================================
Total from investment operations 0.07 (0.21) 0.40 0.97 1.01
============================================================================================================================
Less distributions:
Dividends from net investment income (0.64) (0.67) (0.57) (0.01) (0.68)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.18) -- --
============================================================================================================================
Total distributions (0.64) (0.67) (0.75) (0.01) (0.68)
============================================================================================================================
Net asset value, end of period $ 9.49 $ 10.06 $ 10.94 $ 11.29 $ 10.33
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) 0.80% (1.92)% 3.58% 9.39% 10.19%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $83,722 $99,509 $96,445 $89,319 $63,624
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 0.90%(b) 0.83% 0.77% 0.80% 0.86%
============================================================================================================================
Ratio of net investment income to average net assets 7.84%(b) 7.20% 6.99% 6.90% 7.09%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 74% 83% 50% 52% 76%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $91,043,914.
(c) Total return does not reflect charges at the separate account level.
AIM V.I. GLOBAL UTILITIES FUND
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2000(a) 1999(a) 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period $ 22.80 $ 17.36 $ 15.26 $ 12.55 $ 11.64
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.29 0.32 0.35 0.32 0.40
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.80) 5.49 2.15 2.40 0.99
============================================================================================================================
Total from investment operations (0.51) 5.81 2.50 2.72 1.39
============================================================================================================================
Less distributions:
Dividends from net investment income (0.23) (0.37) (0.28) -- (0.41)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.90) -- (0.12) (0.01) (0.07)
============================================================================================================================
Total distributions (1.13) (0.37) (0.40) (0.01) (0.48)
============================================================================================================================
Net asset value, end of period $ 21.16 $ 22.80 $ 17.36 $ 15.26 $ 12.55
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(d) (2.28)% 33.56% 16.49% 21.63% 12.07%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $49,536 $39,772 $28,134 $22,079 $13,576
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.10%(b) 1.14% 1.11% 1.28% 1.40%(c)
============================================================================================================================
Ratio of net investment income to average net assets 1.23%(b) 1.72% 2.46% 2.81% 3.56%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 50% 45% 32% 28% 47%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Ratios are based on average daily net assets of $47,278,796.
(c)After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 1.55%.
(d) Total return does not reflect charges at the separate account level.
AIM V.I. GOVERNMENT SECURITIES FUND
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period $ 10.63 $ 11.18 $ 10.67 $ 9.87 $ 10.17
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.66 0.63 0.63 0.59 0.58
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.41 (0.78) 0.20 0.22 (0.35)
============================================================================================================================
Total from investment operations 1.07 (0.15) 0.83 0.81 0.23
============================================================================================================================
Less dividends from net investment income (0.54) (0.40) (0.32) (0.01) (0.53)
============================================================================================================================
Net asset value, end of period $ 11.16 $ 10.63 $ 11.18 $ 10.67 $ 9.87
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) 10.12% (1.32)% 7.73% 8.16% 2.29%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $84,002 $70,761 $58,185 $33,800 $24,527
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets (including interest
expense): 0.97%(b) 0.90% 0.76% 0.87% 0.91%
============================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense): 0.85%(b) 0.80% 0.76% 0.87% 0.91%
============================================================================================================================
Ratio of net investment income to average net assets 6.03%(b) 5.75% 5.70% 5.85% 5.80%
============================================================================================================================
Ratio of interest expense to average net assets 0.12%(b) 0.10% -- -- --
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 87% 41% 78% 66% 32%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Ratios are based on average daily net assets of $71,655,187.
(c) Total return does not reflect charges at the separate account level.
AIM V.I. GROWTH FUND
YEAR ENDED DECEMBER 31,
----------------------------------------------------
2000 1999(a) 1998 1997 1996
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 32.25 $ 24.80 $ 19.83 $ 16.25 $ 14.44
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03 0.01 0.08 0.08 0.07
------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (6.60) 8.63 6.57 4.27 2.52
======================================================================================================
Total from investment operations (6.57) 8.64 6.65 4.35 2.59
======================================================================================================
Less distributions:
Dividends from net investment income 0.00 (0.06) (0.09) (0.09) (0.06)
------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.87) (1.13) (1.59) (0.68) (0.72)
======================================================================================================
Total distributions (0.87) (1.19) (1.68) (0.77) (0.78)
======================================================================================================
Net asset value, end of period $ 24.81 $ 32.25 $ 24.80 $ 19.83 $ 16.25
______________________________________________________________________________________________________
======================================================================================================
Total return(c) (20.49)% 35.24% 34.12% 26.87% 18.09%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $879,182 $704,096 $371,915 $258,852 $178,638
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets 0.83%(b) 0.73% 0.72% 0.73% 0.78%
======================================================================================================
Ratio of net investment income to average net
assets 0.11%(b) 0.04% 0.41% 0.54% 0.79%
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 162% 101% 133% 132% 143%
______________________________________________________________________________________________________
======================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Ratios are based on average daily net assets of $913,313,151.
(c) Total return does not reflect charges at the separate account level.
AIM V.I. GROWTH AND INCOME FUND
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997 1996
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 31.59 $ 23.75 $ 18.87 $ 15.03 $ 12.68
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.06 0.26 0.13 0.16
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (4.56) 8.05 4.95 3.74 2.36
============================================================================================================
Total from investment operations (4.55) 8.11 5.21 3.87 2.52
============================================================================================================
Less distributions:
Dividends from net investment income (0.04) (0.16) (0.09) (0.01) (0.14)
------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.81) (0.11) (0.24) (0.02) (0.03)
============================================================================================================
Total distributions (0.85) (0.27) (0.33) (0.03) (0.17)
============================================================================================================
Net asset value, end of period $ 26.19 $ 31.59 $ 23.75 $ 18.87 $ 15.03
____________________________________________________________________________________________________________
============================================================================================================
Total return(c) (14.56)% 34.25% 27.68% 25.72% 19.95%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,514,262 $2,443,264 $1,262,059 $639,113 $209,332
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets 0.85%(b) 0.77% 0.65% 0.69% 0.78%
============================================================================================================
Ratio of net investment income to average net
assets 0.04%(b) 0.22% 1.34% 1.15% 2.05%
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 75% 93% 140% 135% 148%
____________________________________________________________________________________________________________
============================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Ratios are based on average daily net assets of $2,688,675,129.
(c) Total return does not reflect charges at the separate account level.
AIM V.I. HIGH YIELD FUND
FOR THE PERIOD
YEAR ENDED MAY 1,
DECEMBER 31, (DATE OPERATIONS
--------------------- COMMENCED) THROUGH
2000 1999(a) DECEMBER 31, 1998
------- ------- ------------------
Net asset value, beginning of period $ 9.02 $ 8.84 $10.00
------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.91 1.03 0.39
------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.64) (0.10) (1.15)
============================================================================================================
Total from investment operations (1.73) 0.93 (0.76)
============================================================================================================
Less distributions from net investment income (0.94) (0.75) (0.40)
============================================================================================================
Net asset value, end of period $ 6.35 $ 9.02 $ 8.84
____________________________________________________________________________________________________________
============================================================================================================
Total return(b) (19.14)% 10.52% (7.61)%
____________________________________________________________________________________________________________
============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,151 $25,268 $7,966
____________________________________________________________________________________________________________
============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.13%(c) 1.14% 1.13%(d)
------------------------------------------------------------------------------------------------------------
Without fee waivers 1.19%(c) 1.42% 2.50%(d)
============================================================================================================
Ratio of net investment income to average net assets 11.44%(c) 11.07% 9.75%
____________________________________________________________________________________________________________
============================================================================================================
Portfolio turnover rate 72% 127% 39%
____________________________________________________________________________________________________________
============================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Total return is not annualized for periods less than one year. Total return does not reflect charges at the separate account level.
(c)Ratios are based on average daily net assets of $27,626,986.
(d)Annualized.
AIM V.I. INTERNATIONAL EQUITY FUND
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2000 1999(a) 1998 1997 1996
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 29.29 $ 19.62 $ 17.13 $ 16.36 $ 13.66
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18 0.08 0.15 0.10 0.07
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.88) 10.59 2.50 1.03 2.67
============================================================================================================================
Total from investment operations (7.70) 10.67 2.65 1.13 2.74
============================================================================================================================
Less distributions:
Dividends from net investment income (0.06) (0.19) (0.16) (0.08) (0.04)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.41) (0.81) -- (0.28) --
============================================================================================================================
Total distributions (1.47) (1.00) (0.16) (0.36) (0.04)
============================================================================================================================
Net asset value, end of period $ 20.12 $ 29.29 $ 19.62 $ 17.13 $ 16.36
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) (26.40)% 55.04% 15.49% 6.94% 20.05%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $437,336 $454,060 $240,314 $211,023 $165,738
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.02%(b) 0.97% 0.91% 0.93% 0.96%
============================================================================================================================
Ratio of net investment income to average net assets 0.83%(b) 0.38% 0.80% 0.68% 0.78%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 88% 97% 76% 57% 59%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Ratios are based on average daily net assets of $463,993,620.
(c) Total return does not reflect charges at the separate account level.
AIM V.I. MONEY MARKET FUND
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06 0.05 0.05 0.05 0.05
----------------------------------------------------------------------------------------------------------------------------
Less distributions from net investment income (0.06) (0.05) (0.05) (0.05) (0.05)
============================================================================================================================
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) 5.83% 4.66% 5.06% 5.14% 4.97%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $73,864 $95,152 $64,090 $58,635 $63,529
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 0.71%(a) 0.60% 0.58% 0.59% 0.55%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of net investment income to average net assets 5.66%(a) 4.59% 4.94% 5.01% 4.84%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Ratios are based on average daily net assets of $75,824,258.
(b) Total return does not reflect charges at the separate account level.
AIM V.I. NEW TECHNOLOGY FUND
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
2000 1999 1998 1997 1996
------- -------- ------- ------- -------
Net asset value, beginning of period $ 32.96 $ 20.66 $ 18.40 $ 18.14 $ 16.87
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.20 (0.14) (0.01) (0.02) (0.05)
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (11.05) 18.46 3.99 2.59 3.31
============================================================================================================================
Total from investment operations (10.85) 18.32 3.98 2.57 3.26
============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- -- (0.02)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (3.58) (6.02) (1.72) (2.31) (1.97)
============================================================================================================================
Total distributions (3.58) (6.02) (1.72) (2.31) (1.99)
============================================================================================================================
Net asset value, end of period $ 18.53 $ 32.96 $ 20.66 $ 18.40 $ 18.14
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(b) (36.29)% 106.52% 22.11% 14.56% 19.34%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $69,310 $108,428 $69,459 $68,186 $63,258
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.31%(a) 1.27% 1.17% 1.11% 1.12%
----------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.31%(a) 1.27% 1.18% 1.16% 1.17%
============================================================================================================================
Ratio of net investment income (loss) to average net
assets 0.74%(a) (0.62)% (0.04)% (0.10)% (0.26)%
============================================================================================================================
Ratio of interest expense to average net assets -- 0.01% 0.01% -- --
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 131% 124% 73% 91% 77%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a)Ratios are based on average daily net assets of $102,445,227.
(b)Total return does not reflect charges at the separate account level.
AIM V.I. VALUE FUND
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
2000(a) 1999(a) 1998 1997 1996
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 33.50 $ 26.25 $ 20.83 $ 17.48 $ 16.11
------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04 0.06 0.09 0.08 0.30
------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (4.94) 7.76 6.59 4.05 2.09
==============================================================================================================================
Total from investment operations (4.90) 7.82 6.68 4.13 2.39
==============================================================================================================================
Less distributions:
Dividends from net investment income (0.04) (0.09) (0.13) (0.19) (0.10)
------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (1.26) (0.48) (1.13) (0.59) (0.92)
==============================================================================================================================
Total distributions (1.30) (0.57) (1.26) (0.78) (1.02)
==============================================================================================================================
Net asset value, end of period $ 27.30 $ 33.50 $ 26.25 $ 20.83 $ 17.48
______________________________________________________________________________________________________________________________
==============================================================================================================================
Total return(c) (14.68)% 29.90% 32.41% 23.69% 15.02%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,746,161 $2,383,367 $1,221,384 $690,841 $369,735
______________________________________________________________________________________________________________________________
==============================================================================================================================
Ratio of expenses to average net assets 0.84%(b) 0.76% 0.66% 0.70% 0.73%
==============================================================================================================================
Ratio of net investment income to average net
assets 0.12%(b) 0.20% 0.68% 1.05% 2.00%
______________________________________________________________________________________________________________________________
==============================================================================================================================
Portfolio turnover rate 62% 62% 100% 127% 129%
______________________________________________________________________________________________________________________________
==============================================================================================================================
|
(a)Calculated using average shares outstanding.
(b)Ratios are based on average daily net assets of $2,733,652,844.
(c)Total return does not reflect charges at the separate account level.
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about each fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about each fund's investments. The funds' annual report also discusses the market conditions and investment strategies that significantly affected each fund's performance during its last fiscal year.
If you wish to obtain free copies of the funds' current SAI, please send a written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or call (800) 410-4246.
You also can review and obtain copies of the funds' SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room.
SEC 1940 Act file number: 811-7452 ---------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com SPVL-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- --Registered Trademark-- |
STATEMENT OF
ADDITIONAL INFORMATION
AIM VARIABLE INSURANCE FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TX 77046-1173
(713) 626-1919
AIM V.I. AGGRESSIVE GROWTH FUND AIM V.I. GOVERNMENT SECURITIES FUND
AIM V.I. BALANCED FUND AIM V.I. GROWTH AND INCOME FUND
AIM V.I. BLUE CHIP FUND AIM V.I. GROWTH FUND
AIM V.I. CAPITAL APPRECIATION FUND AIM V.I. HIGH YIELD FUND
AIM V.I. CAPITAL DEVELOPMENT FUND AIM V.I. INTERNATIONAL EQUITY FUND
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND AIM V.I. MONEY MARKET FUND
AIM V.I. DIVERSIFIED INCOME FUND AIM V.I. NEW TECHNOLOGY FUND
AIM V.I. GLOBAL UTILITIES FUND AIM V.I. VALUE FUND
|
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, WHICH
MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC., P. O. BOX 4739,
HOUSTON, TX 77210-4739
OR BY CALLING (713) 626-1919 (HOUSTON RESIDENTS)
OR (800) 410-4246 (ALL OTHERS).
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 2001,
RELATING TO PROSPECTUS DATED: MAY 1, 2001
TABLE OF CONTENTS
PAGE
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE FUNDS...............................................................................1
The Trust and Its Shares.................................................................................1
PERFORMANCE.......................................................................................................3
Total Return Calculations................................................................................3
Historical Portfolio Results.............................................................................4
Yield Information........................................................................................5
PORTFOLIO TRANSACTIONS AND BROKERAGE..............................................................................6
General Brokerage Policy.................................................................................6
Allocation of IPO Securities Transactions................................................................8
Section 28(e) Standards..................................................................................8
Portfolio Turnover......................................................................................10
Brokerage Commissions Paid..............................................................................10
INVESTMENT STRATEGIES AND RISKS..................................................................................11
Aggressive Growth Fund..................................................................................11
Balanced Fund...........................................................................................12
Blue Chip Fund..........................................................................................12
Capital Appreciation Fund...............................................................................13
Capital Development Fund................................................................................13
Dent Demographic Trends Fund............................................................................13
Diversified Income Fund.................................................................................13
Global Utilities Fund...................................................................................14
Government Securities Fund..............................................................................14
Growth Fund.............................................................................................15
High Yield Fund.........................................................................................15
International Equity Fund...............................................................................15
Money Market Fund.......................................................................................16
Value Fund..............................................................................................16
INVESTMENT RESTRICTIONS..........................................................................................17
Fundamental Restrictions................................................................................17
Non-fundamental Restrictions............................................................................18
CERTAIN INVESTMENT STRATEGIES AND TECHNIQUES.....................................................................19
Money Market Obligations................................................................................19
Repurchase Agreements...................................................................................20
U.S. Government Agency Mortgage-Backed Securities.......................................................20
Convertible Securities..................................................................................20
Real Estate Investment Trusts ("REITs").................................................................21
Foreign Securities......................................................................................21
Foreign Exchange Transactions...........................................................................22
ADRs and EDRs...........................................................................................22
Lending of Portfolio Securities.........................................................................23
Reverse Repurchase Agreements...........................................................................23
Delayed Delivery Agreements and When-Issued Securities..................................................23
Dollar Roll Transactions................................................................................24
Illiquid Securities.....................................................................................25
Special Situations......................................................................................25
Warrants................................................................................................25
Short Sales.............................................................................................25
Rule 144A Securities....................................................................................26
Equity-Linked Derivatives...............................................................................26
Investment in Other Investment Companies................................................................26
|
Temporary Defensive Investments.........................................................................27
Utilities Industry......................................................................................27
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................28
Introduction............................................................................................28
General Risks of Options, Futures and Currency Strategies...............................................28
Cover...................................................................................................29
Writing Call Options....................................................................................29
Writing Put Options.....................................................................................30
Purchasing Put Options..................................................................................30
Purchasing Call Options.................................................................................30
Over-The-Counter Options................................................................................31
Index Options...........................................................................................31
Limitations on Options..................................................................................31
Interest Rate, Currency and Stock Index Futures Contracts...............................................32
Options on Futures Contracts............................................................................33
Forward Contracts.......................................................................................33
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................33
RISK FACTORS.....................................................................................................33
Small Capitalization Companies..........................................................................33
Non-Investment Grade Debt Securities....................................................................34
Foreign Securities......................................................................................34
Non-diversified Portfolio (Global Utilities Fund Only)..................................................35
MANAGEMENT.......................................................................................................35
Trustees and Officers...................................................................................35
Remuneration of Trustees.......................................................................39
AIM Funds Retirement Plan for Eligible Directors/Trustees......................................40
Deferred Compensation Agreements...............................................................40
Investment Advisory, Sub-Advisory and Administrative Services Agreements................................41
The Distribution Agreement..............................................................................47
DETERMINATION OF NET ASSET VALUE.................................................................................47
PURCHASE AND REDEMPTION OF SHARES................................................................................49
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................50
MISCELLANEOUS INFORMATION........................................................................................52
Audit Reports...........................................................................................52
Legal Matters...........................................................................................52
Custodians and Transfer Agent...........................................................................52
Principal Holders of Securities.........................................................................52
Other Information.......................................................................................57
APPENDIX A......................................................................................................A-1
APPENDIX B......................................................................................................B-1
APPENDIX C......................................................................................................C-1
FINANCIAL STATEMENTS.............................................................................................FS
|
INTRODUCTION
AIM Variable Insurance Funds (the "Trust") is a mutual fund. The rules and regulations of the United States Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information is included in Prospectuses dated May 1, 2001 (referred to collectively as the "Prospectuses" and separately as a "Prospectus"), which relate to one or more of the sixteen series portfolios of the Trust (referred to collectively as the "Funds" and separately as a "Fund"). One or more of the Funds may not be available under a particular variable annuity contract or variable life insurance policy. Accordingly, this Statement of Additional Information may contain information that is not relevant to the investment options under such a contract or policy. Copies of each Prospectus available under a contract or policy and additional copies of this Statement of Additional Information may be obtained without charge by contacting the principal distributor of each Fund's shares, A I M Distributors, Inc. ("AIM Distributors"), 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173 or by calling (800) 410-4246. Investors must receive a Prospectus before they invest. To the extent that this Statement of Additional Information contains information concerning a Fund that is not available under a contract or policy, the Statement of Additional Information does not constitute the offer of the shares of that Fund.
This Statement of Additional Information is intended to furnish prospective investors with additional information concerning the Funds. Some of the information required to be in this Statement of Additional Information is also included in the Funds' current Prospectus and, in order to avoid repetition, reference will be made to sections of the Prospectus. Additionally, the Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement filed with the SEC. Copies of the Registration Statement, including items omitted from the Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE TRUST AND ITS SHARES
The Trust was previously organized on January 22, 1993, as a Maryland corporation. Pursuant to an agreement and plan of reorganization, the Funds were reorganized on May 1, 2000 as portfolios of AIM Variable Insurance Funds, a Delaware business trust which is registered under the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end series management investment company. The Trust currently is organized under an Agreement and Declaration of Trust, dated December 7, 1999, (the "Trust Agreement"). Each Fund is a series of shares of the Trust. The Trust currently consists of sixteen separate portfolios: AIM V.I. Aggressive Growth Fund ("Aggressive Growth Fund"), AIM V.I. Balanced Fund ("Balanced Fund"), AIM V.I. Blue Chip Fund ("Blue Chip Fund"), AIM V.I. Capital Appreciation Fund ("Capital Appreciation Fund"), AIM V.I. Capital Development Fund ("Capital Development Fund"), AIM V.I. Dent Demographic Trends Fund ("Dent Demographic Trends Fund"), AIM V.I. Diversified Income Fund ("Diversified Income Fund"), AIM V.I. Global Utilities Fund ("Global Utilities Fund"), AIM V.I. Government Securities Fund ("Government Fund"), AIM V.I. Growth Fund ("Growth Fund"), AIM V.I. Growth and Income Fund ("Growth and Income Fund"), AIM V.I. High Yield Fund ("High Yield Fund"), AIM V.I. International Equity Fund ("International Fund"), AIM V.I. New Technology Fund ("New Technology Fund")(formerly known as the AIM V.I. Telecommunications and Technology Fund), AIM V.I. Money Market Fund ("Money Market Fund") and AIM V.I. Value Fund ("Value Fund"). Each Fund, with the exception of the Global Utilities Fund, is a "diversified management company" as defined in the 1940 Act. Under the Trust Agreement, the Board of Trustees is authorized to create new series of shares without the necessity of a vote of shareholders of the Trust.
On May 1, 2000, the Funds succeeded to the assets and assumed the liabilities of the funds with corresponding names (the "Predecessor Funds") of AIM Variable Insurance Funds, Inc., a Maryland corporation ("AVIF"), pursuant to an Agreement and Plan of Reorganization between the Trust and AVIF. All historical financial and other information contained in this Statement of Additional Information for periods prior to May 1, 2000 relating to the Funds is that of the Predecessor Funds. Shares of beneficial interest of the Trust are redeemable at their net asset value at the option of the shareholder or at the option of the Trust in
certain circumstances. For information concerning redemptions, investors should consult the Prospectuses under the caption "Purchase and Redemption of Shares."
The assets received by the Trust from the issue or sale of shares of each of its series of shares, and all income, earnings, profits and proceeds thereof, subject only to the rights of creditors, are specifically allocated to the appropriate Fund. They constitute the underlying assets of each Fund, are required to be segregated on the Trust's books of account, and are to be charged with the expenses with respect to such Fund. Any general expenses of the Trust not readily identifiable as belonging to a particular Fund are allocated by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors.
Each share of each Fund represents an equal proportionate interest in that Fund with each other share and is entitled to such dividends and distributions out of the income belonging to such Fund as are declared by the Board. Upon any liquidation of the Trust, shareholders of each Fund are entitled to share pro rata in the net assets belonging to the applicable Fund available for distribution after satisfaction of outstanding liabilities of the Fund.
The Trust is not required to hold annual or regular meetings of shareholders. Meetings of shareholders of a Fund will be held from time to time to consider matters requiring a vote of such shareholders in accordance with the requirements of the 1940 Act, state law or the provisions of the Trust Agreement. It is not expected that shareholder meetings will be held annually.
The Trust understands that insurance company separate accounts owning shares of the Funds will vote their shares in accordance with the instructions received from Contract owners, annuitants and beneficiaries. Fund shares held by a registered separate account as to which no instructions have been received will be voted for or against any proposition, or in abstention, in the same proportion as the shares of that separate account as to which instructions have been received. Fund shares held by a registered separate account that are not attributable to Contracts will also be voted for or against any proposition in the same proportion as the shares for which voting instructions are received by that separate account. If an insurance company determines, however, that it is permitted to vote any such shares of the Funds in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
Shareholders of each Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the shares of a Fund. However, on matters affecting an individual Fund, a separate vote of shareholders of that Fund is required. Shareholders of a Fund are not entitled to vote on any matter which does not affect that Fund but which requires a separate vote of another Fund. An example of a matter which would be voted on separately by shareholders of each Fund is the approval of the Advisory Agreement. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are fully transferable. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees.
The Trust Agreement provides that the trustees of the Trust shall hold office during the existence of the Trust, except as follows: (a) any trustee may resign or retire; (b) any trustee may be removed by a vote of at least two-thirds of the outstanding shares of the Trust, or at any time by written instrument signed by at least two-thirds of the trustees and specifying when such removal becomes effective; or (c) any trustee who has died or become incapacitated and is unable to serve may be removed by a written instrument signed by a majority of the trustees.
Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations, however, there is a remote possibility that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which a Fund would be unable to meet its obligations and wherein the complaining party was held not to be bound by the disclaimer.
The Trust Agreement further provides that the trustees and officers will not be liable for any act, omission or obligation of the Trust or any trustee or officer. However, nothing in the Trust Agreement protects a trustee or officer against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office with the Trust. The Trust Agreement provides for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, if it is determined that such person acted in good faith and reasonably believed: (1) in the case of conduct in his or her official capacity for the Trust, that his or her conduct was in the Trust's best interests, (2) in all other cases, that his or her conduct was at least not opposed to the Trust's best interests and (3) in a criminal proceeding, that he or she had no reason to believe that his or her conduct was unlawful. Such person may not be indemnified against any liability to the Trust or to the Trust's shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers.
PERFORMANCE
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the applicable Fund's return, including the effect of reinvesting dividends and capital gain distributions, and any change in such Fund's net asset value per share (NAV) over the period. Average annual returns are calculated by determining the growth or decline in value of a hypothetical investment in a particular Fund over a stated period, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. While average annual returns are a convenient means of comparing investment alternatives, investors should realize that a Fund's performance is not constant over time, but changes from year to year, and that average annual returns do not represent the actual year-to-year performance of such Fund.
In addition to average annual returns, each Fund may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, and/or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns and other performance information may be quoted numerically or in a table, graph, or similar illustration.
HISTORICAL PORTFOLIO RESULTS
The Funds' average annual total returns for the one and five year periods ended December 31, 2000, and average annual and cumulative total returns for each of the Funds since their inception are as follows:
Since
Year Ended Inception
December 31, 2000 ------------------------------------------
----------------- Average
One Five Inception Annual Cumulative
Year Year Date Return Return
------- ------ --------- --------- ----------
AIM V.I. Aggressive Growth Fund 2.60 N/A 05/01/98 15.54 47.03
AIM V.I. Balanced Fund (4.20) N/A 05/01/98 10.07 29.18
AIM V.I. Blue Chip Fund (8.18) N/A 12/29/99 (8.14) (8.18)
AIM V.I. Capital Appreciation Fund (10.91) 15.45 05/05/93 17.37 240.90
AIM V.I. Capital Development Fund 9.25 N/A 05/01/98 10.48 30.45
AIM V.I. Dent Demographic Trends Fund (17.90) N/A 12/29/99 (17.81) (17.90)
AIM V.I. Diversified Income Fund 0.69 4.28 05/05/93 5.23 47.76
AIM V.I. Global Utilities Fund (2.28) 15.69 05/02/94 15.08 154.98
AIM V.I. Government Securities Fund 10.12 5.31 05/05/93 5.37 49.21
AIM V.I. Growth Fund (20.49) 16.66 05/05/93 16.13 214.24
AIM V.I. Growth and Income Fund (14.56) 17.17 05/02/94 17.66 195.61
AIM V.I. High Yield Fund (19.01) N/A 05/01/98 (6.87) (17.29)
AIM V.I. International Equity Fund (26.40) 11.09 05/05/93 11.62 132.02
AIM V.I. Money Market Fund 5.83 5.13 05/05/93 4.76 42.77
AIM V.I. New Technology Fund* (36.29) 17.04 10/18/93 17.37 216.99
AIM V.I. Value Fund (14.65) 15.87 05/05/93 17.33 239.91
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* Performance prior to October 15, 1999 was for a predecessor fund. In addition, for periods prior to May 1, 2000 the performance shown above relates to the fund before changing its investment strategy to emphasize securities of companies in the technology industry as well as the telecommunications industry. Effective May 1, 2001, the fund changed its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
The total returns quoted above do not reflect charges levied at the insurance company separate account level. For a complete description of the applicable charges, see the fee table in the prospectus for the appropriate insurance company separate account.
Each Fund's performance may be compared in advertising to the performance of other mutual funds in general, or of particular types of mutual funds, especially those with similar objectives. Such performance data may be prepared by Lipper Inc., Morningstar, Inc. and other independent services which monitor the performance of mutual funds. The Funds may also advertise mutual fund performance rankings which have been assigned to each respective Fund by such monitoring services.
Each Fund's performance may also be compared in advertising to the performance of comparative benchmarks such as the Consumer Price Index ("CPI"), the Standard & Poor's ("S&P") 500 Stock Index, and fixed-price investments such as bank certificates of deposit and/or savings accounts.
The International Fund's performance may also be compared in advertising to performance of comparative benchmarks such as The Financial Times-Actuaries World Indices (a wide range of comprehensive measures of stock price performance for the major stock markets and regional areas), Morgan Stanley Capital International Indices (including the EAFE Index) Pacific Basin Index and Pacific Ex Japan Index (a widely recognized series of indices in international market performance), and indices of stocks comparable to those in which the Fund invests.
Each Fund's advertising may from time to time include historical discussions of general economic conditions such as inflation rates and changes in the stock market, foreign and domestic interest rates and foreign and domestic political circumstances and events.
From time to time, Dent Demographic Trends Fund sales literature and/or advertisements may quote (i) Harry S. Dent, Jr.'s theories on why the coming decade may offer unprecedented opportunities for investors, including his opinions on the stock market outlook and where growth may be strongest; (ii) Harry S. Dent, Jr.'s opinions and theories from his books and publications, including, but not limited to, Job Shock, The Great Boom Ahead and The Roaring 2000s, including his beliefs that (a) people's spending patterns may help predict the stock market, (b) the stock market has tended to perform best when a generation has reached its peak spending years from ages 45-50, and (c) as more and more baby boomers reach their peak spending age, they could propel stock prices up for the next decade; and (iii) Harry S. Dent, Jr.'s S-curve analysis, a forecasting tool used to analyze products that show remarkable growth.
In addition, each Fund's long-term performance may be described in advertising in relation to historical, political and/or economic events.
From time to time, A I M Advisors, Inc. ("AIM") or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Voluntary fee waivers or reductions or commitments to assume expenses may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions or commitments to assume expenses, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions or reimbursement of expenses set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing that Fund's yield and total return.
The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results. A Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market conditions. A shareholder's investment in a Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in any Fund.
Some of the Funds (except AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund, AIM V.I. High Yield Fund and AIM V.I. Money Market Fund) may participate in the initial public offering ("IPO") market. For AIM V.I. Capital Development Fund, AIM V.I. Global Utilities Fund and AIM V.I. New Technology Fund (i.e., funds that have a small asset base) any investment a Fund may make in IPOs may significantly increase its total returns There is no guarantee that as a Fund's assets grow, it will continue to experience substantially similar performance by investing in IPOs.
From time to time, the Funds' sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, variable annuities, variable life insurance, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation.
YIELD INFORMATION
Quotations of yield on the Money Market Fund may appear from time to time in the financial press and in advertisements.
The Money Market Fund's yield is its investment income, less expenses, expressed as a percentage of assets on an annualized basis for an identified period, usually seven days. The yield is expressed as a simple annualized yield and as a compounded effective yield. The yield does not reflect the fees and charges imposed on the assets of the insurance company separate account.
The standard formulas prescribed by the SEC for calculating yield and effective yield for the Money Market Fund are described below:
The simple annualized yield is computed by determining the net change (exclusive of realized gains and losses from the sale of securities, unrealized appreciation and depreciation, and income other than investment income) in the value of a hypothetical pre-existing account having a balance of one share at the beginning of the period, dividing the net change in account value by the value of the account at the beginning of the period, and annualizing the resulting quotient (base period return) on a 365-day basis. The net change in account value reflects the value of additional shares purchased with dividends from the original shares in the account during the period, dividends declared on such additional shares during the period, and expenses accrued during the period.
The compounded effective yield is computed by determining the unannualized base period return, adding one to the base period return, raising the sum to a power equal to 365 divided by the number of days in the period, and subtracting one from the result. Historical yields are not necessarily indicative of future yields. Rates of return will vary as interest rates and other conditions affecting money market instruments change. Yields also depend on the quality, length of maturity and type of instruments in the Fund's portfolio and the Fund's operating expenses. Quotations of yield will be accompanied by information concerning the average weighted maturity of the Fund. Comparison of the quoted yields of various investments is valid only if yields are calculated in the same manner and for identical limited periods. When comparing the yield for a Fund with yields quoted with respect to other investments, shareholders should consider (a) possible differences in time periods, (b) the effect of the methods used to calculate quoted yields, (c) the quality and average-weighted maturity of portfolio investments, expenses, convenience, liquidity and other important factors, and (d) the taxable or tax-exempt character of all or part of dividends received.
The simple annualized yield and compounded effective yield for the Money Market Fund for the seven (7) days ended December 31, 2000 were 5.96% and 6.14%, respectively.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
Subject to policies established by the Board of Trustees of the Trust, AIM is responsible for decisions to buy and sell securities for each Fund, for the selection of broker-dealers, for the execution of the Fund's investment portfolio transactions, for the allocation of brokerage fees in connection with such transactions and, where applicable, for the negotiation of commissions and spreads on transactions. AIM's primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. While AIM generally seeks reasonably competitive commission rates, each Fund does not necessarily pay the lowest commission or spread available.
Purchases and sales of portfolio securities for the Diversified Income Fund, the Money Market Fund and the Government Fund are generally transacted with the issuer or a primary market maker. In addition, a portion of the securities in which the Funds invest may be traded in over-the-counter ("OTC") markets. In such transactions, the Fund deals directly with the dealers who make markets in the securities involved, except in those circumstances where better prices and executions are available elsewhere. Portfolio transactions placed through dealers serving as primary market makers are effected at net prices, without commissions as such, but which include compensation to the dealer in the form of mark up or mark down.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. In recent years, however, an increasing number of overseas stock markets have adopted a system of negotiated rates, although a number of markets continue to be subject to an established schedule of minimum commission rates.
Foreign equity securities may be held by a Fund in the form of American Depositary Receipts ("ADRs") or European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers, or securities convertible into foreign equity securities. These securities may not necessarily be denominated in the same currency as the securities into which they may be converted. ADRs are receipts typically issued by a United States bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership arrangement. Generally, ADRs, in registered form, are designed for use in the United States securities
markets, and EDRs, in bearer form, are designed for use in European securities markets. ADRs and EDRs may be listed on stock exchanges, or traded in OTC markets in the United States or Europe, as the case may be. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates.
The Funds are not under any obligation to deal with any broker or group of brokers in the execution of transactions in portfolio securities. Brokers who provide supplemental investment research to AIM may receive orders for transactions by a Fund. Information so received will be in addition to and not in lieu of the services required to be performed by AIM under its agreements with the Fund, and the expenses of AIM will not necessarily be reduced as a result of the receipt of such supplemental information. Certain research services furnished by broker-dealers may be useful to AIM in connection with its services to other advisory clients, including the other mutual funds advised by AIM (collectively with the Funds, the "AIM Funds"). Also, a Fund may pay a higher price for securities or higher commissions in recognition of research services furnished by broker-dealers.
AIM may from time to time determine target levels of commission business for AIM to transact with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be determined based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker, and (3) the broker's attitude toward and interest in mutual funds in general and in the Funds and the other AIM Funds in particular including sales of the Funds and of the other AIM Funds. No specific formula will be used in connection with any of the foregoing considerations in determining the target levels. However, if a broker has indicated a certain level of desired commissions in return for certain research services provided by the broker, this factor will be taken into consideration by AIM.
Subject to the overall objective of obtaining best price and execution for the Funds, AIM may also consider sales of shares by broker-dealers of each Fund and of the other AIM Funds as well as sales of variable annuity contracts ("Contracts") and variable life insurance policies ("Policies") funded through the Funds ("selling dealers"), as a factor in the selection of broker-dealers to execute portfolio transactions for a Fund. Such portfolio transactions may be executed directly by selling dealers or by other broker-dealers with which selling dealers have clearing arrangements.
AIM and its affiliates manage several other investment accounts, some of which may have investment objectives similar to those of the Funds. It is possible that, at times, identical securities will be appropriate for investment by one or more of such investment accounts. The position of each account, however, in the securities of the same issue may vary and the length of time that each account may choose to hold its investment in the securities of the same issue may likewise vary. The timing and amount of purchases by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of a Fund(s) and one or more of these accounts is considered at or about the same time, AIM will fairly allocate transactions in such securities among the Fund(s) and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, in order to obtain the best net price and most favorable execution. Simultaneous transactions could, however, adversely affect the ability of a Fund to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
These combined transactions, and related brokerage charges, will be allocated among the Fund(s) and such accounts in a manner consistent with guidelines and procedures approved by the Trust's Board of Trustees that are designed to achieve an equitable manner of allocation. In some cases the procedure for allocating portfolio transactions among the various investment accounts advised by AIM could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, the main factors considered by AIM are the respective investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held and the judgments of the persons responsible for recommending the investment.
From time to time, an identical security may be sold by an AIM Fund or another investment account advised by AIM or A I M Capital Management, Inc. ("AIM Capital") and simultaneously purchased by another investment account advised by AIM or AIM Capital, when such transactions comply with applicable rules and regulations and are deemed consistent with the investment objective(s) and policies of the investment accounts advised by AIM or AIM Capital. Procedures pursuant to Rule 17a-7 under the 1940 Act regarding
transactions between investment accounts advised by AIM or AIM Capital have been adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. Although such transactions may result in custodian, tax or other related expenses, no brokerage commissions or other direct transaction costs are generated by transactions among the investment accounts advised by AIM or AIM Capital.
ALLOCATION OF IPO SECURITIES TRANSACTIONS
From time to time, certain of the AIM Funds or other accounts managed by AIM may become interested in participating in security distributions that are available in an IPO, and occasions may arise when purchases of such securities by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. In such cases, it shall be AIM's practice to specifically combine or otherwise bunch indications of interest for IPO securities for all AIM Funds and accounts participating in purchase transactions for that security, and to allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks to participate in a particular IPO by reviewing a number of factors, including suitability of the investment with the AIM Fund's or account's investment objective, policies and strategies, the liquidity of the AIM Fund or account if such investment is purchased, and whether the portfolio manager intends to hold the security as a long-term investment. The allocation of limited supply securities issued in IPOs will be made to eligible AIM Funds and accounts in a manner designed to be fair and equitable for the eligible AIM Funds or accounts, and so that there is equal allocation of IPOs over the longer term. Where multiple funds or accounts are eligible, rotational participation may occur, based on the extent to which an AIM Fund or account has participated in previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM Fund and account with an asset level of less than $500 million will be placed in one of three tiers, depending upon each AIM Fund's or account's asset level. The AIM Funds and accounts in the tier containing funds and accounts with the smallest asset levels will participate first, each receiving a 40 basis point allocation (rounded to the nearest share round lot that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or account's net assets. This process continues until all of the AIM Funds and accounts in the three tiers receive their Allocations, or until the shares are all allocated. Should securities remain after this process, eligible AIM Funds and accounts will receive their Allocations on a straight pro rata basis. For the tier of AIM Funds and accounts not receiving a full Allocation, the Allocation may be made only to certain AIM Funds or accounts so that each may receive close to or exactly 40 basis points.
When any AIM Fund and/or account with substantially identical investment objectives and policies participate in syndicates, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund is participating, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such syndicate transactions will be the same for each AIM Fund and account.
SECTION 28(e) STANDARDS
As permitted by Section 28(e) of the Securities Exchange Act of 1934, AIM may cause a Fund to pay a broker that provides brokerage and research services to AIM an amount of commission for effecting a securities transaction for the Fund in excess of the commission another broker would have charged for effecting that transaction. To obtain the benefit of Section 28(e), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided . . . viewed in terms of either that particular transaction or [its] overall responsibilities with respect to the accounts as to which [it] exercises investment discretion" and that the services provided by a broker provide AIM with lawful and appropriate assistance in the performance of its investment decision-making responsibilities. Accordingly, the price to a Fund in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered.
Broker-dealers utilized by AIM may furnish statistical, research and other information or services which are deemed by AIM to be beneficial to the Funds' investment programs. Research services received from brokers supplement AIM's own research (and the research of sub-advisors to other clients of AIM) and
may include the following types of information: statistical and background information on industry groups and individual companies; forecasts and interpretations with respect to U.S. and foreign economies, securities markets, specific industry groups and individual companies; information on political developments; portfolio management strategies; performance information on securities and information concerning prices of securities; and information supplied by specialized services to AIM and to the Trust's trustees with respect to the performance, investment activities and fees and expenses of other mutual funds. Such information may be communicated electronically, orally, in written form or on computer software. Research services may also include the providing of equipment used to communicate research information, the arranging of meetings with management of companies and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the brokers utilized by AIM as a group tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, this research provides AIM with a diverse perspective on financial markets. Research services which are provided to AIM by brokers are available for the benefit of all accounts managed or advised by AIM (or by sub-advisors to accounts managed or advised by AIM). In some cases, the research services are available only from the broker providing such services. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM is of the opinion that because the broker research supplements rather than replaces its research, the receipt of such research does not tend to decrease its expenses, but tends to improve the quality of its investment advice. However, to the extent that AIM would have purchased any such research services had such services not been provided by brokers, the expenses of such services to AIM could be considered to have been reduced accordingly.
For the fiscal year ended December 31, 2000, certain Funds paid brokerage commissions to certain brokers for research services. The amount of such transactions and related commissions paid by each Fund were as follows:
Commissions Transactions
----------- ------------
AIM V. I. Aggressive Growth Fund $ 4,166 $ 3,876,829
AIM V. I. Balanced Fund $ 2,406 $ 1,990,817
AIM V. I. Blue Chip Fund $ 361 $ 401,674
AIM V. I. Capital Appreciation Fund $ 172,713 $189,697,345
AIM V. I. Capital Development Fund $ 4,384 $ 2,480,459
AIM V. I. Dent Demographic Trends Fund $ 2,029 $ 2,266,476
AIM V. I. Global Utilities Fund $ 5,134 $ 3,608,247
AIM V. I. Growth Fund $ 150,950 $170,942,962
AIM V. I. Growth and Income Fund $ 293,251 $303,693,257
AIM V. I. International Equity Fund $ 20,496 $ 11,084,247
AIM V. I. New Technology Fund $ 3,836 $ 6,000,451
AIM V. I. Value Fund $ 284,553 $303,984,163
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As of December 31, 2000, the following Funds entered into investment transactions with the following regular brokers, as that term is defined in Rule 10b-1 under the 1940 Act, having the noted market values.
SALOMON
LEHMAN MORGAN SMITH
BROTHERS MERRILL STANLEY BARNEY
AMERICAN GOLDMAN HOLDINGS, LYNCH & DEAN WITTER HOLDINGS,
FUNDS EXPRESS SACHS INC. CO., INC. & CO. INC.
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AIM V.I. Balanced Fund $ 455,981 $ 620,238 $ 534,399 $ 571,927 $ 602,300 --
AIM V.I. Blue Chip Fund $ 483,450 -- -- $ 354,575 $ 570,600 --
AIM V.I. Capital Appreciation Fund $21,975,000 $30,776,612 -- $12,601,050 $ 26,628,000 --
AIM V.I. Dent Demographic Trends Fund $ 659,250 $ 855,500 -- $ 818,250 $ 1,347,250 --
AIM V.I. Diversified Income Fund -- -- $ 1,538,181 $ 187,532 -- --
AIM V.I. Growth Fund $25,798,650 -- -- $20,476,706 -- --
AIM V.I. Growth and Income Fund $75,539,062 $32,509,000 -- $40,912,500 $ 97,081,250 --
AIM V.I. Money Market Fund -- -- -- $ 3,500,000 $ 3,400,000 $2,981,129
AIM V.I. Value Fund -- -- -- $21,820,000 $106,884,475 --
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PORTFOLIO TURNOVER
The portfolio turnover rate of each Fund is shown under "Financial Highlights" in the Prospectus. In any particular year, however, market conditions could result in portfolio activity at a rate greater or lesser than anticipated. Higher portfolio turnover increases transaction costs to the Fund.
BROKERAGE COMMISSIONS PAID
Brokerage commissions paid by each of the Funds listed below were as follows for the fiscal years ended December 31, 2000, December 31, 1999 and December 31, 1998. The significant change in commissions paid from year to year for AIM V.I. Capital Appreciation Fund and AIM V.I. Growth and Income Fund is due to the increase in asset level.
December 31, December 31, December 31,
2000 1999 1998
------------ ------------ ------------
AIM V.I. Aggressive Growth Fund $ 72,497 $ 12,853 $ 2,983*
AIM V.I. Balanced Fund $ 38,836 $ 18,419 $ 2,241*
AIM V.I. Blue Chip Fund $ 17,310 N/A N/A
AIM V.I. Capital Appreciation Fund $2,337,094 $1,028,908 $1,017,185
AIM V.I. Capital Development Fund $ 116,941 $ 14,060 $ 3,748*
AIM V.I. Dent Demographic Trends Fund $ 39,329 N/A N/A
AIM V.I. Diversified Income Fund $ -0- $ 1,626 $ 282
AIM V.I. Global Utilities Fund $ 63,962 $ 21,661 $ 18,422
AIM V.I. Government Securities Fund $ -0- $ -0- $ -0-
AIM V.I. Growth Fund $2,025,067 $ 940,142 $ 876,546
AIM V.I. Growth and Income Fund $3,238,465 $2,951,259 $2,834,451
AIM V.I. High Yield Fund $ -0- $ -0- $ -0-*
AIM V.I. International Equity Fund $1,670,150 $1,061,593 $ 814,499
AIM V.I. Money Market Fund $ -0- $ -0- $ -0-
AIM V.I. New Technology Fund $ 85,374 $ 131,019 $ 120,189
AIM V.I. Value Fund $3,583,721 $1,978,681 $1,920,264
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* Commissions paid are for the period May 1,1998 (date operations commenced) through December 31, 1998.
INVESTMENT STRATEGIES AND RISKS
Information concerning each Fund's non-fundamental investment objective is set forth in the Prospectus under the heading "Investment Objectives and Strategies." There can be no assurance that any Fund will achieve its objective. The principal features of each Fund's investment program and the primary risks associated with that investment program are discussed in the Prospectus under the following headings: "Investment Objectives and Strategies" and "Principal Risks of Investing in the Funds". The following discussion of investment policies supplements the discussion of the investment strategies and risks set forth in the Prospectus.
Set forth in this section is further information with respect to certain Fund's investment policies, strategies and practices. The investment objective(s) of each Fund are non-fundamental policies and may be changed by the Board of Trustees without shareholder approval. Each Fund's investment policies, strategies and practices are also non-fundamental. The Board of Trustees of the Trust reserves the right to change any of these non-fundamental investment policies, strategies or practices without shareholder approval. However, shareholders will be notified before any material change in the investment policies become effective. Each Fund has adopted certain investment restrictions, some of which are fundamental and cannot be changed without shareholder approval. See "Investment Restrictions" in this Statement of Additional Information. Individuals considering the purchase of shares of any Fund should recognize that there are risks in the ownership of any security.
AGGRESSIVE GROWTH FUND
The Fund will invest primarily in common stocks, convertible bonds, convertible preferred stocks and warrants of companies in the small to medium-sized category (i.e., companies with a market capitalization within the range of small cap stocks in the Russell 2500 Index.) Any income received from securities held by the Fund will be incidental, and an investor should not consider a purchase of shares of the Fund as equivalent to a complete investment program. The Fund's portfolio is primarily comprised of securities of two basic categories: (a) "core" companies, which Fund management considers to have experienced above-average and consistent long-term growth in earnings and to have excellent prospects for outstanding future growth, and (b) "earnings acceleration" companies which Fund management believes are currently enjoying dramatic increase in profits. The Fund's strategy does not preclude investment in large, seasoned companies which in the judgement of AIM possess superior potential returns similar to companies with formative growth profiles. The Fund will also invest in established smaller companies (under $500 million in market capitalization) which offer exceptional value based upon substantially above average earnings growth potential relative to market value. The Fund may invest in non-equity securities, such as corporate bonds or U.S. Government obligations during periods when, in the opinion of AIM, prevailing market, financial, or economic
conditions warrant, as well as when such holdings are advisable in light of a change in circumstances of a particular company or within a particular industry.
BALANCED FUND
The Fund will invest in a broadly diversified portfolio of common stocks, preferred stocks, convertible securities and bonds. Most of such fixed income securities will be rated Baa or better by Moody's Investors Service, Inc. ("Moody's") or BBB or better by Standard & Poor's Rating Services ("S&P") or, if unrated, deemed to be of comparable quality by AIM, although the Fund may invest to a limited extent in lower-rated securities. (For a description of the various rating categories, see Appendix A to this Statement of Additional Information. For more information concerning the risk factors associated with investments in high yield securities, see "Risk Factors -- Non-Investment Grade Debt Securities".) The fixed income securities in which the Fund invests may include U.S. Government obligations, mortgage-backed securities, asset-backed securities, bank obligations, corporate debt obligations and unrated obligations, including those of foreign issuers.
BLUE CHIP FUND
The Fund intends to invest at least 65% of its total assets in the common stocks of blue chip companies as determined by AIM. These companies will have the potential for above-average growth in earnings or be well-established in their respective industries. The Fund will generally invest in large and medium sized companies (i.e., companies which fall in the largest 85% of market capitalization of publicly traded companies listed in the United States) which possess the following characteristics:
o Market Characteristics
Blue chip companies are those which occupy (or in AIM's judgment have the potential to occupy) leading market positions that are expected to be maintained or enhanced over time. Strong market positions, particularly in growing industries, can give a company pricing flexibility as well as the potential for strong unit sales. These factors can in turn lead to higher earnings growth and greater share price appreciation. Market leaders can be identified within an industry as those companies which have:
- superior growth prospects compared with other companies in the same industry;
- possession of proprietary technology with the potential to bring about major changes within an industry; and/or
- leading sales within an industry, or the potential to become a market leader.
o Financial Characteristics
Blue chip companies possess at least one of the following attributes:
- faster earnings growth than its competitors and the market in general;
- higher profit margins relative to its competitors;
- strong cash flow relative to its competitors; and/or
- a balance sheet with relatively low debt and a high return on equity relative to its competitors.
When AIM believes securities other than common stocks offer opportunity for long-term growth of capital and income, the Fund may invest in United States government securities, corporate bonds and debentures and convertible preferred stocks and debt securities. The Fund will invest only in debt securities (other than convertible debt securities) which are rated at "Investment Grade" by either S&P or Moody's. Debt
securities in the lowest investment grade (e.g., rated BBB by S&P or Baa by Moody's) have speculative characteristics and changes in economic conditions and other circumstances are more likely to lead to a weakened capacity on the part of the issuer to make principal and interest payments than is the case with higher grade bonds. The Fund will limit its investments in convertible securities to those in which the underlying common stock is a suitable investment for the Fund without regard to debt rating category, but will not invest more than 10% of its total assets in convertible securities. The Fund may invest in United States government securities and corporate bonds and debentures when AIM believes interest rates on such investments may decline thereby potentially increasing the market value of such securities or to meet the additional investment objective of producing current income. Under normal market conditions, the Fund expects at all times to have at least 65% of its total assets invested in securities which AIM believes offer opportunity for long-term growth of capital or income.
For the risks involved in investing in foreign securities, see "Risk Factors - Foreign Securities" in this Statement of Additional Information.
CAPITAL APPRECIATION FUND
The Capital Appreciation Fund's portfolio is primarily comprised of securities of two basic categories of companies: (1) "core" companies, which AIM considers to have experienced consistent long-term growth in earnings and to have strong prospects for outstanding future growth, and (2) "earnings acceleration" companies which AIM believes are currently enjoying a dramatic increase in profits.
CAPITAL DEVELOPMENT FUND
The Fund will invest primarily in securities of small and medium-sized companies (i.e., companies which fall in the smallest 85% by market capitalization of publicly traded companies in the United States).
DENT DEMOGRAPHIC TRENDS FUND
Harry S. Dent, Jr., President of H.S. Dent Advisors, Inc., is an internationally known strategic consultant and best-selling author who provides the Fund's portfolio managers with macroeconomic and sector research, along with investment and market capitalization recommendations. The Fund's portfolio managers then focus on companies within those sectors and market capitalizations that have historically experienced or are deemed to have the potential for above-average, long-term growth in revenues and earnings. The Fund makes use of a unique investment style that blends AIM's earnings momentum approach with proprietary guidance from Dent.
The Fund's portfolio managers may sell stocks that experience decelerated earnings and negative earnings revisions. They actively monitor valuation targets and may reduce positions that they believe have become too heavily weighted in the Fund's portfolio.
The Fund may invest in companies of various market capitalizations and is not limited exclusively to small-, mid- or large-cap stocks, which may help minimize the risks associated with sector investing.
Demographic, economic and lifestyle trends may occur in different phases around the world. The Fund is positioned to potentially take advantage of these differing phases by investing in both domestic and foreign stock issuers.
DIVERSIFIED INCOME FUND
The Fund may invest up to 10% of its total assets in common stocks, preferred stocks, similar equity securities and convertible securities of U.S. and foreign companies. The Fund does not intend to invest more than 50% of its total assets in lower-rated or unrated high yield securities or more than 50% of its total assets in foreign debt securities. (For a description of the various rating categories of corporate debt securities in which the Fund may invest, see Appendix A to this Statement of Additional
Information. For a description of U.S. Government Agency Mortgage-Backed Securities, see Appendix B to this Statement of Additional Information.) For a discussion of the investment risks associated with investments in high yield securities and foreign securities, see "Risk Factors" in this Statement of Additional Information.
GLOBAL UTILITIES FUND
Under normal circumstances, at least 65% of the Fund's total assets will be invested in securities of public utility companies (either domestic or foreign). Public utility companies include companies that produce or supply electricity, natural gas, water, sanitary services, and telephone or telegraph, cable, satellite or other communication or information transmission services, as well as holding companies which derive at least 40% of their revenues from utility-related activities and companies that provide advanced technologies for use by the utilities industry. The Fund will seek to position itself to take advantage of deregulation in the utility industry and advances in communication and natural gas technology. In addition to the Fund's investments in common and preferred stocks of public utility companies, the Fund may invest up to 25% of its total assets in convertible securities. When AIM deems it appropriate, the Fund may also purchase the bonds of such companies. (For a description of the various rating categories of corporate debt securities in which the Fund may invest, see Appendix A to this Statement of Additional Information.) The Fund may also invest up to 80% of its total assets in securities of foreign companies, including investments in American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and underlying securities of foreign issuers. For a discussion of the investment risks associated with investments in non-investment grade debt securities and foreign securities, see "Risk Factors" in this Statement of Additional Information.
A portfolio of utility company securities is subject to a different degree of volatility than a more broadly diversified portfolio. Economic, operational or regulatory changes that affect utility companies will have a material impact upon the value of the securities that the Fund owns. Events, such as changing weather patterns, emergencies involving nuclear power plants, or rapidly changing fuel prices that have no direct connection with companies whose securities are owned by the Fund may affect the prices of those securities.
Moreover, a portfolio of utilities industry securities is subject to the risks unique to that industry, such as inflationary or other increases in fuel and operating expenses, possible increases in the interest costs of loans needed for capital construction programs, compliance with environmental regulations, possible adverse changes in the regulatory climate and availability of fuel sources.
GOVERNMENT SECURITIES FUND
The government securities which may be purchased by the Fund include
but are not limited to (1) U.S. Treasury obligations such as Treasury Bills
(maturities of one year or less), Treasury Notes (maturities of one to ten
years) and Treasury Bonds (generally maturities of greater than ten years) and
(2) obligations issued or guaranteed by U.S. Government agencies and
instrumentalities ("Agency Securities") which are supported by any of the
following: (a) the full faith and credit of the U.S. Treasury, such as
obligations of the Government National Mortgage Association ("GNMA"), (b) the
right of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury, such as obligations of the Federal National Mortgage
Association ("FNMA"), the Federal Home Loan Bank and the U.S. Postal Service or
(c) the credit of the agency or instrumentality, such as obligations of the
Federal Home Loan Mortgage Corporation ("FHLMC") and Federal Farm Credit System.
Although their close relationship with the U.S. Government is believed to make
them high-quality securities with minimal credit risks, the U.S. Government is
not required by law to support the agencies and instrumentalities listed in (b)
and (c), above. Accordingly, such securities may involve risk of loss of
principal and interest; however, historically there have not been any defaults
of such issues. For a listing of some of the types of Agency Securities in which
the Fund may invest, see Appendix B to this Statement of Additional Information.
The Fund's investments include high coupon U.S. Government Agency Mortgage-Backed Securities, which provide a higher coupon at the time of purchase than the prevailing market rate yield. The prices of high coupon U.S. Government Agency Mortgage-Backed Securities do not tend to rise as rapidly as those of traditional fixed rate securities at times when interest rates are decreasing, and tend to decline more slowly at times when interest rates are increasing. The Fund may purchase such securities at a premium, which means that a faster principal prepayment rate than expected will reduce the market value of and income from
such securities, while a slower prepayment rate will tend to increase the market value of and income from such securities.
The composition and weighted average maturity of the Fund's portfolio will vary from time to time, based upon the determination of AIM and how best to further the Fund's investment objective. The Fund may invest in government securities of all maturities, short-term, intermediate-term and long-term. The Fund intends to maintain a dollar-weighted average portfolio maturity of between three and ten years.
GROWTH FUND
Current income will not be an important criterion of investment selection, and any such income should be considered incidental. The Fund's portfolio is primarily comprised of securities of two basic categories of companies: (1) "core" companies, which AIM considers to have experienced consistent long-term growth in earnings and to have strong prospects for outstanding future growth, and (2) "earnings acceleration" companies which AIM believes are currently enjoying a dramatic increase in profits.
HIGH YIELD FUND
The Fund invests principally in publicly traded non-investment grade debt securities. Debt securities of less than investment grade are considered "high risk" securities (commonly referred to as junk bonds). The Fund will invest over 50% of the value of its total assets in securities that are rated Baa, Ba or B by Moody's or BBB, BB, or B by S&P, or securities of comparable quality in the opinion of the fund's portfolio managers, that are either unrated or rated by other NRSROs. (For a description of the various rating categories, see Appendix A to this Statement of Additional Information.) The Fund may also hold, from time to time, securities rated Caa by Moody's or CCC by S&P, or if unrated or rated by other NRSROs, securities of comparable quality as determined by AIM. It should be noted, however, that achieving the Fund's investment objective may be more dependent on the credit analysis of AIM, and less on that of credit rating agencies, than may be the case for funds that invest in more highly rated bonds.
While the securities held by the Fund are expected to provide greater income and, possibly, opportunity for greater gain than investments in more highly rated securities, they may be subject to greater risk of loss of income and principal and are more speculative in nature. The Fund's yield and the net asset value of its shares may be expected to fluctuate over time. Therefore, an investment in the Fund may not be appropriate for some investors and should not constitute a complete investment program for others. See "Risk Factors -- Non-Investment Grade Debt Securities."
The Fund may invest in both illiquid securities and securities which are subject to restrictions on resale because they have not been registered under the Securities Act of 1933. See "Illiquid Securities" for further information regarding such investments.
INTERNATIONAL EQUITY FUND
In managing the Fund, AIM seeks to apply to a diversified portfolio of international equity securities substantially the same investment strategy which it applies to the Growth Fund with respect to that Fund's investment in United States equities markets. The Fund will utilize, to the extent practicable, a fully managed investment policy providing for the selection of securities which meet certain quantitative standards determined by AIM. AIM will review carefully the earnings history and prospects for growth of each company considered for investment by the Fund. It is expected that the Fund's portfolio, when fully invested, will generally be comprised of two basic categories of foreign companies: (1) "core" companies, which AIM considers to have experienced consistent long-term growth in earnings and to have strong prospects for outstanding future growth, and (2) companies that AIM believes are currently experiencing a greater than anticipated increase in earnings. If a particular foreign company meets the quantitative standards determined by AIM, its securities may be acquired by the Fund regardless of the location of the company or the percentage of the Fund's investments in the company's country or region. However, AIM will also consider other factors in making investment decisions for the Fund, including such factors as the prospects for relative economic growth among countries or regions, economic and political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. For a discussion of the investment
risks associated with investments in foreign securities, see "Risk Factors" in this Statement of Additional Information.
MONEY MARKET FUND
The Fund invests in a diversified portfolio of high quality U.S. dollar denominated money market instruments and other similar instruments with maturities of 397 days or less from the date of purchase, and will maintain a dollar weighted-average portfolio maturity of 90 days or less. Securities subject to repurchase agreements may bear longer maturities.
The Fund invests in a broad range of U.S. Government and foreign government obligations, and bank and commercial instruments that may be available in the money markets. Such obligations include U.S. Treasury obligations and repurchase agreements secured by such obligations. The Money Market Fund intends to invest in bankers' acceptances, certificates of deposit, repurchase agreements, time deposits, variable rate master demand notes, taxable municipal securities and commercial paper, and U.S. Government direct obligations and U.S. Government agencies' securities. Bankers acceptances, certificates of deposit and time deposits may be purchased from U.S. or foreign banks. All of these instruments, which are collectively referred to as "Money Market Obligations," are briefly described in Appendix C to this Statement of Additional Information.
The Fund will limit investments in Money Market Obligations to those which are denominated in U.S. dollars and which at the date of purchase are "First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. Generally "First Tier" securities are securities that are rated in the highest rating category by two NRSROs, or, if only rated by one NRSRO, are rated in the highest rating category by that NRSRO, or, if unrated, are determined by AIM (under the supervision of and pursuant to guidelines established by the Board of Trustees) to be comparable quality to a rated security that meets the foregoing quality standards. For a more complete definition of a "First Tier" security, see "Money Market Obligations" in this Statement of Additional Information.
The Money Market Fund may invest up to 100% of its total assets in obligations issued by banks. While the Fund will limit its investments in bank instruments to U.S. dollar denominated obligations, it may invest in Eurodollar obligations (i.e., U.S. dollar-denominated obligations issued by a foreign branch of a domestic bank), Yankee dollar obligations (i.e., U.S. dollar-denominated obligations issued by a domestic branch of a foreign bank) and obligations of foreign branches of foreign banks. The Money Market Fund will limit its aggregate investments in foreign bank obligations, including Eurodollar obligations and Yankee dollar obligations, to 50% of its total assets at the time of purchase, provided that there is no limitation upon the Fund's investments in (a) Eurodollar obligations, if the domestic parent of the foreign branch issuing the obligation is unconditionally liable in the event that the foreign branch for any reason fails to pay on the Eurodollar obligation; and (b) Yankee dollar obligations, if the U.S. branch of the foreign bank is subject to the same regulation as U.S. banks. Eurodollar, Yankee dollar and other foreign bank obligations include time deposits, which are non-negotiable deposits maintained in a bank for a specified period of time at a stated interest rate. For a discussion of the risks pertaining to investments in foreign securities, see "Risk Factors" in this Statement of Additional Information.
VALUE FUND
The secondary objective of income would be satisfied principally from the income (interest and dividends) generated by the common stocks, convertible bonds and convertible preferred stocks held in the Fund's portfolio. The Fund may also acquire preferred stocks and debt instruments having prospects for growth of capital.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
Each Fund is subject to the following fundamental investment
restrictions, except Global Utilities Fund is not subject to restrictions (1) or
(4). Fundamental restrictions may be changed only by a vote of the lesser of (i)
67% or more of the Fund's shares present at a meeting if the holders of more
than 50% of the outstanding shares are present in person or represented by
proxy, or (ii) more than 50% of the Fund's outstanding shares. Consistent with
applicable law and unless otherwise provided, all percentage limitations apply
at the time of purchase.
(1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the 1940 Act Laws and Interpretations) or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the 1940 Act Laws, Interpretations and Exemptions). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions;
(2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions;
(3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the Securities Act of 1933;
(4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, (ii) tax-exempt obligations issued by governments or political subdivisions of governments, or (iii) for Money Market, bank instruments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security;
(5) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or in investing in securities that are secured by real estate or interests therein;
(6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities;
(7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests; and
(8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and limitations as that Fund.
Global Utilities Fund is also subject to the following fundamental investment restriction:
The Fund will concentrate (as such term may be defined or interpreted by the 1940 Act Laws, Interpretations, and Exemptions) its investments in the securities of domestic and foreign public utility companies.
The investment restrictions set forth above provide the Funds with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though the Funds have this flexibility, the Board of Trustees has adopted non-fundamental restrictions for the Funds relating to certain of these restrictions which the advisor must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS
The following non-fundamental investment restrictions apply to all of
the Funds, except Global Utilities Fund is not subject to restrictions (1) or
(3). They may be changed for any Fund without approval of that Fund's voting
securities.
(1) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% of its total assets (and for Money Market Fund, with respect to 100% of its total assets), purchase the securities of any issuer (other than securities issued or guaranteed by the U. S. Government or any of its agencies or instrumentalities), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, except as permitted by Rule 2a-7 under the 1940 Act, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may (i) purchase securities of other investment companies as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities of money market funds and lend money to other investment companies and their series portfolios that have AIM as an investment advisor, subject to the terms and conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker/dealers or other investment companies or their series portfolios that have AIM or an affiliate of AIM as an investment advisor (an "Advised Fund"). The Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowing from banks exceeds 5% of the Fund's total assets.
(3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to another Advised Fund, on such terms and conditions as the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
For purposes of Global Utilities Fund's fundamental restriction regarding industry concentration, public utility companies shall consist of companies that produce or supply electricity, natural gas, water, sanitary services, and telephone, cable satellite, telegraph or other communication or information transmission services, as well as developing utility technology companies and holding companies which derive at least 40% of their revenues from utility-related activities.
CERTAIN INVESTMENT STRATEGIES AND TECHNIQUES
Each of the Funds has the flexibility to invest, to the extent described below, in a variety of instruments designed to enhance its investment capabilities. Each of the Funds may invest in money market obligations, foreign securities (including ADRs and EDRs), repurchase agreements, reverse repurchase agreements, taxable municipal securities, illiquid securities and Rule 144A securities; the Diversified Income Fund and the Government Fund may invest in U.S. Government Agency Mortgage-Backed Securities; each of the Funds may purchase or sell securities on a delayed delivery or when-issued basis and may borrow money; each of the Funds, other than the Money Market Fund, may lend portfolio securities and make short sales "against the box." A short sale is "against the box" to the extent that the Fund contemporaneously owns or has the right to obtain securities identical to those sold short without payment of any further consideration.
Each of the Funds, other than the Money Market Fund, may write (i.e., sell) "covered" put and call options and buy put and call options on domestic and foreign securities, securities indices and currencies. Each of the Funds, other than the Money Market Fund, may use exchange-traded financial futures contracts, options thereon, and forward contracts as a hedge to protect against possible changes in market values. A brief description of these investment instruments and their risks appears below. See "Hedging and Other Investment Techniques" in this Statement of Additional Information for more detailed information.
MONEY MARKET OBLIGATIONS
When deemed appropriate for temporary or defensive purposes, each of the Funds may hold cash or cash equivalent Money Market Obligations. Of course, the Money Market Fund invests exclusively in Money Market Obligations. While none of the Funds other than the Money Market Fund is required by regulation or fundamental policy to limit such investments to those which, at the date of purchase, are "First Tier" securities as that term is defined in Rule 2a-7 under the 1940 Act, it is the current intention of AIM to limit such investments to those securities which, at the time of purchase, are considered "First Tier" securities or securities which AIM has determined to be of comparable credit quality. To the extent that a Fund invests to a significant degree in these instruments, its ability to achieve its investment objective may be adversely affected.
In addition to the Money Market Obligations described above, as a temporary or defensive measure, and without regard to their respective investment objectives, AIM, may invest all or substantially all of the assets of each Fund (other than Money Market Fund) in cash or Money Market Obligations, including repurchase agreements, some of which may be denominated in foreign currencies.
As set forth in the Prospectus, the Money Market Fund will limit its purchases of Money Market Obligations to U.S. dollar denominated securities which are "First Tier" securities, as such term is defined from time to time in Rule 2a-7 under the 1940 Act. A First Tier Security is generally a security that: (i) has received a short-term rating, or is subject to a guarantee that has received a short-term rating, or, in either case, is issued by an issuer with a short-term rating from the Requisite NRSROs in the highest short-term rating category for debt obligations; (ii) is an unrated security that the Fund's investment adviser has determined are of comparable quality to a rated security described in (i); (iii) is a security issued by a registered investment company that is a money market fund; or (iv) is a Government Security.
Subsequent to its purchase by the Fund, an issue of Money Market Obligations may cease to be a First Tier security. Subject to certain exceptions set forth in Rule 2a-7, such an event will not require the elimination of the security from the Fund, but AIM will consider such an event to be relevant in its determination of whether the Fund should continue to hold the security.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements with
institutions believed by the Trust's Board of Trustees to present minimal credit
risk. A repurchase agreement is an instrument under which the Fund acquires
ownership of a debt security and the seller agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed upon time and price, thereby
determining the yield during the Fund's holding period. With regard to
repurchase transactions, in the event of a bankruptcy or other default of a
seller of a repurchase agreement (such as the sellers' failure to repurchase the
obligation in accordance with the terms of the agreement), a Fund could
experience both delays in liquidating the underlying securities and losses,
including: (a) a possible decline in the value of the underlying security during
the period while the Fund seeks to enforce its rights thereto; (b) possible
subnormal levels of income and lack of access to income during this period; and
(c) expenses of enforcing its rights. Repurchase agreements are considered to be
loans by the Fund under the 1940 Act. Repurchase agreements will be secured by
U.S. Treasury securities, U.S. Government agency securities (including, but not
limited to, those which have been stripped of their interest payments and
mortgage-backed securities) and commercial paper.
Although the underlying collateral for repurchase agreements may have maturities exceeding one year, the Funds will not enter into repurchase agreements expiring in more than seven days. The Fund may, however, enter into a "continuing contract" or "open" repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying obligation from the Fund on demand and the effective interest rate is negotiated on a daily basis. Repurchase agreements are considered to be loans by the Fund under the 1940 Act. Securities subject to repurchase agreements will be held in the custodian's account with the Federal Book-Entry System on behalf of the Fund.
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
The Diversified Income Fund and the Government Fund may invest in U.S. Government Agency Mortgage-Backed Securities. These securities are obligations issued or guaranteed by the United States Government or by one of its agencies or instrumentalities, including but not limited to GNMA, FNMA, or FHLMC. U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through to investors of their pro-rata share of monthly payments (including any principal prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees paid to the guarantor of such securities and servicers of the underlying mortgage loans. GNMA, FNMA and FHLMC each guarantee timely distributions of interest to certificate holders. GNMA and FNMA guarantee timely distributions of scheduled principal. FHLMC has in the past guaranteed only the ultimate collection of principal of the underlying mortgage loan; however, FHLMC Gold Participation Certificates now guarantee timely payment of monthly principal reductions. Although their close relationship with the U.S. Government is believed to make them high-quality securities with minimal credit risks, the U.S. Government is not obligated by law to support either FNMA or FHLMC. However, historically there have not been any defaults of FNMA or FHLMC issues. See Appendix B for a more complete description of GNMA securities.
Mortgage-backed securities consist of interests in underlying mortgages generally with maturities of up to thirty years. However, due to early unscheduled payments of principal of the underlying mortgages, the securities have a shorter average life and, therefore, less volatility than a comparable thirty-year bond. The value of U.S. Government Agency Mortgage-Backed Securities, like other traditional debt instruments, will tend to move in the opposite direction compared to interest rates.
CONVERTIBLE SECURITIES
To the extent consistent with their respective investment objectives, each of the Funds (except the Money Market Fund) may invest in convertible securities. Convertible securities usually consist of corporate debt securities or preferred stock that may in certain circumstances be converted into a predetermined number of shares of another form of that issuer's equity, usually common stock. Convertible securities consequently often involve attributes of both debt and equity instruments, and investment in such securities requires analysis of both credit and stock market risks. Convertible securities rank senior to common stock in a corporation's capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption at the option of the issuer at a price established in the
convertible security's governing instrument. Although the Funds will only purchase convertible securities that AIM considers to have adequate protection parameters, including an adequate capacity to pay interest and repay principal in a timely manner, each applicable Fund invests in such securities without regard to corporate bond ratings.
REAL ESTATE INVESTMENT TRUSTS ("REITs")
To the extent consistent with their respective investment objectives and policies, each of the Funds (except the Government Fund and the Money Market Fund) may invest in equity and/or debt securities issued by REITs. Such investments will not exceed (i) 25% of the total assets of the Aggressive Growth Fund, the Balanced Fund, the Blue Chip Fund, the Capital Appreciation Fund, the Capital Development Fund, the Dent Demographic Trends Fund, the Global Utilities Fund, the Growth Fund, the Growth and Income Fund, the International Fund, the New Technology Fund and the Value Fund; and (ii) 10% of the total assets of the Diversified Income Fund and the High Yield Fund.
REITs are trusts which sell equity or debt securities to investors and use the proceeds to invest in real estate or interest therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the Southeastern United States, or both.
To the extent that the Fund has the ability to invest in REITs, the Fund could conceivably own real estate directly as a result of a default on the securities it owns. The Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs.
FOREIGN SECURITIES
To the extent consistent with their respective investment objectives, each of the Funds may invest in foreign securities. It is not anticipated that such foreign securities will constitute more than: (i) 20% of the value of the total assets of the Government Fund; (ii) 25% of the value of the total assets of the Aggressive Growth Fund, the Balanced Fund, the Blue Chip Fund, the Capital Appreciation Fund, the Capital Development Fund, the Dent Demographic Trends Fund, the Growth Fund, the Growth and Income Fund, the High Yield Fund, the Value Fund, and the New Technology Fund; (iii) 50% of the value of the total assets of the Diversified Income Fund and the Money Market Fund (however, the Money Market Fund may only invest in foreign securities denominated in U.S. dollars); and (iv) 80% of the value of the total assets of the Global Utilities Fund. The International Fund intends to invest at least 70% of its total assets in foreign securities.
The Diversified Income Fund may invest in debt obligations which may be denominated in the U.S. dollar or in other currencies issued or guaranteed by foreign corporations, certain supranational entities (such as the World Bank, Asian Development Bank and European Economic Community), and foreign governments (including political subdivisions having taxing authority) or their agencies or instrumentalities. The Diversified Income Fund may also invest in debt obligations issued by corporations denominated in non-U.S. dollar currencies. No more than 25% of the Diversified Income Fund's total assets, at the time of purchase, will be invested in government securities of any one foreign country. At the present time, AIM does not intend to invest more than 10% of the Diversified Income Fund's total assets in securities issued by foreign governments or foreign companies located in developing countries in various regions of the world. A
"developing country" is a country in the initial stages of its industrial cycle. Investments in emerging markets or developing countries involve exposure to economic structures that are generally less diverse and mature and to political systems which can be expected to have less stability than those of more developed countries. Such countries may have relatively unstable governments, economies based on only a few industries, and securities markets which trade only a small number of securities. Historical experience indicates that emerging markets have been more volatile than the markets of more mature economies; such markets have also from time to time provided higher rates of return and greater risks to investors. AIM believes that these characteristics of emerging markets can be expected to continue in the future.
The Global Utilities Fund may invest up to 80% of its total assets in securities of foreign companies, including investments in ADRs, EDRs and other securities representing underlying securities of foreign issuers. Under normal market conditions, the Global Utilities Fund will be invested in securities of issuers located in at least four countries, one of which will be the United States, although for defensive purposes, it may invest 100% of its total assets in securities of U.S. issuers. In some foreign countries, utility companies are partially owned by government agencies. In some cases, foreign government agencies may have significant investments in businesses other than utility companies. Also, investments in securities of foreign issuers may involve other risks which are not ordinarily associated with investments in domestic issuers. In addition, investors should also be aware that the Global Utilities Fund may invest in companies located within emerging or developing countries.
Under normal market conditions the International Fund will invest at least 70% of its total assets in marketable equity securities (including common and preferred stock and depositary receipts for stock) and may invest up to 20% of its total assets in securities exchangeable for or convertible into stock of foreign companies.
Under normal market conditions, the International Fund intends to invest in the securities of foreign companies located in at least four countries outside the United States. The International Fund will emphasize investment in foreign companies in the developed countries of Western Europe and the Pacific Basin, but the Fund may also invest to a lesser extent in the securities of companies located in developing countries in various regions of the world. At the present time, AIM does not intend to invest more than 20% of the International Fund's total assets in securities issued by foreign governments or foreign companies located in developing countries.
For a discussion of the risks pertaining to investments in foreign obligations, see "Risk Factors" in this Statement of Additional Information.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with foreign currencies, and consequently the Funds (except the Money Market Fund) may from time to time hold cash balances in the form of foreign currencies and multinational currency units. Such foreign currencies and multinational currency units will usually be acquired on a spot (i.e. cash) basis at the spot rate prevailing in foreign exchange markets and will result in currency conversion costs to the Fund. A Fund attempts to purchase and sell foreign currencies on as favorable a basis as practicable; however, some price spread on foreign exchange transactions (to cover service charges) may be incurred, particularly when the Fund changes investments from one country to another, or when U.S. Dollars are used to purchase foreign securities. Certain countries could adopt policies which would prevent the Fund from transferring cash out of such countries, and the Fund may be affected either favorably or unfavorably by fluctuations in relative exchange rates while the Fund holds foreign currencies.
ADRs AND EDRs
To the extent consistent with their respective investment objectives each of the Funds (except the International Fund which is discussed separately above) may also invest in securities which are in the form of ADRs, EDRs or other securities representing underlying securities of foreign issuers. ADRs are receipts typically issued by a United States bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership
arrangement. ADRs, EDRs and other securities representing underlying securities of foreign issuers are treated as foreign securities for purposes of determining the applicable limitation on investment in foreign securities.
LENDING OF PORTFOLIO SECURITIES
Each Fund (except the Money Market Fund) may, from time to time, lend securities from their respective portfolios, with a value not exceeding 33 1/3% of their respective total assets, to banks, brokers and other financial institutions, and receive in return collateral in the form of liquid assets which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The collateral received will consist of cash, U.S. Government securities, letters of credit or such other collateral as may be permitted under each such Fund's investment program. While the securities are being lent, a Fund will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of the collateral or a fee from the borrower. A Fund has a right to call each loan and obtain the securities on five business days' notice or, in connection with securities trading on foreign markets, within such longer period of time which coincides with the normal settlement period for purchases and sales of such securities in such foreign markets. A Fund will not have the right to vote securities while they are being lent, but it will call a loan in anticipation of any important vote. During the period of the loan, the applicable Fund receives the income on both the loaned securities and the collateral (or a fee) and thereby increases its yield. In the event that the borrower defaults on its obligation to return loaned securities because of insolvency or otherwise, the Fund could experience delays and costs in gaining access to the collateral and could suffer a loss to the extent that the value of the collateral falls below the market value of the loaned securities. Loans will only be made to persons deemed by AIM to be of good standing and will not be made unless, in the judgment of AIM, the consideration to be earned from such loans would justify the risk.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale by the Fund of portfolio securities, with an agreement that the Fund will repurchase the securities at an agreed upon price, date and interest payment. Each Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. At the time it enters into a reverse repurchase agreement, a Fund will segregate liquid assets having a dollar value equal to the repurchase price. Each of the Funds may enter into reverse repurchase agreements in amounts not exceeding 33 1/3% of the value of their respective total assets. Reverse repurchase agreements involve the risk that the market value of securities retained by a Fund in lieu of liquidating may decline below the repurchase price of the securities sold by the Fund which is obligated to repurchase. This risk, if encountered, could cause a reduction in the net asset value of the Fund's shares. Reverse repurchase agreements are considered to be borrowings under the 1940 Act. See "Borrowing" in this Statement of Additional Information for percentage limitations on borrowings.
DELAYED DELIVERY AGREEMENTS AND WHEN-ISSUED SECURITIES
Each Fund may enter into delayed delivery agreements and may purchase securities on a "when-issued" basis.
Delayed delivery agreements involve commitments by each such Fund to dealers or issuers to acquire securities or instruments at a specified future date beyond the customary settlement date for such securities. These commitments fix the payment price and interest rate to be received on the investment. Delayed delivery agreements will not be used as a speculative or leverage technique. Rather, from time to time, AIM can anticipate that cash for investment purposes will result from scheduled maturities of existing portfolio instruments or from net sales of shares of the Fund and may enter into delayed delivery agreements to assure that the Fund will be as fully invested as possible in instruments meeting its investment objective. Until the settlement date, the Fund will segregate cash or other liquid assets of a dollar value sufficient at all times to make payment for the delayed delivery securities. The delayed delivery securities, which will not begin
to accrue interest until the settlement date, will be recorded as an asset of the Fund and will be subject to the risks of market fluctuation. The purchase price of the delayed delivery securities is a liability of the Fund until settlement. If cash is not available to the Fund at the time of settlement, the Fund may be required to dispose of portfolio securities that it would otherwise hold to maturity in order to meet its obligation to accept delivery under a delayed delivery agreement. The Board of Trustees has determined that entering into delayed delivery agreements does not present a materially increased risk of loss to shareholders, but the Board of Trustees may restrict the use of delayed delivery agreements if the risk of loss is determined to be material or if it affects the constant net asset value of the Money Market Fund.
Many new issues of debt securities are offered on a "when-issued" basis, that is, the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued (normally within forty-five days after the date of the transaction). The payment obligation and the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. The Funds will only make commitments to purchase such debt securities with the intention of actually acquiring such securities, but the Funds may each sell these securities before the settlement date if it is deemed advisable. The Fund holds, and maintains until the settlement date segregated liquid assets of a dollar value sufficient at all times to make payment for the when-issued securities. The securities will be marked-to-market and additional assets will be segregated if necessary to maintain adequate coverage of the when-issued commitments.
Securities purchased on a when-issued basis and the securities held in the Funds' portfolios are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and changes in the level of interest rates (which will generally result in all of those securities changing in value in the same way, i.e., all those securities experiencing appreciation when interest rates rise). Therefore, if, in order to achieve higher interest income, a Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Fund's assets will fluctuate to a greater degree. Furthermore, when the time comes for the Fund to meet its obligations under when-issued commitments, the Fund will do so by using then-available cash flow, by sale of the segregated securities, by the sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the applicable Fund's payment obligation).
A sale of securities to meet such obligations carries with it a greater potential for the realization of net short-term capital gains, which are not exempt from federal income taxes. The value of when-issued securities on the settlement date may be more or less than the purchase price.
If a Fund enters into a delayed delivery agreement or purchases a when-issued security, the Fund will direct its custodian bank to segregate liquid assets in an amount equal to its delayed delivery agreements or when-issued commitments. If the market value of such securities declines, additional cash or securities will be segregated on a daily basis so that the market value of the account will equal the amount of such Fund's delayed delivery agreements and when-issued commitments. To the extent that funds are segregated, they will not be available for new investment or to meet redemptions. Investment in securities on a when-issued basis and use of delayed delivery agreements may increase the Fund's exposure to market fluctuation, or may increase the possibility that the Fund will incur a short-term loss, if the Fund must engage in portfolio transactions in order to honor a when-issued commitment or accept delivery of a security under a delayed delivery agreement. The Fund may employ techniques designed to minimize these risks. No additional delayed delivery agreements or when-issued commitments will be made by a Fund if, as a result, more than 25% of the Fund's net assets would become so committed.
The Government Fund may engage in buy/sell back transactions (a form of delayed delivery agreement). In a buy/sell back transaction, the Fund enters a trade to sell securities at one price and simultaneously enters a trade to buy the same securities at another price for settlement at a future date.
DOLLAR ROLL TRANSACTIONS
In order to enhance portfolio returns and manage prepayment risk, the Diversified Income Fund and the Government Fund may engage in dollar roll transactions with respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, the Fund sells a mortgage security held in the portfolio
to a financial institution such as a bank or broker-dealer, and simultaneously agrees to repurchase a substantially similar security (same type, coupon and maturity) from the institution at a later date at an agreed upon price. The mortgage securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayments histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for the Fund exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities under a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. See "Borrowing," below for the applicable limitation on dollar roll transactions.
ILLIQUID SECURITIES
None of the Funds will invest more than 15% of their respective net assets in illiquid securities, including restricted securities which are illiquid. The Money Market Fund will not invest more than 10% of its net assets in illiquid securities.
SPECIAL SITUATIONS
Although the Capital Appreciation Fund does not currently intend to do so, it may invest in "special situations." A special situation arises when, in the opinion of the Fund's management, the securities of a particular company will, within a reasonably estimable period of time, be accorded market recognition at an appreciated value solely by reason of a development applicable to that company, and regardless of general business conditions or movements of the market as a whole. Developments creating special situations might include, among others: liquidations, reorganizations, recapitalizations, mergers, material litigation, technical breakthroughs and new management or management policies. Although large and well known companies may be involved, special situations more often involve comparatively small or unseasoned companies. Investments in unseasoned companies and special situations often involve much greater risk than is inherent in ordinary investment securities.
WARRANTS
The Aggressive Growth Fund, the Blue Chip Fund, the Capital Development Fund, the Dent Demographic Trends Fund, the Growth and Income Fund and the High Yield Fund may, from time to time, invest in warrants. Warrants are, in effect, longer-term call options. They give the holder the right to purchase a given number of shares of a particular company at specified prices within certain periods of time. The purchaser of a warrant expects that the market price of the security will exceed the purchase price of the warrant plus the exercise price of the warrant, thus giving him a profit. Of course, since the market price may never exceed the exercise price before the expiration date of the warrant, the purchaser of the warrant risks the loss of the entire purchase price of the warrant. Warrants generally trade in the open market and may be sold rather than exercised. Warrants are sometimes sold in unit form with other securities of an issuer. Units of warrants and common stock may be employed in financing young, unseasoned companies. The purchase price of a warrant varies with the exercise price of a warrant, the current market value of the underlying security, the life of the warrant and various other investment factors.
SHORT SALES
Each of the Funds (except the Money Market Fund) may enter into short sales transactions from time to time. None of these Funds will make short sales of securities nor maintain a short position unless at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. This is a technique known as selling short "against
the box." Such short sales will be used by each of the Funds for the purpose of deferring recognition of gain or loss for federal income tax purposes. In no event may more than 10% of the value of any such Fund's total assets be deposited or pledged as collateral for such sales at any time.
RULE 144A SECURITIES
Each of the Funds may invest in securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act"). These securities are sometimes referred to as private placements. Although securities which may be resold only to "qualified institutional buyers" in accordance with the provisions of Rule 144A under the 1933 Act are technically considered "restricted securities," the Funds may each purchase Rule 144A securities without regard to the limitation on investments in illiquid securities described above under "Illiquid Securities," provided that a determination is made that such securities have a readily available trading market. AIM will determine the liquidity of Rule 144A securities under the supervision of the Trust's Board of Trustees. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination AIM will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the security and of market place trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will be monitored by AIM and, if as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that the Fund does not exceed its applicable percentage limitation for investments in illiquid securities.
EQUITY-LINKED DERIVATIVES
The Aggressive Growth Fund, the Balanced Fund, the Blue Chip Fund, the Capital Appreciation Fund, the Capital Development Fund, the Dent Demographic Trends Fund, the Global Utilities Fund, the Growth and Income Fund, the Growth Fund, the International Equity Fund, the New Technology Fund and the Value Fund may invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optomised Portfolios as Listed Securities ("OPALS"). Investments in equity-linked derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in equity-linked derivatives may constitute investments in other investment companies. See "Investment in Other Investment Companies."
INVESTMENT IN OTHER INVESTMENT COMPANIES
Each of the Funds may invest in other investment companies to the extent permitted by the 1940 Act, and rules and regulations thereunder, and if applicable, exemptive orders granted by the SEC. The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds (defined below): (i) a Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Fund may not invest more than 10% of its total assets in securities issued by other investment companies other than Affiliated Money Market Funds. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds, the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Funds have obtained an exemptive order from the SEC allowing them to invest uninvested cash balances and cash collateral received in connection with securities lending in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that, with respect to uninvested cash balances, investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund. With respect to a Fund's purchase of shares of the Affiliated Money Market Funds, the Fund will indirectly pay the advisory fees and other operating expenses of the Affiliated Money Market Funds.
TEMPORARY DEFENSIVE INVESTMENTS
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each of the Funds (except Money Market Fund) may temporarily hold all or a portion of its assets in cash, money market instruments, bonds, or other debt securities. The Funds may also invest up to 25% of their respective total assets in Affiliated Money Market Funds for these purposes. For a description of the various rating categories of corporate bonds and commercial paper in which the Funds may invest, see the Appendix to this Statement of Additional Information.
In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, Money Market Fund may temporarily hold all or a portion of its assets in cash, and may invest up to 25% of its total assets in Affiliated Money Market Funds.
UTILITIES INDUSTRY
The following is a general description of the particular types of utilities industries in which the Global Utilities Fund may invest.
Electric Utility Industry. Electric utilities are heavily regulated. Local rates are subject to the review of state commissions, and sales either between companies or that cross state lines are subject to review by the Federal Energy Regulatory Commission. The industry is also subject to regulation by the SEC under the Public Utility Holding Company Act of 1935. In addition, companies constructing or operating nuclear powered generating stations are subject to extensive regulation by the Nuclear Regulatory Commission.
Electric utility companies are also subject to extensive local regulation in environmental and site location matters. Future legislation with regard to the issues of acid rain and toxic and radioactive wastes could have a significant impact on the manner in which utility companies conduct their business, and the costs that they incur. Since the late 1970s, investor-owned utilities have experienced a number of unfavorable regulatory trends, including increased regulatory resistance to price increases and new legislation encouraging competition.
Electric utilities have recently become subject to competition in varying degrees. This competition can have the effect of decreasing revenues and profit margins.
Natural Gas Industry. The natural gas industry is comprised primarily of many small distribution companies and a few large interstate pipeline companies. The Public Utility Holding Company Act of 1935 has generally acted as a bar to the consolidation of pipeline and distribution companies. Regulation of these companies is similar to that of electric companies. The performance of natural gas utilities may also be substantially affected by fluctuations in energy prices. Competition in the natural gas industry has resulted in the consolidation of the industry.
Communications Industry. Most of the communications industry capacity is concentrated in the hands of a few very large publicly-held companies, unlike the situation in the electric and gas industries. Significant risks for the investor to overcome still exist, however, including risk relating to pricing at marginal versus embedded cost. New entrants may have lower costs of material due to newer technologies or lower standards of reliability than those heretofore imposed by American Telephone & Telegraph ("AT&T") on the industry. Accordingly, the marginal cost of incremental service is much lower than the costs embedded in an existing network. Communications companies are not subject to the Public Utility Holding Company Act of 1935.
Interstate communications service may be subject to Federal Communications Commission regulation. Local service may be regulated by the states. In addition, AT&T and its former subsidiaries are still subject to judicial review pursuant to the settlement of the antitrust case brought against them by the Department of Justice.
Water Utility Industry. The water utility industry is composed of regulated public utilities that are involved in the distribution of drinking water to densely populated areas. The industry is geographically diverse
and subject to the same rate base and rate of return regulations as are other public utilities. Demand for water is most heavily influenced by the local weather, population growth in the service area and new construction. Supplies of clean, drinkable water are limited and are primarily a function of the amount of past rainfall.
Other. In addition to the particular types of utilities industries
described above, the Fund may invest in developing utility technology companies
(such as cellular telephone, fiber optics and satellite communications firms)
and in holding companies which derive a substantial portion of their revenues
from utility-related activities.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
INTRODUCTION
Each of the Funds (except the Money Market Fund) may use forward contracts, futures contracts, options on securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with each Fund's investments. These instruments are often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least in part, from the performance of another asset (such as a security, currency or an index of securities).
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Funds of options, futures contracts and forward currency contracts involves special considerations and risks, as described below. Risks pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract, forward contract or option thereon at any particular time.
(5) As described below, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction.
COVER
Transactions using forward contracts, futures contracts and options (other than options purchased by a Fund) expose a Fund to an obligation to another party. A Fund will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward contracts or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all times to cover its potential obligations not covered as provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities.
Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, the Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations.
WRITING CALL OPTIONS
Each of the Funds may write (sell) covered call options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of a
call option, a Fund would have the obligation to deliver the underlying
security, cash or currency (depending on the type of derivative) to the holder
(buyer) at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of a Fund continues, it may be assigned an exercise notice,
requiring it to deliver the underlying security, cash or currency against
payment of the exercise price. This obligation terminates upon the expiration of
the call option, or such earlier time at which a Fund effects a closing purchase
transaction by purchasing an option identical to that previously sold.
When writing a call option a Fund, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security, contract or currency above the exercise price, and retains the risk of loss should the price of the security, contract or currency decline. Unlike one who owns securities, contracts or currencies not subject to an option, a Fund has no control over when it may be required to sell the underlying securities, contracts or currencies, since most options may be exercised at any time prior to the option's expiration. If a call option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option.
Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
WRITING PUT OPTIONS
Each of the Funds may write (sell) covered put options on securities, futures contracts, forward contracts, indices and currencies. As the writer of a put option, a Fund would have the obligation to buy the underlying security, contract or currency (depending on the type of derivative) at the exercise price at any time until (American style) or on (European style) the expiration date. This obligation terminates upon the expiration of the put option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option identical to that previously sold.
A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the lower price it is willing to pay for the underlying security, contract or currency. The risk in such a transaction would be that the market price of the underlying security, contract or currency would decline below the exercise price less the premium received.
PURCHASING PUT OPTIONS
Each of the Funds may purchase covered put options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a put option, a Fund would have the right to sell the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such option or permit such option to expire.
A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon exercise of said option. Conversely, if the underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost.
A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
PURCHASING CALL OPTIONS
Each of the Funds may purchase covered call options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a call option, a Fund would have the right to purchase the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such options or permit such options to expire.
Call options may be purchased by a Fund for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected decline in the market price of the underlying security, contract or currency and, in such event, could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option.
Each of the Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads."
OVER-THE-COUNTER OPTIONS
Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option position at any time prior to its expiration.
The staff of the SEC considers purchased OTC options (i.e., the market value of the option) to be illiquid securities. A Fund may also sell OTC options and, in connection therewith, segregate assets or cover its obligations with respect to OTC options written by it. The assets used as cover for OTC options written by the Fund will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Fund may repurchase any OTC option it writes at a maximum price to be calculated by a formula set forth in the option agreement. The cover for an OTC option written subject to this procedure would be considered illiquid only to the extent that the maximum repurchase price under the formula exceeds the intrinsic value of the option.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures contracts except that all settlements are in cash and gain or loss depends on changes in the index in question (and thus on price movements in the securities market or a particular market sector generally) rather than on price movements in individual securities or futures contracts. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset some of the risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index.
LIMITATIONS ON OPTIONS
A Fund will not write options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at the time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each of the Funds may enter into interest rate, currency or stock index futures contracts (collectively, "Futures" or "Futures Contracts") as a hedge against changes in prevailing levels of interest rates, currency exchange rates or stock price levels, respectively, in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by it. A Fund's hedging may include sales of Futures as an offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and purchases of Futures as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place. A stock index future provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made. Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times the Future is outstanding.
The Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls. For a further discussion of the risks associated with investments in foreign securities, see "Foreign Securities" in this Statement of Additional Information.
Closing out an open Future is effected by entering into an offsetting Future for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Future at a particular time. If a Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Future.
A Fund's Futures transactions will be entered into for hedging purposes only; that is, Futures will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures will be purchased to protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures is the amount of funds that must be deposited by a Fund in order to initiate Futures trading and maintain its open positions in Futures. A margin deposit made when the Futures Contract is entered ("initial margin") is intended to ensure the Fund's performance under the Futures Contract. The margin required for a particular Future is set by the exchange on which the Future is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures commission merchant through which a Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency or index fluctuates making the Futures more or less valuable, a process known as marking-to-market.
If a Fund were unable to liquidate a Future or an option on a Futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Future or option or to maintain cash or securities in a segregated account.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the Futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures margin account.
FORWARD CONTRACTS
A forward contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon by the parties. A Fund either may accept or make delivery of the currency at the maturity of the forward contract. A Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions.
Each of the Funds may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward contracts does not eliminate fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward contract sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on Futures Contracts and options on foreign currencies traded on a CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are "in-the-money") will not exceed 5% of the total assets of the Fund, after taking into account unrealized profits and unrealized losses on any contracts it has entered into. This guideline may be modified by the Board, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%.
RISK FACTORS
Investors should consider carefully the following special factors before investing in any of the Funds.
SMALL CAPITALIZATION COMPANIES
Investors should realize that equity securities of small to medium-sized companies may involve greater risk than is associated with investing in more established companies. Small to medium-sized companies often have limited product and market diversification, fewer financial resources or may be dependent on a few key managers. Any one of the foregoing may change suddenly and have an immediate impact on the value of the company's securities. Furthermore, whenever the securities markets are experiencing rapid price changes due to national economic trends, secondary growth securities have historically been subject to exaggerated price changes.
NON-INVESTMENT GRADE DEBT SECURITIES
The Balanced Fund, the Diversified Income Fund, the High Yield Fund, and to a lesser extent the Dent Demographic Trends Fund and the Global Utilities Fund may seek to meet their respective investment objectives by investing in non-investment grade debt securities, commonly known as "junk bonds." While generally providing greater income and opportunity for gain, non-investment grade debt securities may be subject to greater risks than higher-rated securities. Economic downturns tend to disrupt the market for junk bonds and adversely affect their values. Such economic downturns may be expected to result in increased price volatility for junk bonds and of the value of shares of the above-named Funds, and increased issuer defaults on junk bonds.
In addition, many issuers of junk bonds are substantially leveraged, which may impair their ability to meet their obligations. In some cases, junk bonds are subordinated to the prior payment of senior indebtedness, which potentially limits a Fund's ability to fully recover principal or to receive payments when senior securities are subject to a default.
The credit rating of a junk bond does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. Junk bonds have speculative characteristics which are likely to increase in number and significance with each successive lower rating category.
When the secondary market for junk bonds becomes more illiquid, or in the absence of readily available market quotations for such securities, the relative lack of reliable objective data makes it more difficult for the Trust's trustees to value a Fund's securities, and judgment plays a more important role in determining such valuations. Increased illiquidity in the junk bond market also may affect a Fund's ability to dispose of such securities at desirable prices.
In the event a Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds without regard to their investment merits, thereby decreasing the asset based upon which the Fund's expenses can be spread and possibly reducing the Fund's rate of return. Prices of junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to adverse economic changes and individual corporate developments, than those of higher-rated debt securities.
FOREIGN SECURITIES
Investments by a Fund in foreign securities whether denominated in U.S. dollars or foreign currencies, may entail the following risks set forth below. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of the risks described below.
CURRENCY RISK. The value of the Fund's foreign investments (except for Money Market Fund, which may only invest in U.S. dollar denominated securities) may be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security generally decreases when the value of the U.S. dollar rises
against the foreign currency in which the security is denominated, and tends to increase when the value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. It is anticipated that each participating country will replace its local currency with the euro on July 1, 2002. Any other European country that is a member of the European Union and satisfies the criteria for participation in the EMU may elect to participate in the EMU and may supplement its existing currency with the euro. The anticipated replacement of existing currencies with the euro on July 1, 2002 could cause market disruptions before or after July 1, 2002 and could adversely affect the value of securities held by the Fund.
POLITICAL AND ECONOMIC RISK. The economies of many of the countries in which the Fund may invest are not as developed as the United States economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Fund's investments.
REGULATORY RISK. Foreign companies are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Fund may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Fund's shareholders.
MARKET RISK. The securities markets in many of the countries in which the Fund invests will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies and governments may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative difficulties (such as the need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States.
In addition, there are risks associated with certain investment strategies employed by the Funds as discussed in the previous section.
NON-DIVERSIFIED PORTFOLIO (GLOBAL UTILITIES FUND ONLY)
The Global Utilities Fund is a non-diversified portfolio, which means that it may invest a greater proportion of its assets in the securities of a smaller number of issuers and therefore may be subject to greater market and credit risk than a more broadly diversified portfolio. (A diversified portfolio may not invest more than 5% of its assets in obligations of one issuer, with respect to 75% of its total assets.)
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during at least the last five years are set forth below. Unless otherwise indicated, the address of each trustee and executive officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
*ROBERT H. GRAHAM (54) Trustee, Chairman Director, President and Chief Executive Officer,
and President A I M Management Group Inc.; Director and
President, A I M Advisors, Inc.; Director and
Senior Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and
Director and Vice Chairman, AMVESCAP PLC.
BRUCE L. CROCKETT (57) Trustee Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation; and Chairman, Board
of Governors of INTELSAT (international
communications company).
OWEN DALY II (76) Trustee Formerly, Director, Cortland Trust, Inc.
Six Blythewood Road (investment company), CF & I Steel Corp.,
Baltimore, MD 21210 Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the
Board of Equitable Bancorporation.
ALBERT R. DOWDEN (59) Trustee Chairman of the Board of Directors, Cortland
1815 Central Park Drive Trust, Inc. (investment company) and DHJ Media,
P.O. Box 774000-PMB #222 Inc.; and Director, Magellan Insurance Company.
Steamboat Springs, CO 80477 Formerly, Director, President and Chief Executive
Officer, Volvo Group North America, Inc.; Senior
Vice President, AB Volvo; and Director, The Hertz
Corporation, Genmar Corporation (boat
manufacturer), National Media Corporation and
Annuity and Life Re (Holdings), Ltd.
EDWARD K. DUNN, JR. (65) Trustee Formerly, Chairman of the Board of Directors,
2 Hopkins Plaza, 8th Floor Mercantile Mortgage Corp.; Vice Chairman of the
Suite 805 Board of Directors, President and Chief Operating
Baltimore, MD 21201 Officer, Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares.
|
* A trustee who is an "interested person" of A I M Advisors, Inc. and the Trust as defined in the 1940 Act.
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
JACK M. FIELDS (49) Trustee Chief Executive Officer, Twenty First Century
Washington, DC 20003 Group, Inc. (a governmental affairs company).
Formerly, Member of the U.S. House of
Representatives.
**CARL FRISCHLING (64) Trustee Partner, Kramer, Levin, Naftalis & Frankel, LLP
919 Third Avenue (law firm).
New York, NY 10022
PREMA MATHAI-DAVIS (50) Trustee Member, Visiting Committee, Harvard University
370 East 76th Street Graduate School of Education, New School
New York, NY 10021 University. Formerly, Chief Executive Officer,
YWCA of the U.S.A.; Commissioner, New York
City Department of the Aging; and Commissioner,
New York City Metropolitan Transportation
Authority.
LEWIS F. PENNOCK (58) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
LOUIS S. SKLAR (61) Trustee Executive Vice President, Development and
The Williams Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
GARY T. CRUM (53) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Executive ice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
CAROL F. RELIHAN (46) Senior Vice Director, Senior Vice President, General Counsel
President and and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company;
General Counsel and Vice President, A I M Fund
Services, Inc.; and Vice President, A I M Capital
Management, Inc. and A I M Distributors, Inc.
|
** A trustee who is an "interested person" of the Trust as defined in the 1940 Act.
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- --------------- ----------------------------------------
DANA R. SUTTON (42) Vice President Vice President and Fund Controller, A I M
and Treasurer Advisors, Inc.; and Assistant Vice President and
Assistant Treasurer, Fund Management Company.
ROBERT G. ALLEY (52) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.
STUART W. COCO (45) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
MELVILLE B. COX (57) Vice President Vice President and Chief Compliance Officer, A I M
Advisors, Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc., and Fund Management Company.
KAREN DUNN KELLEY (40) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
EDGAR M. LARSEN (60) Vice President Vice President, A I M Capital
Management, Inc.
|
The standing committees of the Board are the Audit Committee, the Investments Committee and the Committee on Directors/Trustees.
The members of the Audit Committee are Messrs. Crockett, Daly, Dowden, Dunn (Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The Audit Committee is responsible for: (i) considering management's recommendations of independent accountants for each Fund and evaluating such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Funds' independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Funds' independent accountants and management.
The members of the Investments Committee are Messrs. Crockett, Daly, Dowden, Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The Investments Committee is responsible for: (i) overseeing AIM's investment-related compliance systems and procedures to ensure their continued adequacy; and (ii) considering and acting, on an interim basis between meetings of the full Board, on investment-related matters requiring Board consideration, including dividends and distributions, brokerage policy and pricing matters.
The members of the Committee on Directors/Trustees are Messrs. Crockett (Chairman), Daly, Dowden, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis. The Committee on Directors/Trustees is responsible for: (i) considering and nominating individuals to stand for election as independent trustees as long as the company maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the independent trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the independent trustees.
The Committee on Directors/Trustees will consider nominees recommended by a shareholder to serve as trustees, provided (i) that such person was a shareholder of record at the time they submit such names and is entitled to vote at the meeting, and (ii) that the Committee on Directors/Trustees or the Board, as applicable, shall make the final determination of persons to be nominated.
All of the Trust's trustees also serve as directors or trustees of some or all of the other investment companies managed or advised by AIM. All of the Trust's executive officers hold similar offices with some or all of the other investment companies managed or advised by AIM.
Remuneration of Trustees
Each trustee is reimbursed for expenses incurred in connection with each meeting of the Board of Trustees or any Committee thereof. Each trustee of the Trust who is not also an officer of the Trust is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of certain other investment companies advised or managed by AIM. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component.
Set forth below is information regarding compensation paid or accrued during the fiscal year ended December 31, 2000 for each trustee of the Trust:
AGGREGATE RETIREMENT BENEFITS TOTAL
COMPENSATION ACCRUED BY COMPENSATION
TRUSTEE FROM TRUST(1) ALL AIM FUNDS(2) FROM ALL AIM FUNDS(3)
------- ------------- ------------------- ---------------------
Charles T. Bauer(4) $ -0- $ -0- $ -0-
------- ------- -------
Bruce L. Crockett $ 15,270 $ 60,951 $ 111,500
------- ------- -------
Owen Daly II $ 15,270 $ 97,195 $ 111,500
------- ------- -------
Albert R. Dowden(5) $ 1,796 $ -0- $ 13,435
------- ------- -------
Edward K. Dunn, Jr. $ 15,270 $ 22,138 $ 111,500
------- ------- -------
Jack Fields $ 14,869 $ 23,019 $ 108,500
------- ------- -------
Carl Frischling(6) $ 15,270 $ 107,507 $ 111,500
------- ------- -------
Robert H. Graham $ -0- $ -0- $ -0-
------- ------- -------
Prema Mathai-Davis $ 15,270 $ 22,606 $ 111,500
------- ------- -------
Lewis F. Pennock $ 15,270 $ 67,995 $ 111,500
------- ------- -------
Louis S. Sklar $ 15,196 $ 87,538 $ 111,000
------- ------- -------
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended December 31, 2000, including earnings, was $135,867.
(2) During the fiscal year ended December 31, 2000, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $33,295. Data reflects compensation estimated for the calendar year ended December 31, 2000.
(3) Each trustee serves as a director or trustee for a total of 12 registered investment companies advised by AIM. Data reflects compensation estimated for the calendar year ended December 31, 2000.
(4) Mr. Bauer was a trustee and officer until September 30, 2000, when he retired.
(5) Mr. Dowden has served as trustee since December 14, 2000.
(6) The Trust paid the law firm of Kramer, Levin, Naftalis & Frankel LLP $83,279 in legal fees for services provided to the Funds during the fiscal year ended December 31, 2000. Mr. Frischling, a trustee of the Trust, is a partner in such firm.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each trustee (who is not a employee of any of the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, the normal retirement date is the date on which the eligible trustee has attained age 65 and has completed at least five years of continuous service with one or more of the regulated investment companies managed, administered or distributed by AIM or its affiliates (the "Applicable AIM Funds"). Each eligible trustee is entitled to receive an annual benefit from the Applicable AIM Funds commencing on the first day of the calendar quarter coincident with or following his or her date of retirement equal to a maximum of 75% of the annual retainer paid or accrued by the Applicable AIM Funds for such trustee during the twelve-month period immediately preceding the trustee's retirement (including amounts deferred under a separate agreement between the Applicable AIM Funds and the trustee) and based on the number of such trustee's years of service (not in excess of 10 years of service) completed with respect to any of the Applicable AIM Funds. Such benefit is payable to each eligible trustee in quarterly installments. If an eligible trustee dies after attaining the normal retirement date but before receipt of all benefits under the Plan, the trustee's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased trustee, for no more than ten years beginning the first day of the calendar quarter following the date of the trustee's death. Payments under the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits payable to an eligible trustee upon retirement assuming a specified level of compensation and years of service classifications. The estimated credited years of service for Messrs. Crockett, Daly, Dowden, Dunn, Fields, Frischling, Pennock, and Sklar and Dr. Mathai-Davis are 13, 13, 0, 2, 3, 23, 19, 11, and 2 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
Number of
Years of
Service With Estimated Annual
the Applicable AIM Benefits Upon
Funds Retirement
------------------- ----------------
10 $75,000
9 $67,500
8 $60,000
7 $52,500
6 $45,000
5 $37,500
|
Deferred Compensation Agreements
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (for purposes of this paragraph only, the "deferring trustees") have each executed a Deferred Compensation Agreement (collectively, the
"Agreements"). Pursuant to the Agreements, the deferring trustees elected to defer receipt of 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the deferring trustees may select various AIM Funds in which all or part of their deferral account shall be deemed to be invested. Distributions from the deferring trustees' deferral accounts will be paid in cash, in generally equal quarterly installments over a period of five (5) or ten (10) years (depending on the Agreement) beginning on the date the deferring trustee's retirement benefits commence under the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the deferring trustee's termination of service as a trustee of the Trust. If a deferring trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary in a single lump sum payment as soon as practicable after such deferring trustee's death. The Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the deferring trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
Each Fund has entered into a master investment advisory agreement (the "Advisory Agreement") dated May 1, 2000, and a master administrative services agreement (the "Administrative Services Agreement"), dated May 1, 2000, with AIM. A prior investment advisory agreement with substantially similar terms to the Advisory Agreement was in effect prior to May 1, 2000. A prior master administrative services agreement ("Prior Administrative Services Agreement") with substantially similar terms to the Administrative Services Agreement, was in effect prior to May 1, 2000. In addition, AIM has also entered into a sub-advisory agreement, dated May 1, 2000 (the "Sub-Advisory Agreement") with H.S. Dent Advisors, Inc. ("Dent"), with respect to the Dent Demographic Trends Fund. A prior sub-advisory agreement with substantially identical terms was in effect prior to May 1, 2000. The address of Dent is 6515 Gwin Road, Oakland, California 94611. See "Fund Management" in each Prospectus.
AIM was organized in 1976, and along with its subsidiaries, manages or advises over 135 investment portfolios encompassing a broad range of investment objectives. AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM Management"), a holding company that has been engaged in the financial services business since 1976. The address of AIM is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. AIM is the sole shareholder of the Funds' principal underwriter, A I M Distributors, Inc. ("AIM Distributors"). AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London, EC2M 4YR, England. AMVESCAP PLC and its subsidiaries are an independent investment management group engaged in institutional investment management and retail mutual fund businesses in the United States, Europe and the Pacific Region. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management" herein.
AIM and the Trust have adopted a Code of Ethics which requires investment personnel and certain other employees to (a) pre-clear all personal securities transactions subject to the Code of Ethics; (b) file reports regarding such transactions; (c) refrain from personally engaging in (i) short-term trading of a security, (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security (subject to a de minimis exception), and (iii) transactions involving securities being considered for investment by an AIM Fund (subject to the de minimis exception); and (d) abide by certain other provisions of the Code of Ethics. The de minimis exception under the Code of Ethics covers situations where there is no material conflict of interest because of the large market capitalization of a security and the relatively small number of shares involved in a personal transaction. The Code of Ethics also generally prohibits AIM employees from purchasing securities in initial public offerings. Personal trading reports are periodically reviewed by AIM, and the Board of Trustees reviews quarterly and annual reports (which summarize any significant violations of the Code of Ethics). Sanctions for violating the Code of Ethics may include censure, monetary penalties, suspension or termination of employment.
The Advisory Agreement for the Funds provides that each Fund will pay all expenses of the Fund, including, without limitation: brokerage commissions, taxes, legal, auditing, or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to trustees and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of the Funds in connection with
membership in investment company organizations, the cost of printing copies of prospectuses and statements of additional information distributed to the Fund's shareholders; and all other charges and costs of the Fund's operations unless otherwise explicitly provided.
In addition, if a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The Advisory Agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fee, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee.
The Advisory Agreement for the Funds and the Sub-Advisory Agreement for the Dent Demographic Trends Fund provide that they will remain in effect for the initial term and continue in effect from year to year thereafter only if such continuance is specifically approved at least annually (i) by the Trust's Board of Trustees or by the vote of a majority of the outstanding voting securities of the Funds (as defined in the 1940 Act); and (ii) by the affirmative vote of a majority of the trustees who are not parties to the agreement or "interested persons" of any such party (the "Non-Interested Trustees") by votes cast in person at a meeting called for such purpose. The Advisory Agreement was initially approved by the Trust's Board of Trustees (including the affirmative vote of all of the Non-Interested Trustees) on February 3, 2000, and was approved by the Funds' shareholders on April 10, 2000. The Advisory Agreement became effective on May 1, 2000. The Sub-Advisory Agreement for the Dent Demographic Trends Fund was initially approved by the Trust's Board of Trustees (including the affirmative vote of all of the Non-Interested Trustees) on February 3, 2000, and was approved by the applicable Fund's shareholders and became effective May 1, 2000.
The Advisory and Sub-Advisory Agreement provide that each of AIM (in
the case of the Advisory Agreement), and Dent (in the case of the Sub-Advisory
Agreement), may terminate its agreement with respect to any Fund(s) on sixty
(60) days' written notice without penalty. In addition, the Trust (by vote of
the Board of Trustees or by vote of a majority of the outstanding voting
securities of a Fund) may terminate the Advisory or Sub-Advisory Agreement with
respect to a Fund on 60 days' written notice without penalty. Each agreement
terminates automatically in the event of its assignment.
As compensation for its services, AIM pays Dent the following fees pursuant to the Sub-Advisory Agreement with respect to the Dent Demographic Trends Fund:
NET ASSETS ANNUAL RATE ---------- ----------- First $1 billion ................................................................ 0.13% Over $1 billion, to and including $2 billion .................................... 0.10% Over $2 billion ................................................................. 0.07% |
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Fund's detriment during the period stated in the agreement between AIM and the Fund.
Pursuant to the Advisory Agreement, AIM receives a fee from each of the AIM V.I. Aggressive Growth Fund, the AIM V.I. Balanced Fund, the AIM V.I. Blue Chip Fund, the AIM V.I. Capital Appreciation Fund, the AIM V.I. Capital Development Fund, the AIM V.I. Dent Demographic Trends Fund, the AIM V.I. Diversified Income Fund, the AIM V.I. Global Utilities Fund, the AIM V.I. Government Securities Fund, the AIM V.I. Growth Fund, the AIM V.I. Growth and Income Fund, the AIM V.I. High Yield Fund, the AIM V.I. International Equity Fund, the AIM V.I. Money Market Fund, the AIM V.I. New Technology Fund and the AIM V.I. Value Fund calculated at the following annual rate, based on the average daily net assets of the Fund during the year:
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. GLOBAL UTILITIES FUND
AIM V.I. GROWTH FUND
AIM V.I. GROWTH AND INCOME FUND
AIM V.I. VALUE FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $250 million ...................................................... 0.65%
Over $250 million ....................................................... 0.60%
|
AIM V.I. AGGRESSIVE GROWTH FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $150 million ...................................................... 0.80%
Over $150 million .......................................................0.625%
|
AIM V.I. BALANCED FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $150 million ...................................................... 0.75%
Over $150 million ....................................................... 0.50%
|
AIM V.I. BLUE CHIP FUND
AIM V.I. CAPITAL DEVELOPMENT FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $350 million ...................................................... 0.75%
Over $350 million .......................................................0.625%
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $2 billion ........................................................ 0.85%
Over $2 billion ......................................................... 0.80%
|
AIM V.I. DIVERSIFIED INCOME FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $250 million ...................................................... 0.60%
Over $250 million ....................................................... 0.55%
|
AIM V.I. NEW TECHNOLOGY FUND
ANNUAL
NET ASSETS RATE
---------- ------
All ..................................................................... 1.00%
|
AIM V.I. GOVERNMENT SECURITIES FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $250 million ...................................................... 0.50%
Over $250 million ....................................................... 0.45%
|
AIM V.I. HIGH YIELD FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $200 million ......................................................0.625%
Next $300 million ....................................................... 0.55%
Next $500 million ....................................................... 0.50%
Amount over $1 billion .................................................. 0.45%
|
AIM V.I. INTERNATIONAL EQUITY FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $250 million ...................................................... 0.75%
Over $250 million ....................................................... 0.70%
|
AIM V.I. MONEY MARKET FUND
ANNUAL
NET ASSETS RATE
---------- ------
First $250 million ...................................................... 0.40%
Over $250 million ....................................................... 0.35%
|
Each of the Funds paid to AIM a management fee (net of fee waivers) for the fiscal years ended December 31, 2000, December 31, 1999, and December 31, 1998, under a prior, substantially similar advisory agreement, as follows:
December 31, December 31, December 31,
2000 1999 1998
---------------- ---------------- ----------------
AIM V.I. Aggressive Growth Fund $ 353,091 $ -0- $ 1,609*
AIM V.I. Balanced Fund $ 520,878 $ 183,468 $ -0-*
AIM V.I. Blue Chip Fund $ -0- N/A N/A
AIM V.I. Capital Appreciation Fund $ 8,988,195 $ 4,830,846 $ 3,521,837
AIM V.I. Capital Development Fund $ 221,721 $ -0- $ -0-*
AIM V.I. Dent Demographic Trends Fund $ 128,447 N/A N/A
AIM V.I. Diversified Income Fund $ 546,264 $ 556,418 $ 580,119
AIM V.I. Global Utilities Fund $ 307,312 $ 202,137 $ 161,488
AIM V.I. Government Securities Fund $ 358,276 $ 315,598 $ 221,956
AIM V.I. Growth Fund $ 5,604,879 $ 3,026,404 $ 1,941,818
AIM V.I. Growth and Income Fund $ 16,262,897 $ 10,438,977 $ 5,556,833
AIM V.I. High Yield Fund $ 155,683 $ 58,392 $ -0-*
AIM V.I. International Equity Fund $ 3,372,955 $ 2,066,153 $ 1,744,127
AIM V.I. Money Market Fund $ 303,297 $ 317,031 $ 252,407
AIM V.I. New Technology Fund $ 1,024,453 $ 756,068 N/A
AIM V.I. Value Fund $ 16,526,917 $ 10,380,472 $ 5,570,566
|
* Fees paid were for the period May 1, 1998 (date operations commenced) through December 31, 1998.
For the fiscal years ended December 31, 2000, December 31, 1999 and December 31, 1998, AIM waived management fees for each Fund as follows:
December 31, December 31, December 31,
2000 1999 1998
---------------- ---------------- ----------------
AIM V.I. Aggressive Growth Fund $ 50,479 $ 66,764 $ 11,445*
AIM V.I. Balanced Fund $ -0- $ 26,814 $ 21,238*
AIM V.I. Blue Chip Fund $ 82,552 N/A N/A
AIM V.I. Capital Appreciation Fund $ -0- $ -0- $ -0-
AIM V.I. Capital Development Fund $ 76,606 $ 35,726 $ 9,522*
AIM V.I. Dent Demographic Trends Fund $ 47,600 N/A N/A
AIM V.I. Diversified Income Fund $ -0- $ -0- $ -0-
AIM V.I. Global Utilities Fund $ -0- $ -0- $ -0-
AIM V.I. Government Securities Fund $ -0- $ -0- $ -0-
AIM V.I. Growth Fund $ -0- $ -0- $ -0-
AIM V.I. Growth and Income Fund $ -0- $ -0- $ -0-
AIM V.I. High Yield Fund $ 16,986 $ 45,183 $ 20,728*
AIM V.I. International Equity Fund $ -0- $ -0- $ -0-
AIM V.I. Money Market Fund $ -0- $ -0- $ -0-
AIM V.I. New Technology Fund $ -0- $ -0- N/A
AIM V.I. Value Fund $ -0- $ -0- $ -0-
|
* Fees waived were for the period May 1, 1998 (date operations commenced) through December 31, 1998.
In addition to the management fees waived by AIM for the fiscal years ended December 31, 2000, December 31, 1999 and December 31, 1998, AIM absorbed other expenses as follows:
December 31, December 31, December 31,
2000 1999 1998
---------------- ---------------- ----------------
AIM V.I. Aggressive Growth Fund $ -0- $ 36,238 $ 43,400*
AIM V.I. Balanced Fund $ -0- $ -0- $ 25,501*
AIM V.I. Blue Chip Fund $ 7,702 N/A N/A
AIM V.I. Capital Appreciation Fund $ -0- $ -0- $ -0-
AIM V.I. Capital Development Fund $ -0- $ 68,305 $ 48,808*
AIM V.I. Dent Demographic Trends Fund $ -0- N/A N/A
AIM V.I. Diversified Income Fund $ -0- $ -0- $ -0-
AIM V.I. Global Utilities Fund $ -0- $ -0- $ -0-
AIM V.I. Government Securities Fund $ -0- $ -0- $ -0-
AIM V.I. Growth Fund $ -0- $ -0- $ -0-
AIM V.I. Growth and Income Fund $ -0- $ -0- $ -0-
AIM V.I. High Yield Fund $ -0- $ -0- $ 24,798*
AIM V.I. International Equity Fund $ -0- $ -0- $ -0-
AIM V.I. Money Market Fund $ -0- $ -0- $ -0-
AIM V.I. New Technology Fund $ -0- $ -0- N/A
AIM V.I. Value Fund $ -0- $ -0- $ -0-
|
* Fee amounts are for the period May 1, 1998 (date operations commenced) through December 31, 1998.
The Administrative Services Agreement for the Funds provides that AIM
may perform certain accounting and other administrative services to each Fund
which are not required to be performed by AIM under the Advisory Agreement. For
such services, AIM would be entitled to receive from each Fund reimbursement of
its expenses. In addition, AIM provides, or assures that Participating Insurance
Companies will provide, certain services implementing the Trust's funding
arrangements with Participating Insurance Companies. These services include:
establishment of compliance procedures; negotiation of participation agreements;
preparation of prospectuses, financial reports and proxy statements for existing
Contractowners; maintenance of master accounts; facilitation of purchases and
redemptions requested by Contractowners; distribution to existing Contractowners
of copies of prospectuses, proxy materials, periodic Fund reports and other
materials; maintenance of records; and Contractowner services and communication.
Effective May 1, 1998, the Funds reimburse AIM for its costs in providing, or
assuring that Participating Insurance Companies provide, these services,
currently in an amount up to 0.25% of the average net asset value of each Fund.
AIM has agreed to bear certain of these costs on the net assets of each Fund as
of April 30, 1998.
The Administrative Services Agreement for the Funds provides that the agreement will remain in effect for the initial term and continue in effect from year to year thereafter only if such continuance is specifically approved at least annually (i) by the Trust's Board of Trustees or by the vote of a majority of the outstanding voting securities of the Funds (as defined in the 1940 Act); and (ii) by the affirmative vote of a majority of the Non-Interested Trustees, by votes cast in person at a meeting called for such purpose. The agreement terminates automatically in the event of its assignment or in the event of termination of the Advisory Agreement.
For the fiscal years ended December 31, 2000, December 31, 1999 and December 31, 1998, AIM received reimbursement of administrative services costs from each of the Funds pursuant to the Administrative Services Agreement and the Prior Administrative Services Agreement as follows:
December 31, December 31, December 31,
2000 1999 1998
---------------- ---------------- ----------------
AIM V.I. Aggressive Growth Fund $ 50,000 $ 43,901 $ 26,658*
AIM V.I. Balanced Fund $ 50,000 $ 43,975 $ 26,649*
AIM V.I. Blue Chip Fund $ 50,000 N/A N/A
AIM V.I. Capital Appreciation Fund $ 130,011 $ 78,369 $ 62,063
AIM V.I. Capital Development Fund $ 50,000 $ 43,901 $ 26,658*
AIM V.I. Dent Demographic Trends Fund $ 50,000 N/A N/A
AIM V.I. Diversified Income Fund $ 50,000 $ 50,901 $ 47,528
AIM V.I. Global Utilities Fund $ 50,000 $ 51,234 $ 46,855
AIM V.I. Government Securities Fund $ 50,000 $ 44,501 $ 50,152
AIM V.I. Growth Fund $ 112,857 $ 73,728 $ 57,128
AIM V.I. Growth and Income Fund $ 169,439 $ 102,711 $ 296,138
AIM V.I. High Yield Fund $ 50,137 $ 43,433 $ 28,103*
AIM V.I. International Equity Fund $ 92,799 $ 64,730 $ 76,026
AIM V.I. Money Market Fund $ 50,000 $ 44,311 $ 36,480
AIM V.I. New Technology Fund $ 50,000 $ 34,698 N/A
AIM V.I. Value Fund $ 167,010 $ 107,813 $ 420,725
|
* Fees paid were for the period May 1, 1998 (date operations commenced) through December 31, 1998.
THE DISTRIBUTION AGREEMENT
The Funds have entered into a master distribution agreement (the "Distribution Agreement") with AIM Distributors, dated May 1, 2000. Information concerning AIM Distributors and the continuous offering of the Funds' shares is set forth in the Prospectus under the heading "Fund Management." The Distribution Agreement provides that AIM Distributors will bear the expenses of printing from the final proof and distributing prospectuses and statements of additional information of the Funds relating to the sale of Fund shares. The Distribution Agreement provides that the Funds shall bear the expenses of qualification of shares of the Fund for sale in connection with the public offering in any jurisdictions where qualification is required by law. AIM Distributors has not undertaken to sell any specified number of shares of the Funds.
The Distribution Agreement for the Funds provides that it will remain
in effect for the initial term and continue in effect from year to year
thereafter only if such continuance is specifically approved at least annually
(i) by the Trust's Board of Trustees or by the vote of a majority of the
outstanding voting securities of the Funds (as defined in the 1940 Act); and
(ii) by the affirmative vote of a majority of Non-Interested Trustees by votes
cast in person at a meeting called for such purpose. The Trust or AIM
Distributors may terminate its Distribution Agreement on sixty (60) days'
written notice without penalty. The Distribution Agreement will terminate
automatically in the event of its assignment.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each of the Funds
will be determined as of the close of the customary trading session of the New
York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern Time) on each
"business day of the Fund." In the event the NYSE closes early (i.e. before 4:00
p.m. Eastern Time) on a particular day, the net asset value of a Fund share is
determined as of the close of the NYSE on such day. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of the customary trading session of the NYSE.
A "business day of a Fund" is any day on which the NYSE is open for business. It
is expected that the NYSE will be closed during the next twelve months on
Saturdays and Sundays and on the observed holidays of New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset value per
share of a Fund is determined by subtracting the liabilities (e.g., the
expenses) of the Fund from the assets of the Fund and dividing the result by the
total number of shares outstanding of such Fund. The determination of a Fund's
net asset value per share is made in accordance with generally accepted
accounting principles.
VALUATION OF INVESTMENTS OF ALL FUNDS EXCEPT THE MONEY MARKET FUND. Among other items, a Fund's liabilities include accrued expenses and dividends payable, and its total assets include portfolio securities valued at their market value as well as income accrued but not received. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Trust's officers and in accordance with methods which are specifically authorized by the Board of Trustees of the Trust. Short-term obligations with maturities of 60 days or less are valued at amortized cost as reflecting fair value.
VALUATION OF THE MONEY MARKET FUND'S INVESTMENTS. The Money Market Fund uses the amortized cost method of valuing the securities held by the Fund and rounds the Fund's per share net asset value to the nearest whole cent; therefore, it is anticipated that the net asset value of the shares of the Fund will remain constant at $1.00 per share. However, the Trust can give no assurance that the Fund can maintain a $1.00 net asset value per share.
FUTURES CONTRACTS. Initial margin deposits made upon entering into futures contracts are recognized as assets due from the broker (the Fund's agent in acquiring the futures position). During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by "marking-to-market" on a daily basis to reflect the market value of the contract at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Fund that has entered into the futures contract records a
realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund's basis in the contract.
For the Money Market Fund: The net asset value per share of the Fund is determined daily as of the close of trading on the New York Stock Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each business day of the Fund. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of the NYSE on such day. Net asset value per share is determined by dividing the value of the Fund's securities, cash and other assets (including interest accrued but not collected), less all its liabilities (including accrued expenses and dividends payable), by the number of shares outstanding of the Fund and rounding the resulting per share net asset value to the nearest one cent. Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles.
The securities of the Fund are valued on the basis of amortized cost. This method values a security at its cost on the date of purchase and thereafter assumes a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Fund would receive if the security were sold. During such periods, the daily yield on shares of the Fund computed as described under "Yield Information" may differ somewhat from an identical computation made by another investment company with identical investments utilizing available indications as to the market value of its portfolio securities.
The valuation of the portfolio instruments based upon their amortized cost and the concomitant maintenance of the net asset value per share of $1.00 for the Fund is permitted in accordance with applicable rules and regulations of the SEC which require the Fund to adhere to certain conditions. The Fund will invest only in "Eligible Securities," as defined in Rule 2a-7 of the 1940 Act, which the Fund's Board of Trustees has determined present minimal credit risk. Rule 2a-7 also requires, among other things, that the Fund maintain a dollar-weighted average portfolio maturity of 90 days or less and purchase only instruments having remaining maturities of 397 calendar days or less.
The Board of Trustees is required to establish procedures designed to stabilize, to the extent reasonably practicable, the Fund's price per share at $1.00 for the Fund as computed for the purpose of sales and redemptions. Such procedures include review of the Fund's holdings by the Board of Trustees at such intervals as they may deem appropriate, to determine whether the net asset value calculated by using available market quotations or other reputable sources for the Fund deviates from $1.00 per share and, if so, whether such deviation may result in material dilution or is otherwise unfair to existing holders of the Fund's shares. In the event the Board of Trustees determines that such a deviation exists for the Fund, it will take such corrective action as the Board of Trustees deems necessary and appropriate with respect to the Fund, including the sale of portfolio instruments prior to maturity to realize capital gains or losses or to shorten the average portfolio maturity; the withholding of dividends; redemption of shares in kind; or the establishment of a net asset value per share by using available market quotations.
The Fund intends to comply with any amendments made to Rule 2a-7 which may require corresponding changes in the Fund's procedures which are designed to stabilize the Fund's price per share at $1.00.
For All Other Funds: The net asset value per share of each Fund is normally determined daily as of the close of the customary trading session on the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Trust. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and options contracts closing prices which are available 15 minutes after the close of trading of the NYSE will generally be used. Net asset value per share is determined by dividing the value of the Fund's securities, cash and other assets (including interest accrued but not collected), less all its liabilities (including accrued expenses and dividends payable), by the total number of shares outstanding. Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles.
Each equity security held by the Fund is valued at its last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the mean between the last bid and asked prices based upon quotes furnished by market makers for such securities. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price on that day. Debt securities are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to special securities, yield, quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in a manner specifically authorized by the Board of Trustees of the Trust. Short-term obligations having 60 days or less to maturity are valued on the basis of amortized cost. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE.
Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the customary trading session of the NYSE. The values of such foreign securities used in computing the net asset value of each Fund's shares are determined at such times as trading is completed. Foreign currency exchange rates are also generally determined prior to the close of the customary trading session of the NYSE. Occasionally, events affecting the values of such foreign securities and such foreign securities exchange rates may occur after the time at which such values are determined and prior to the close of the NYSE that will not be reflected in the computation of a Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees.
PURCHASE AND REDEMPTION OF SHARES
The Trust offers the shares of the Funds, on a continuous basis, to both registered and unregistered separate accounts of affiliated and unaffiliated Participating Insurance Companies to fund variable annuity contracts (the "Contracts") and variable life insurance policies ("Policies"). Each separate account contains divisions, each of which corresponds to a Fund in the Trust. Net purchase payments under the Contracts are placed in one or more of the divisions of the relevant separate account and the assets of each division are invested in the shares of the Fund which corresponds to that division. Each separate account purchases and redeems shares of these Funds for its divisions at net asset value without sales or redemption charges. Currently several insurance company separate accounts invest in the Funds.
The Trust, in the future, may offer the shares of its Funds to certain pension and retirement plans ("Plans") qualified under the Internal Revenue Code. The relationships of Plans and Plan participants to the Fund would be subject, in part, to the provisions of the individual plans and applicable law. Accordingly, such relationships could be different from those described in this Prospectus for separate accounts and owners of Contracts and Policies, in such areas, for example, as tax matters and voting privileges.
The Board of Trustees monitors for possible conflicts among separate accounts (and will do so for plans) buying shares of the Funds. Conflicts could develop for a variety of reasons. For example, violation of the federal tax laws by one separate account investing in a fund could cause the contracts or policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Board of Trustees may require a separate account or Plan to withdraw its participation in a Fund. A Fund's net asset value could decrease if it had to sell investment securities to pay redemptions proceeds to a separate account (or plan) withdrawing because of a conflict.
Each Fund ordinarily effects orders to purchase or redeem its shares that are based on transactions under Policies or Contracts (e.g., purchase or premium payments, surrender or withdrawal requests, etc.) at the Fund's net asset value per share next computed on the day on which the separate account processes
such transactions. Each Fund effects orders to purchase or redeem its shares that are not based on such transactions at the Fund's net asset value per share next computed on the day on which the Fund receives the orders.
Please refer to the appropriate separate account prospectus related to your Contract for more information regarding the Contract.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS. The Funds declare and distribute dividends representing substantially all net investment income as follows:
DIVIDENDS DIVIDENDS
DECLARED PAID
--------- ---------
AIM V.I. Aggressive Growth Fund .......................... annually annually
AIM V.I. Balanced Fund ................................... annually annually
AIM V.I. Blue Chip Fund .................................. annually annually
AIM V.I. Capital Appreciation Fund ....................... annually annually
AIM V.I. Capital Development Fund ........................ annually annually
AIM V.I. Dent Demographic Trends Fund .................... annually annually
AIM V.I. Diversified Income Fund ......................... annually annually
AIM V.I. Global Utilities Fund ........................... annually annually
AIM V.I. Government Securities Fund ...................... annually annually
AIM V.I. Growth Fund ..................................... annually annually
AIM V.I. Growth and Income Fund .......................... annually annually
AIM V.I. High Yield Fund ................................. annually annually
AIM V.I. International Equity Fund ....................... annually annually
AIM V.I. Money Market Fund ............................... daily daily
AIM V.I. New Technology Fund ............................. annually annually
AIM V.I. Value Fund ...................................... annually annually
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Substantially all net realized capital gains, if any, are distributed on an annual basis, except for the Money Market Fund, which may distribute net realized short-term gains more frequently.
All such distributions will be automatically reinvested, at the election of Participating Insurance Companies, in shares of the Fund issuing the distribution at the net asset value determined on the reinvestment date.
TAX MATTERS. Each series of shares of the Trust is treated as a separate association taxable as a corporation. Each Fund intends to qualify under the Internal Revenue Code of 1986, as amended (the "Code"), as a regulated investment company ("RIC") for each taxable year. As a RIC, a Fund will not be subject to federal income tax to the extent it distributes to its shareholders its net investment income and net capital gains.
In order to qualify as a regulated investment company, each Fund must satisfy certain requirements concerning the nature of its income, diversification of its assets and distribution of its income to shareholders. In order to ensure that individuals holding the Contracts whose assets are invested in a Fund will not be subject to federal income tax on distributions made by the Fund prior to the receipt of payments under the Contracts, each Fund intends to comply with additional requirements of Section 817(h) of the Code relating to both diversification of its assets and eligibility of an investor to be its shareholder. Certain of these requirements in the aggregate may limit the ability of a Fund to engage in transactions involving options, futures contracts, forward contracts and foreign currency and related deposits.
The holding of the foreign currencies and investments by a Fund in certain "passive foreign investment companies" may be limited in order to avoid imposition of a tax on such Fund.
Each Fund investing in foreign securities may be subject to foreign withholding taxes on income from its investments. In any year in which more than 50% in value of a Fund's total assets at the close of the taxable year consists of securities of foreign corporations, the Fund may elect to treat any foreign taxes paid by it as if they had been paid by its shareholders. The insurance company segregated asset accounts holding Fund shares should consider the impact of this election.
Holders of Contracts under which assets are invested in the Funds should refer to the prospectus for the Contracts for information regarding the tax aspects of ownership of such Contracts.
Because each Fund intends to qualify under the Code as a RIC for each taxable year, each Fund must, among other things, meet the following requirements: A. Each Fund must generally derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities, foreign currencies, or other income derived with respect to its business of investing in such stock, securities or currencies. B. Each Fund must diversify its holdings so that, at the end of each fiscal quarter or within 30 days thereafter: (i) at least 50% of the market value of the Fund's assets is represented by cash, cash items (including receivables), U.S. Government securities, securities of other RICs, and other securities, with such other securities limited, with respect to any one issuer, to an amount not greater than 5% of the Fund's assets and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Fund's assets is invested in the securities of any one issuer (other than U.S. Government securities or securities of other RICs).
The Code imposes a nondeductible 4% excise tax on a RIC that fails to distribute during each calendar year the sum of 98% of its ordinary income for the calendar year, plus 98% of its capital gain net income for the 12-month period ending on October 31 of the calendar year. The amount which must be distributed is increased by undistributed income and gains from prior years and decreased by certain distributions in prior years. Each Fund intends to make sufficient distributions to avoid imposition of the excise tax. Some Funds meet an exception which results in their not being subject to excise tax.
As a RIC, each Fund will not be subject to federal income tax on its income and gains distributed to shareholders if it distributes at least (i) 90% of its investment company taxable income for the taxable year; and (ii) 90% of the excess of its tax-exempt interest income under Code Section 103(a) over its deductions disallowed under Code Sections 265 and 171(a)(2).
Each Fund intends to comply with the diversification requirements imposed by Section 817(h) of the Code and the regulations thereunder. These requirements, which are in addition to the diversification requirements imposed on each Fund by the 1940 Act and Subchapter M of the Code, place certain limitations on (i) the assets of the insurance company separate accounts that may be invested in securities of a single issuer and (ii) eligible investors. Because Section 817(h) and those regulations treat the assets of each Fund as assets of the corresponding division of the insurance company separate accounts, each Fund intends to comply with these diversification requirements. Specifically, the regulations provide that, except as permitted by the "safe harbor" described below, as of the end of each calendar quarter or within 30 days thereafter no more than 55% of a Fund's total assets may be represented by any one investment, no more than 70% by any two investments, no more than 80% by any three investments and no more than 90% by any four investments. For this purpose, all securities of the same issuer are considered a single investment, and while each U.S. Government agency and instrumentality is considered a separate issuer, a particular foreign government and its agencies, instrumentalities and political subdivisions all will be considered the same issuer. The regulations also provide that a Fund's shareholders are limited, generally, to life insurance company separate accounts, general accounts of the same life insurance company, an investment adviser or affiliate in connection with the creation or management of a Fund or the trustee of a qualified pension plan. Section 817(h) provides, as a safe harbor, that a separate account will be treated as being adequately diversified if the diversification requirements under Subchapter M are satisfied and no more than 55% of the value of the account's total assets are cash and cash items (including receivables), government securities and securities of other RICs. Failure of a Fund to satisfy the Section 817(h) requirements would result in taxation of and treatment of the Contract holders investing in a corresponding division other than as described in the applicable prospectuses of the various insurance company separate accounts.
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Trust furnishes semi-annual reports containing information about the Funds and their operations, including a list of the investments held in each Fund's portfolio and their respective financial statements. Financial statements, audited by independent auditors, will be issued annually. The firm of Tait, Weller & Baker, Eight Penn Center Plaza, Philadelphia, PA 19103, serves as the auditors of each Fund.
LEGAL MATTERS
Foley & Lardner, Washington, D.C. has advised the Trust on certain federal securities law matters.
CUSTODIANS AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110, is custodian of all securities and cash of the Funds (except the Money Market Fund). The Bank of New York ("BONY"), 90 Washington Street, 11th Floor, New York, New York 10280, is custodian of all securities and cash of the Money Market Fund. State Street and BONY attend to the collection of principal and income, pays and collects all monies for securities bought and sold by the Funds, and performs certain other ministerial duties for each of the respective Funds. State Street also acts as transfer and dividend disbursing agent for the Funds. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets. The Funds pay State Street such compensation as may be agreed upon from time to time.
PRINCIPAL HOLDERS OF SECURITIES
To the best of the knowledge of each Fund, the names of the record holders of 5% or more of the outstanding shares of the Fund as of April 2, 2001, and the percentage of the outstanding shares of such Fund owned by such shareholders as of such date are set out below. The address of A I M Advisors, Inc. is 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173. The address of Allmerica Financial Life Insurance Company is 440 Lincoln Street, Worcester, MA 01653. The address of Allstate Life Insurance Company is 3100 Sanders Road, Northbrook, IL 60062. The address of American Enterprise Life Insurance Company is IDS Tower 10, Minneapolis, MN 55440. The address of Allianz Life Insurance Company is 1750 Hennepin Ave., Minneapolis, MN 55403. The address of Connecticut General Life Insurance Company is 900 Cottage Grove Road, Hartford, CT 06152-2321. The address of Glenbrook Life and Annuity Company is 3100 Sanders Road, N4C, Northbrook, IL 60062. The address of The Guardian Life Insurance and Annuity Company is 201 Park Avenue South, New York, NY 10003. The address of IDS Life Insurance Company is IDS Tower 10, T27/52, Minneapolis, MN 55440. The address of Merrill Lynch Life Insurance Company is 800 Scudders Mill Road, Plainsboro, NJ 08536. The address of Northern Life Insurance Company is 20 Washington Avenue, Minneapolis, MN 55401. The address of Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey is Gateway Center Three, 13th Floor, Newark, NJ 07102. The address of SAFECO Life Insurance Company is 154 Place, N.E., Redmond, WA 98052. The address of Sun Life of Canada (U.S.) is One Sun Life Executive Park, Wellesly Hills, MA 02481. The address of First Citicorp Life Insurance Company is One Court Square, Long Island City, NY 11120. The address of Union Central Life Insurance Company is 1876 Waycross Road, Cincinnati, OH 45240. The address for Hartford Life Insurance Company is 200 Hopmeadow Street, Simsbury, CT 06089. The address of Security Life of Denver Insurance Company is 1290 Broadway, Denver, CO 80203. The address of Aetna Life Insurance and Annuity Company is 151 Farmington Avenue, Hartford, CT 06156. The address of General American Life Insurance Company is 9735 Landmark Parkway Drive, St. Louis, MO 63127. The address of The Lincoln National Life Insurance Company is 1300 S. Clinton, Fort Wayne, IN 46802. The address of Reliastar Life Insurance Company is 20 Washington Avenue, Minneapolis, MN 55401.
AIM V.I. AGGRESSIVE GROWTH FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 42.74%*
Allmerica Financial Life Insurance Company -0- -0- 39.60%*
SAFECO Life Insurance Company -0- -0- 9.62%
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AIM V.I. BALANCED FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 77.25%*
Union Central Life Insurance Company -0- -0- 15.86%
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AIM V.I. BLUE CHIP FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 66.11%*
Allmerica Financial Life Insurance Company -0- -0- 16.38%
Allstate Life Insurance Company -0- -0- 12.28%
Connecticut General Life Insurance Company -0- -0- 5.19%
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AIM V.I. CAPITAL APPRECIATION FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Connecticut General Life Insurance Company -0- -0- 18.64%
Glenbrook Life and Annuity Company -0- -0- 15.78%
Merrill Lynch Life Insurance Company -0- -0- 14.67%
Aetna Life Insurance and Annuity Company -0- -0- 11.73%
IDS Life Insurance Company -0- -0- 7.39%
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* A shareholder who beneficially owns more than 25% of the voting securities of a Fund may be presumed to "control" the Fund. The Funds understand that insurance company separate accounts owning shares of the Funds will vote their shares in accordance with instructions received from Contract owners, annuitants and beneficiaries. If an insurance company determines, however, that it is permitted to vote any such shares of the Funds in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
AIM V.I. CAPITAL DEVELOPMENT FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
IDS Life Insurance Company -0- -0- 70.08%*
Glenbrook Life and Annuity Company -0- -0- 20.49%
American Enterprise Life Insurance Company -0- -0- 5.78%
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AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 49.46%*
Northern Life Insurance Company -0- -0- 19.01%
Reliastar Life Insurance Company -0- -0- 13.50%
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AIM V.I. DIVERSIFIED INCOME FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Connecticut General Life Insurance Company -0- -0- 40.83%*
Glenbrook Life and Annuity Company -0- -0- 36.89%*
General American Life Insurance Company -0- -0- 10.43%
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* A shareholder who beneficially owns more than 25% of the voting securities of a Fund may be presumed to "control" the Fund. The Funds understand that insurance company separate accounts owning shares of the Funds will vote their shares in accordance with instructions received from Contract owners, annuitants and beneficiaries. If an insurance company determines, however, that it is permitted to vote any such shares of the Funds in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
AIM V.I. GLOBAL UTILITIES FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 51.94%*
Connecticut General Life Insurance Company -0- -0- 29.80%*
The Guardian Insurance and Annuity Company -0- -0- 13.48%
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AIM V.I. GOVERNMENT SECURITIES FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Security Life of Denver Insurance Company -0- -0- 42.65%*
Glenbrook Life and Annuity Company -0- -0- 20.36%
Connecticut General Life Insurance Company -0- -0- 14.58%
First Citicorp Life Insurance Company -0- -0- 11.22%
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AIM V.I. GROWTH FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 21.37%
Connecticut General Life Insurance Company -0- -0- 19.52%
Aetna Life Insurance and Annuity Company -0- -0- 14.03%
The Lincoln National Life Insurance Company -0- -0- 8.37%
Sun Life of Canada (U.S.) -0- -0- 6.99%
Allianz Life Insurance Company -0- -0- 5.19%
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* A shareholder who beneficially owns more than 25% of the voting securities of a Fund may be presumed to "control" the Fund. The Funds understand that insurance company separate accounts owning shares of the Funds will vote their shares in accordance with instructions received from Contract owners, annuitants and beneficiaries. If an insurance company determines, however, that it is permitted to vote any such shares of the Funds in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
AIM V.I. GROWTH AND INCOME FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
IDS Life Insurance Company -0- -0- 56.98%*
Glenbrook Life and Annuity Company -0- -0- 9.48%
Pruco Life Insurance Company -0- -0- 7.43%
AETNA Life Insurance Company -0- -0- 6.55%
Connecticut General Life Insurance Company -0- -0- 5.12%
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AIM V.I. HIGH YIELD FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 57.62%*
Hartford Life Insurance Company -0- -0- 31.43%*
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AIM V.I. INTERNATIONAL EQUITY FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Connecticut General Life Insurance Company -0- -0- 23.54%
Glenbrook Life and Annuity Company -0- -0- 17.38%
Sun Life of Canada (U.S.) -0- -0- 14.65%
General American Life Insurance Company -0- -0- 6.03%
Merrill Lynch Life Insurance Company -0- -0- 5.40%
The Lincoln National Life Insurance Company -0- -0- 5.23%
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* A shareholder who beneficially owns more than 25% of the voting securities of a Fund may be presumed to "control" the Fund. The Funds understand that insurance company separate accounts owning shares of the Funds will vote their shares in accordance with instructions received from Contract owners, annuitants and beneficiaries. If an insurance company determines, however, that it is permitted to vote any such shares of the Funds in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
AIM V.I. MONEY MARKET FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Glenbrook Life and Annuity Company -0- -0- 49.91%*
Connecticut General Life Insurance Company -0- -0- 38.89%*
General American Life Insurance Company -0- -0- 8.27%
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AIM V.I. NEW TECHNOLOGY FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
General American Life Insurance Company -0- -0- 65.18%*
Glenbrook Life and Annuity Company -0- -0- 27.30%*
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AIM V.I. VALUE FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
Merrill Lynch Life Insurance Company -0- -0- 19.45%
Pruco Life Insurance Company of New Jersey -0- -0- 14.50%
Connecticut General Life Insurance Company -0- -0- 12.38%
Glenbrook Life and Annuity Company -0- -0- 11.06%
AETNA Life Insurance Company -0- -0 5.62%
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As of April 2, 2001, the trustees and officers of the Trust as a group owned beneficially less than 1% of the outstanding shares of the Trust.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement which the Funds have filed with the SEC under the Securities Act of 1933 and reference is hereby made to the Registration Statement for further information with respect to the Funds and the securities offered hereby. The Registration Statement is available for inspection by the public at the SEC in Washington, D.C.
* A shareholder who beneficially owns more than 25% of the voting securities of a Fund may be presumed to "control" the Fund. The Funds understand that insurance company separate accounts owning shares of the Funds will vote their shares in accordance with instructions received from Contract owners, annuitants and beneficiaries. If an insurance company determines, however, that it is permitted to vote any such shares of the Funds in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
Investment grade debt securities are those rating categories indicated by an asterisk (*).
Moody's Investors Service, Inc.'s corporate bond ratings are as follows:
*Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
*Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long term risks appear somewhat larger than in Aaa securities.
*A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future.
*Baa -- Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Ba -- Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during other good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating classification from Aa through B in its corporate bond rating system. The modifier indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.
Standard and Poor's Ratings Services classifications are as follows:
*AAA -- Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong.
*AA -- Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.
*A -- Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
*BBB -- Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher categories.
BB, B, CCC, CC, C -- Debt rated "BB", "B", "CCC", "CC" and "C" is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. "BB" indicates the lowest degree of speculation and "C" the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions.
BB -- Debt rated "BB" has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The "BB" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BBB --" rating.
B -- Debt rated "B" has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The "B" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BB" or "BB --" rating.
CCC -- Debt rated "CCC" has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it's not likely to have the capacity to pay interest and repay principal. The "CCC" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "B" or "B --" rating.
CC -- The rating "CC" is typically applied to debt subordinated to senior debt that is assigned an actual or implied "CCC" rating.
C -- The rating "C" is typically applied to debt subordinated to senior debt which is assigned an actual or implied "CCC--" debt rating. The "C" rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.
C1 -- The rating "C1" is reserved for income bonds on which no interest is being paid.
D -- Debt rated "D" is in payment default. The "D" rating category is used when interest payments or principal or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The rating from "AA" to "CCC" maybe modified by the addition of a plus or minus sign to show relative standing within the major categories.
Duff & Phelps fixed-income ratings are as follows:
*AAA -- Highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt.
*AA+, AA, AA- -- High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions.
*A+, A, A- -- Protection factors are average but adequate. However, risk factors are more variable and greater in periods of economic stress.
*BBB+, BBB, BBB- -- Below average protection factors but still considered sufficient for prudent investment. Considerable variability in risk during economic cycles.
BB+, BB, BB- -- Below investment grade but deemed likely to meet obligations when due. Present or prospective financial protection factors fluctuate according to industry conditions or company fortunes. Overall quality may move up or down frequently within this category.
B+, B, B- -- Below investment grade and possessing risk that obligations will not be met when due. Financial protection factors will fluctuate widely according to economic cycles, industry conditions and/or company fortunes. Potential exists for frequent changes in quality rating within this category or into a higher or lower quality rating grade.
CCC -- Well below investment grade securities. May be in default or have considerable uncertainty as to timely payment of Interest, preferred dividends and/or principal. Protection factors are narrow and risk can be substantial with unfavorable economic/industry conditions, and/or with unfavorable company developments.
Fitch IBCA Inc.'s bond ratings are as follows:
*AAA -- Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events.
*AA -- Bonds considered to be Investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated "AAA". Because bonds rated in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated "F-1+".
*A -- Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.
*BBB -- Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds, and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings.
BB -- Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified which could assist the obligor in satisfying its debt service requirements.
B -- Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue.
CCC -- Bonds have certain identifiable characteristics which, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment.
CC -- Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time.
C -- Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D -- Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. "DDD" represents the highest potential for recovery on these bonds, and "D" represents the lowest potential for recovery.
Plus (+) Minus (-) -- Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "AAA", "DDD", "DD", or "D" categories.
APPENDIX B
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY
U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES
The following list includes certain common Agency Securities, as defined in the Prospectus, and does not purport to be exhaustive.
EXPORT-IMPORT BANK CERTIFICATES -- are certificates of beneficial interest and participation certificates issued and guaranteed by the Export-Import Bank of the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS -- are bonds issued by a cooperatively owned, nationwide system of banks and associations supervised by the Farm Credit Administration, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS -- are notes and bonds issued by the Federal Home Loan Bank System.
FHA DEBENTURES -- are debentures issued by the Federal Housing Authority of the U.S. Government.
FHA INSURED NOTES -- are bonds issued by the Farmers Home Administration of the U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS -- are bonds issued and guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its funds by selling mortgages (as well as participation interests in the mortgages) and by borrowing funds through the issuance of debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" -- represent undivided interests in specified groups of conventional mortgage loans (and/or participation interests in those loans) underwritten and owned by FHLMC. At least 95% of the aggregate principal balance of the whole mortgage loans and/or participations in a group formed by FHLMC typically consists of single-family mortgage loans, and not more than 5% consists of multi-family loans. FHLMC Participation Certificates are not guaranteed by, and do not constitute a debt or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC Participation Certificates are issued in fully registered form only, in original unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1 million and $5 million. FHLMC guarantees to each registered holder of a Participation Certificate, to the extent of such holder's pro rata share (i) the timely payment of interest accruing at the applicable certificate rate on the unpaid principal balance outstanding on the mortgage loans, and (ii) collection of all principal on the mortgage loans without any offset or deductions. Pursuant to these guaranties, FHLMC indemnifies holders of Participation Certificates against any reduction in principal by reason of charges for property repairs, maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS -- are bonds issued
and guaranteed by FNMA, a federally chartered and privately-owned corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" -- are mortgage pass-through certificates issued and guaranteed by FNMA. FNMA Certificates represent a fractional undivided ownership interest in a pool of mortgage loans either provided from FNMA's own portfolio or purchased from primary lenders. The mortgage loans included in the pool are conventional, insured by the Federal Housing Administration or guaranteed by the Veterans Administration. FNMA Certificates are not backed by, nor entitled to, the full faith and credit of the U.S. Government.
Loans not provided from FNMA's own portfolio are purchased only from primary lenders that satisfy certain criteria developed by FNMA, including depth of mortgage origination experience, servicing experience and financial capacity. FNMA may purchase an entire loan pool from a single lender, and issue Certificates
backed by that loan pool alone, or may package a pool made up of loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest rates, may be included in a single pool, although each pool will consist of mortgage loans related to one-family or two-to-four family residential properties. Substantially all FNMA mortgage pools currently consist of fixed interest rate and growing equity mortgage loans, although FNMA mortgage pools may also consist of adjustable interest rate mortgage loans or other types of mortgage loans. Each mortgage loan must conform to FNMA's published requirements or guidelines with respect to maximum principal amount, loan-to-value ratio, loan term, underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a trust indenture for the benefit of Certificate holders. The trust indenture gives FNMA responsibility for servicing and administering the loans in a pool. FNMA contracts with the lenders or other servicing institutions to perform all services and duties customary to the servicing of mortgages, as well as duties specifically prescribed by FNMA, all under FNMA supervision. FNMA may remove service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual interest rate borne by an underlying mortgage loan in the pool, less a fee to FNMA as compensation for servicing and for FNMA's guarantee lenders servicing the underlying mortgage loans receive as compensation a portion of the fee paid to FNMA, the excess yields on pooled loans with coupon rates above the lowest rate borne by any mortgage loan in the pool and certain other amounts collected, such as late charges.
The minimum size of a FNMA pool is $1 million of mortgage loans. Registered holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually through securities dealers. The lender of a single lender pool typically markets all Certificates based on that pool, and lenders of multiple lender pools market Certificates based on a pro rata interest in the aggregate pool. The amount of FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE MAES" -- are mortgage-backed securities which represent a partial ownership interest in a pool of mortgage loans issued by lenders such as mortgage bankers, commercial banks and savings and loan associations. Each mortgage loan included in the pool is either insured by the Federal Housing Administration or guaranteed by the Veterans Administration. A "pool" or group of such mortgages is assembled, and, after being approved by GNMA, is offered to investors through securities dealers. GNMA is a U.S. Government corporation within the Department of Housing and Urban Development.
GNMA Certificates differ from bonds in that the principal is paid back monthly by the borrower over the term of the loan rather than returned in a lump sum at maturity. GNMA Certificates are called "modified pass-through" securities because they entitle the holder to receive its proportionate share of all interest and principal payments owed on the mortgage pool, net of fees paid to the issuer and GNMA, regardless of whether or not the mortgagor actually makes the payment. Payment of principal of and interest on GNMA Certificates of the "modified pass-through" type is guaranteed by GNMA and backed by the full faith and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially less than the original maturity of the mortgage pools underlying the securities. Prepayments of principal by mortgagors and mortgage foreclosures will usually result in the return on the greater part of principal invested far in advance of the maturity of the mortgages in the pool. Foreclosures impose little risk to principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely, it is not possible to accurately predict the average life of a particular issue of GNMA Certificates. However, statistics published by the FHA indicate that the average life of a single family dwelling mortgage with 25- to 30-year maturity, the type of mortgage which backs the vast majority of GNMA Certificates, is approximately 12 years. It is therefore customary practice to treat GNMA Certificates as 30-year mortgage-backed securities which prepay fully in the twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates, the coupon rate of interest of GNMA Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured mortgages underlying the Certificates.
The yield which will be earned on GNMA Certificates may vary from their coupon rates for the following reasons: (i) Certificates may be issued at a premium or discount, rather than at par; (ii) Certificates may trade in the secondary market at a premium or discount after issuance; (iii) interest is earned and compounded monthly which has the effect of raising the effective yield earned on the Certificates; and (iv) the actual yield of each Certificate is affected by the prepayment of mortgages included in the mortgage pool underlying the Certificates and the rate at which principal so prepaid is reinvested. In addition, prepayment of mortgages included in the mortgage pool underlying a GNMA Certificate purchased at a premium may result in a loss to the Fund.
Due to the large amount of GNMA Certificates outstanding and active participation in the secondary market by securities dealers and investors, GNMA Certificates are highly liquid instruments. Prices of GNMA Certificates are readily available from securities dealers and depend on, among other things, the level of market rates, the Certificate's coupon rate and the prepayment experience of the pool of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES -- are participation certificates issued by the General Services Administration of the U.S. Government.
MARITIME ADMINISTRATION BONDS -- are bonds issued and provided by the Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES -- are debentures issued in accordance with the provisions of Title IV of the Housing and Urban Development Act of 1968, as supplemented and extended by Title VII of the Housing and Urban Development Act of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS -- are short-term project notes and long-term bonds issued by public housing and urban renewal agencies in connection with programs administered by the Department of Housing and Urban Development of the U.S. Government, the payment of which is secured by the U.S. Government.
SBA DEBENTURES -- are debentures fully guaranteed as to principal and interest by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES -- are debentures backed by the Student Loan Marketing Association.
TITLE XI BONDS -- are bonds issued in accordance with the provisions of Title XI of the Merchant Marine Act of 1936, as amended, the payment of which is guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS -- are bonds issued by the Washington Metropolitan Area Transit Authority and are guaranteed by the Secretary of Transportation of the U.S. Government.
APPENDIX C
DESCRIPTION OF MONEY MARKET OBLIGATIONS
The following list does not purport to be an exhaustive list of all Money Market Obligations, and the Funds reserve the right to invest in Money Market Obligations other than those listed below:
1. GOVERNMENT OBLIGATIONS.
U.S. GOVERNMENT DIRECT OBLIGATIONS -- Bills, notes, and bonds issued by the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES -- Certain federal agencies such as the Government National Mortgage Association have been established as instrumentalities of the U.S. Government to supervise and finance certain types of activities. Issues of these agencies, while not direct obligations of the U.S. Government, are either backed by the full faith and credit of the United States or are guaranteed by the Treasury or supported by the issuing agencies' right to borrow from the Treasury.
FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated obligations issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities that are determined by the Fund's investment advisor to be of comparable quality to the other obligations in which the Fund may invest. Such securities also include debt obligations of supranational entities. Supranational entities include international organizations designated or supported by governmental entities to promote economic reconstruction or development and international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the World Bank), the European Coal and Steel Community, the Asian Development Bank and the InterAmerican Development Bank. The percentage of the Fund's assets invested in securities Issued by foreign governments will vary depending on the relative yields of such securities, the economic and financial markets of the countries in which the investments are made and the interest rate climate of such countries.
2. BANK INSTRUMENTS.
BANKERS' ACCEPTANCES -- A bill of exchange or time draft drawn on and accepted by a commercial bank. It is used by corporations to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument with a specific maturity. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market, prior to maturity.
TIME DEPOSITS -- A non-negotiable receipt issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market.
EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S. dollar-denominated obligation issued by a foreign branch of a domestic bank.
YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S. dollar-denominated obligation issued by a domestic branch of a foreign bank.
3. COMMERCIAL INSTRUMENTS.
COMMERCIAL PAPER -- The term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few days to nine months.
VARIABLE RATE MASTER DEMAND NOTES -- Variable rate master demand notes are unsecured demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with issuers who meet the foregoing quality criteria as discussed in the Statement of Additional Information under "Investment Programs." The interest rate on a variable rate master demand note is periodically redetermined according to a prescribed formula. Although there is no secondary market in master demand notes, the payee may demand payment of the principal amount of the note on relatively short notice. All variable rate master demand notes acquired by the Money Market Fund will be payable within a prescribed notice period not to exceed seven days.
4. REPURCHASE AGREEMENTS.
A repurchase agreement is a contractual undertaking whereby the seller of securities (limited to U.S. Government securities, including securities issued or guaranteed by the U.S. Treasury or the various agencies and instrumentalities of the U.S. Government) agrees to repurchase the securities at a specified price on a future date determined by negotiations.
5. TAXABLE MUNICIPAL SECURITIES.
Taxable municipal securities are debt securities issued by or on behalf of states and their political subdivisions, the District of Columbia, and possessions of the United States, the interest on which is not exempt from federal income tax.
FINANCIAL STATEMENTS
FS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Aggressive Growth Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Aggressive Growth Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998 in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. AGGRESSIVE GROWTH FUND
FS-1
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS - 93.36%
AIR FREIGHT - 0.35%
Expeditors International of Washington, Inc. 6,800 $ 365,075
====================================================================
BANKS (REGIONAL) - 1.42%
Bank United Corp. - Class A 7,200 490,950
--------------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 22,700 974,681
====================================================================
1,465,631
====================================================================
BIOTECHNOLOGY - 0.72%
Applera Corp. - Celera Genomics Group(a) 3,200 115,000
--------------------------------------------------------------------
Aurora Biosciences Corp.(a) 4,500 141,469
--------------------------------------------------------------------
Techne Corp.(a) 13,600 490,450
====================================================================
746,919
====================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.41%
Hispanic Broadcasting Corp.(a) 16,400 418,200
====================================================================
CHEMICALS (SPECIALTY) - 0.90%
OM Group, Inc. 17,000 928,625
====================================================================
COMMUNICATIONS EQUIPMENT - 4.92%
Comverse Technology, Inc.(a) 11,400 1,238,325
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Digital Lightwave, Inc.(a) 5,400 171,112
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Dycom Industries, Inc.(a) 12,500 449,219
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Finisar Corp.(a) 11,100 321,900
--------------------------------------------------------------------
MasTec, Inc.(a) 10,263 205,260
--------------------------------------------------------------------
Polycom, Inc.(a) 45,400 1,461,312
--------------------------------------------------------------------
Proxim, Inc.(a) 17,000 731,000
--------------------------------------------------------------------
REMEC, Inc.(a) 22,150 213,194
--------------------------------------------------------------------
Tollgrade Communications, Inc.(a) 3,200 116,800
--------------------------------------------------------------------
UTStarcom, Inc.(a) 11,100 172,050
====================================================================
5,080,172
====================================================================
COMPUTERS (HARDWARE) - 1.93%
Concurrent Computer Corp.(a) 11,400 61,275
--------------------------------------------------------------------
National Instruments Corp.(a) 39,750 1,930,359
====================================================================
1,991,634
====================================================================
COMPUTERS (NETWORKING) - 2.59%
Avocent Corp.(a) 11,050 298,350
--------------------------------------------------------------------
Emulex Corp.(a) 22,700 1,814,581
--------------------------------------------------------------------
SonicWALL, Inc.(a) 34,100 554,125
====================================================================
2,667,056
====================================================================
COMPUTERS (PERIPHERALS) - 3.21%
Actel Corp.(a) 22,700 549,056
--------------------------------------------------------------------
QLogic Corp.(a) 28,400 2,186,800
--------------------------------------------------------------------
SanDisk Corp.(a) 11,100 308,025
--------------------------------------------------------------------
Silicon Storage Technology, Inc.(a) 22,300 263,419
====================================================================
3,307,300
====================================================================
|
MARKET
SHARES VALUE
COMPUTERS (SOFTWARE & SERVICES) - 7.83%
Aspen Technology, Inc.(a) 22,700 $ 754,775
--------------------------------------------------------------------
Business Objects S.A. - ADR (France)(a) 6,600 373,725
--------------------------------------------------------------------
Eclipsys Corp.(a) 16,600 406,700
--------------------------------------------------------------------
Henry (Jack) & Associates, Inc. 34,100 2,118,462
--------------------------------------------------------------------
Inforte Corp.(a) 16,600 228,250
--------------------------------------------------------------------
Macrovision Corp.(a) 11,400 843,778
--------------------------------------------------------------------
Mercury Interactive Corp.(a) 4,400 397,100
--------------------------------------------------------------------
Micromuse Inc.(a) 4,600 277,653
--------------------------------------------------------------------
NetIQ Corp.(a) 4,541 396,770
--------------------------------------------------------------------
Peregrine Systems, Inc.(a) 8,600 169,850
--------------------------------------------------------------------
Rational Software Corp.(a) 8,800 342,650
--------------------------------------------------------------------
SeaChange International, Inc.(a) 5,500 111,719
--------------------------------------------------------------------
Secure Computing Corp.(a) 21,500 212,312
--------------------------------------------------------------------
SERENA Software, Inc.(a) 11,400 390,272
--------------------------------------------------------------------
Ulticom, Inc.(a) 6,800 231,625
--------------------------------------------------------------------
Verity, Inc.(a) 16,600 399,437
--------------------------------------------------------------------
WebTrends Corp.(a) 11,400 329,887
--------------------------------------------------------------------
Zengine, Inc.(a) 13,780 94,737
====================================================================
8,079,702
====================================================================
DISTRIBUTORS (FOOD & HEALTH) - 0.64%
McKesson HBOC, Inc. 11,400 409,146
--------------------------------------------------------------------
Patterson Dental Co.(a) 7,500 254,062
====================================================================
663,208
====================================================================
ELECTRICAL EQUIPMENT - 2.82%
Black Box Corp.(a) 12,500 603,906
--------------------------------------------------------------------
Cree, Inc.(a) 6,800 241,612
--------------------------------------------------------------------
Molex, Inc. - Class A 11,950 303,978
--------------------------------------------------------------------
Plexus Corp.(a) 22,700 689,867
--------------------------------------------------------------------
Sanmina Corp.(a) 9,100 697,287
--------------------------------------------------------------------
Viasystems Group, Inc.(a) 45,400 377,387
====================================================================
2,914,037
====================================================================
ELECTRONICS (COMPONENT DISTRIBUTORS) - 2.34%
Power-One, Inc.(a) 45,400 1,784,787
--------------------------------------------------------------------
Sawtek Inc.(a) 13,600 628,150
====================================================================
2,412,937
====================================================================
ELECTRONICS (DEFENSE) - 2.32%
Aeroflex Inc.(a) 22,700 654,398
--------------------------------------------------------------------
Anaren Microwave, Inc.(a) 25,800 1,733,438
====================================================================
2,387,836
====================================================================
|
AIM V.I. AGGRESSIVE GROWTH FUND
FS-2
MARKET
SHARES VALUE
ELECTRONICS (INSTRUMENTATION) - 4.00%
Alpha Industries, Inc.(a) 68,100 $ 2,519,700
-----------------------------------------------------------------------
PerkinElmer, Inc. 4,500 472,500
-----------------------------------------------------------------------
Tektronix, Inc. 33,700 1,135,269
=======================================================================
4,127,469
=======================================================================
ELECTRONICS (SEMICONDUCTORS) - 5.11%
Cirrus Logic, Inc.(a) 11,100 208,125
-----------------------------------------------------------------------
Dallas Semiconductor Corp. 17,000 435,625
-----------------------------------------------------------------------
GlobeSpan, Inc.(a) 3,200 88,000
-----------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 28,400 940,750
-----------------------------------------------------------------------
Micrel, Inc.(a) 14,700 495,206
-----------------------------------------------------------------------
Microchip Technology Inc.(a) 45,400 995,963
-----------------------------------------------------------------------
Pixelworks, Inc.(a) 11,400 255,075
-----------------------------------------------------------------------
Semtech Corp.(a) 11,400 251,513
-----------------------------------------------------------------------
SIPEX Corp.(a) 28,400 679,825
-----------------------------------------------------------------------
TranSwitch Corp.(a) 17,000 665,125
-----------------------------------------------------------------------
Zoran Corp.(a) 16,600 257,300
=======================================================================
5,272,507
=======================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.36%
EMCORE Corp.(a) 7,900 371,300
=======================================================================
FINANCIAL (DIVERSIFIED) - 1.29%
SEI Investments Co. 11,900 1,332,800
=======================================================================
FOODS - 0.35%
Hain Celestial Group, Inc.(a) 11,100 360,750
=======================================================================
FOOTWEAR - 0.37%
Vans, Inc.(a) 22,700 384,481
=======================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.59%
CIMA Labs Inc.(a) 4,400 286,275
-----------------------------------------------------------------------
Medicis Pharmaceutical Corp. - Class A(a) 5,400 319,275
=======================================================================
605,550
=======================================================================
HEALTH CARE (HOSPITAL MANAGEMENT) - 4.27%
Health Management Associates, Inc. - Class A(a) 56,800 1,178,600
-----------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 22,700 1,137,838
-----------------------------------------------------------------------
Province Healthcare Co.(a) 40,850 1,608,469
-----------------------------------------------------------------------
Triad Hospitals, Inc.(a) 14,900 485,181
=======================================================================
4,410,088
=======================================================================
HEALTH CARE (MANAGED CARE) - 1.82%
Express Scripts, Inc. - Class A(a) 6,500 664,625
-----------------------------------------------------------------------
First Health Group Corp.(a) 26,100 1,215,281
=======================================================================
1,879,906
=======================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.89%
Biosite Diagnostics Inc.(a) 11,400 460,988
-----------------------------------------------------------------------
Novoste Corp.(a) 5,500 151,250
-----------------------------------------------------------------------
Zoll Medical Corp.(a) 8,800 308,550
=======================================================================
920,788
=======================================================================
|
MARKET
SHARES VALUE
HEALTH CARE (SPECIALIZED SERVICES) - 4.87%
HEALTHSOUTH Corp.(a) 68,100 $ 1,110,881
--------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 7,900 1,390,400
--------------------------------------------------------------------
Lincare Holdings, Inc.(a) 17,000 970,063
--------------------------------------------------------------------
Quest Diagnostics Inc.(a) 6,800 965,600
--------------------------------------------------------------------
RehabCare Group, Inc.(a) 11,400 585,675
====================================================================
5,022,619
====================================================================
INSURANCE (PROPERTY - CASUALTY) - 0.59%
HCC Insurance Holdings, Inc. 22,700 611,481
====================================================================
INVESTMENT MANAGEMENT - 0.98%
Affiliated Managers Group, Inc.(a) 10,200 559,725
--------------------------------------------------------------------
Eaton Vance Corp. 14,000 451,500
====================================================================
1,011,225
====================================================================
MANUFACTURING (SPECIALIZED) - 0.51%
Insituform Technologies, Inc. - Class A(a) 13,300 530,338
====================================================================
METAL FABRICATORS - 1.54%
Shaw Group Inc. (The)(a) 31,800 1,590,000
====================================================================
NATURAL GAS - 0.75%
Kinder Morgan, Inc. 14,800 772,375
====================================================================
OFFICE EQUIPMENT & SUPPLIES - 0.16%
MCSi, Inc.(a) 7,500 160,313
====================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 8.00%
Cal Dive International, Inc.(a) 22,700 604,388
--------------------------------------------------------------------
Cooper Cameron Corp.(a) 14,700 971,119
--------------------------------------------------------------------
Core Laboratories N.V. (Netherlands)(a) 19,900 543,519
--------------------------------------------------------------------
Dril-Quip, Inc.(a) 6,600 225,638
--------------------------------------------------------------------
Hanover Compressor Co.(a) 26,300 1,171,994
--------------------------------------------------------------------
Marine Drilling Cos., Inc.(a) 28,400 759,700
--------------------------------------------------------------------
National-Oilwell, Inc.(a) 39,700 1,535,894
--------------------------------------------------------------------
Patterson Energy, Inc.(a) 34,100 1,270,225
--------------------------------------------------------------------
Pride International, Inc.(a) 34,000 837,250
--------------------------------------------------------------------
Varco International, Inc.(a) 15,400 334,950
====================================================================
8,254,677
====================================================================
OIL & GAS (EXPLORATION & PRODUCTION) - 0.72%
Newfield Exploration Co.(a) 11,100 526,556
--------------------------------------------------------------------
Stone Energy Corp.(a) 3,400 219,470
====================================================================
746,026
====================================================================
RESTAURANTS - 1.88%
CBRL Group, Inc. 25,700 467,419
--------------------------------------------------------------------
CEC Entertainment Inc.(a) 18,150 619,369
--------------------------------------------------------------------
Jack in the Box Inc.(a) 8,800 259,050
--------------------------------------------------------------------
Sonic Corp.(a) 25,500 594,469
====================================================================
1,940,307
====================================================================
|
AIM V.I. AGGRESSIVE GROWTH FUND
FS-3
MARKET
SHARES VALUE
RETAIL (COMPUTERS & ELECTRONICS) - 0.67%
CDW Computer Centers, Inc.(a) 19,900 $ 554,713
-----------------------------------------------------------------------
Tweeter Home Entertainment Group, Inc.(a) 11,400 138,938
=======================================================================
693,651
=======================================================================
RETAIL (SPECIALTY) - 1.80%
Genesco, Inc.(a) 22,700 554,731
-----------------------------------------------------------------------
Linens 'n Things, Inc.(a) 28,400 784,550
-----------------------------------------------------------------------
Venator Group, Inc.(a) 33,200 514,600
=======================================================================
1,853,881
=======================================================================
RETAIL (SPECIALTY - APPAREL) - 3.97%
Abercrombie & Fitch Co. - Class A(a) 68,100 1,362,000
-----------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 45,437 1,238,158
-----------------------------------------------------------------------
Pacific Sunwear of California(a) 11,400 292,125
-----------------------------------------------------------------------
Talbots, Inc. (The) 20,400 930,750
-----------------------------------------------------------------------
Too Inc.(a) 22,100 276,250
=======================================================================
4,099,283
=======================================================================
SERVICES (ADVERTISING/MARKETING) - 1.85%
Forrester Research, Inc.(a) 11,400 570,713
-----------------------------------------------------------------------
Professional Detailing, Inc.(a) 7,900 835,548
-----------------------------------------------------------------------
TMP Worldwide, Inc.(a) 9,100 500,500
=======================================================================
1,906,761
=======================================================================
SERVICES (COMMERCIAL & CONSUMER) - 3.32%
Apollo Group, Inc. - Class A(a) 13,700 673,869
-----------------------------------------------------------------------
Copart, Inc.(a) 13,300 285,950
-----------------------------------------------------------------------
Corporate Executive Board Co. (The)(a) 14,800 588,531
-----------------------------------------------------------------------
DeVry, Inc.(a) 14,500 547,375
-----------------------------------------------------------------------
DiamondCluster International, Inc. - Class A(a) 34,100 1,040,050
-----------------------------------------------------------------------
Iron Mountain Inc.(a) 7,900 293,288
=======================================================================
3,429,063
=======================================================================
SERVICES (COMPUTER SYSTEMS) - 1.04%
SunGard Data Systems Inc.(a) 22,700 1,069,738
=======================================================================
SERVICES (DATA PROCESSING) - 1.92%
Concord EFS, Inc.(a) 27,850 1,223,659
-----------------------------------------------------------------------
Fiserv, Inc.(a) 15,900 754,256
=======================================================================
1,977,915
=======================================================================
SERVICES (EMPLOYMENT) - 2.09%
Hall, Kinion & Associates, Inc.(a) 27,900 561,488
-----------------------------------------------------------------------
Heidrick & Struggles International, Inc.(a) 11,900 500,544
-----------------------------------------------------------------------
On Assignment, Inc.(a) 11,400 324,900
-----------------------------------------------------------------------
Robert Half International Inc.(a) 28,900 765,850
=======================================================================
2,152,782
=======================================================================
|
MARKET
SHARES VALUE
SERVICES (FACILITIES & ENVIRONMENTAL) - 1.23%
Tetra Tech, Inc.(a) 39,700 $ 1,265,438
===========================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 3.60%
AirGate PCS, Inc.(a) 11,400 404,700
---------------------------------------------------------------------------
Powertel, Inc.(a) 4,400 272,525
---------------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 22,700 1,327,950
---------------------------------------------------------------------------
Research in Motion (Canada)(a) 13,600 1,088,000
---------------------------------------------------------------------------
Rural Cellular Corp. - Class A(a) 4,400 130,350
---------------------------------------------------------------------------
SBA Communications Corp.(a) 6,800 279,225
---------------------------------------------------------------------------
Western Wireless Corp. - Class A(a) 5,500 215,531
===========================================================================
3,718,281
===========================================================================
TEXTILES (APPAREL) - 0.42%
Quicksilver, Inc.(a) 22,150 429,156
===========================================================================
Total Common Stocks & Other Equity Interests (Cost
$94,284,543) 96,329,281
===========================================================================
MONEY MARKET FUNDS - 6.52%
STIC Liquid Assets Portfolio(b) 3,365,479 3,365,479
===========================================================================
STIC Prime Portfolio(b) 3,365,479 3,365,479
===========================================================================
Total Money Market Funds
(Cost $6,730,958) 6,730,958
===========================================================================
TOTAL INVESTMENTS - 99.88%
(COST $101,015,501) 103,060,239
===========================================================================
OTHER ASSETS LESS LIABILITIES - 0.12% 120,627
===========================================================================
NET ASSETS - 100.00% $103,180,866
===========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-4
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $101,015,501) $103,060,239 ============================================================== Receivables for: Fund shares sold 331,585 -------------------------------------------------------------- Dividends 43,997 -------------------------------------------------------------- Investment for deferred compensation plan 14,805 -------------------------------------------------------------- Other assets 715 ============================================================== Total assets 103,451,341 ============================================================== LIABILITIES: Payables for: Investments purchased 81,801 -------------------------------------------------------------- Fund shares reacquired 714 -------------------------------------------------------------- Deferred compensation plan 14,805 -------------------------------------------------------------- Accrued advisory fees 86,324 -------------------------------------------------------------- Accrued administrative services fees 64,651 -------------------------------------------------------------- Accrued operating expenses 22,180 ============================================================== Total liabilities 270,475 ============================================================== Net assets applicable to shares outstanding $103,180,866 ______________________________________________________________ ============================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 7,056,124 ============================================================== Net asset value $ 14.62 ______________________________________________________________ ============================================================== |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME: Dividends from affiliated money market funds $ 257,584 --------------------------------------------------------------------------- Dividends 25,308 --------------------------------------------------------------------------- Interest 1,209 =========================================================================== Total investment income 284,101 =========================================================================== EXPENSES: Advisory fees 403,570 --------------------------------------------------------------------------- Administrative services fees 113,363 --------------------------------------------------------------------------- Custodian fees 70,146 --------------------------------------------------------------------------- Professional fees 22,291 --------------------------------------------------------------------------- Trustees' fees 6,645 --------------------------------------------------------------------------- Other 18,915 =========================================================================== Total expenses 634,930 =========================================================================== Less: Fees waived (50,479) --------------------------------------------------------------------------- Expenses paid indirectly (602) --------------------------------------------------------------------------- Net expenses 583,849 =========================================================================== Net investment income (loss) (299,748) =========================================================================== REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES Net realized gain (loss) from investment securities (6,658,190) =========================================================================== Change in net unrealized appreciation (depreciation) of investment securities (3,147,103) --------------------------------------------------------------------------- Net gain (loss) from investment securities (9,805,293) =========================================================================== Net increase (decrease) in net assets resulting from operations $(10,105,041) ___________________________________________________________________________ =========================================================================== |
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-5
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
------------ -----------
OPERATIONS:
Net investment income (loss) $ (299,748) $ (34,296)
----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities (6,658,190) (13,688)
----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (3,147,103) 4,503,331
============================================================================
Net increase (decrease) in net assets resulting
from operations (10,105,041) 4,455,347
============================================================================
Share transactions - net 95,960,063 8,471,394
============================================================================
Net increase in net assets 85,855,022 12,926,741
============================================================================
NET ASSETS:
Beginning of year 17,325,844 4,399,103
============================================================================
End of year $103,180,866 $17,325,844
____________________________________________________________________________
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $108,218,541 $12,551,916
----------------------------------------------------------------------------
Undistributed net investment income (loss) (14,998) (8,688)
----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (7,067,415) (409,225)
----------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,044,738 5,191,841
============================================================================
$103,180,866 $17,325,844
____________________________________________________________________________
============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Aggressive Growth Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
achieve long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price as of the close of the customary trading session on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in a manner specifically authorized by the Board of Trustees. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE").
AIM V.I. AGGRESSIVE GROWTH FUND
FS-6
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the
customary trading session of the NYSE which would not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under
the supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income (loss) was
increased by $293,438 and paid in capital decreased by $293,438 as a result
of differing book/tax treatment of net operating loss. Net assets of the
Fund were unaffected by the reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $2,178,994 as of December 31, 2000 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, through the year 2008.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. During the year
ended December 31, 2000, AIM waived fees of $50,479.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $113,363 of which AIM retained $50,000 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,343
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $602 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $602.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $121,894,199 and $31,105,968, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $12,551,404 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (12,306,104) ========================================================================== Net unrealized appreciation of investment securities $ 245,300 __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $102,814,939.
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the years ended Decmber 31, 2000 and 1999
were as follows:
2000 1999
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- -----------
Sold 6,160,739 $101,301,215 1,128,485 $12,082,374
------------------------------------------------------------
Reacquired (320,145) (5,341,152) (359,576) (3,610,980)
============================================================
5,840,594 $ 95,960,063 768,909 $ 8,471,394
____________________________________________________________
============================================================
|
AIM V.I. AGGRESSIVE GROWTH FUND
FS-7
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
MAY 1, 1998
YEAR ENDED (DATE OPERATIONS
DECEMBER 31, COMMENCED) TO
--------------------- DECEMBER 31,
2000(a) 1999(a) 1998
-------- ------- ----------------
Net asset value, beginning of period $ 14.25 $ 9.85 $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10) (0.04) 0.04
--------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) 0.47 4.44 (0.14)
================================================================================
Total from investment operations 0.37 4.40 (0.10)
================================================================================
Less distributions from net investment
income -- -- (0.05)
================================================================================
Net asset value, end of period $ 14.62 $ 14.25 $ 9.85
________________________________________________________________________________
================================================================================
Total return(b) 2.60% 44.67% (0.94)%
________________________________________________________________________________
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s
omitted) $103,181 $17,326 $4,399
________________________________________________________________________________
================================================================================
Ratio of expenses to average net
assets:
With fee waivers 1.16%(c) 1.19% 1.16%(d)
================================================================================
Without fee waivers 1.26%(c) 2.42% 4.62%(d)
================================================================================
Ratio of net investment income (loss)
to average net assets (0.59)%(c) (0.41)% 0.96%(d)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 65% 89% 30%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $50,446,304.
(d) Annualized.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-8
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Balanced Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Balanced Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998 in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. BALANCED FUND
FS-9
SCHEDULE OF INVESTMENTS
December 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS & NOTES - 30.80%
AIRLINES - 0.35%
Delta Air Lines, Inc.,
Unsec. Notes, 7.90%, 12/15/09 $ 200,000 $ 192,328
-------------------------------------------------------------------------------
Deb., 10.38%, 12/15/22 100,000 104,829
===============================================================================
297,157
===============================================================================
AUTOMOBILES - 0.27%
DaimlerChrysler N.A. Holding Corp., Gtd.
Notes, 8.00%, 06/15/10 100,000 101,091
-------------------------------------------------------------------------------
Unsec. Notes, 7.40%, 01/20/05 130,000 130,953
===============================================================================
232,044
===============================================================================
BANKS (MAJOR REGIONAL) - 2.20%
BankBoston N.A., Unsec. Sub. Notes, 7.00%, 09/15/07 250,000 250,782
-------------------------------------------------------------------------------
BB&T Corp., RAPS Sub. Notes, 6.38%, 06/30/05 235,000 227,637
-------------------------------------------------------------------------------
Crestar Financial Corp., Sub. Notes, 8.75%, 11/15/04 60,000 64,290
-------------------------------------------------------------------------------
Deutsche Bank Luxembourg (Luxembourg), Yankee Bonds,
6.83%, 12/28/07 (Acquired 07/11/00; Cost $458,225)(a) 500,000 463,107
-------------------------------------------------------------------------------
HSBC Capital Funding L.P., Gtd. Bonds, 10.18%, 12/29/49
(Acquired 08/24/00;
Cost $111,662)(a) 100,000 115,311
-------------------------------------------------------------------------------
Midland Bank PLC (United Kingdom), Unsec. Sub. Yankee
Notes,
7.65%, 05/01/25 20,000 20,712
-------------------------------------------------------------------------------
Bank of America Corp., Sub. Notes,
9.38%, 09/15/09 50,000 57,056
-------------------------------------------------------------------------------
10.20%, 07/15/15 150,000 179,725
-------------------------------------------------------------------------------
Regions Financial Corp., Putable Sub. Notes, 7.75%,
09/15/24 200,000 207,436
-------------------------------------------------------------------------------
Republic New York Corp., Sub.
Deb., 9.50%, 04/15/14 70,000 81,730
-------------------------------------------------------------------------------
Notes, 9.70%, 02/01/09 65,000 74,119
-------------------------------------------------------------------------------
Skandinaviska Enskilda Banken (Sweden), Sub. Yankee
Notes, 6.88%, 02/15/09 150,000 142,617
===============================================================================
1,884,522
===============================================================================
BANKS (MONEY CENTER) - 0.98%
BSCH Issuances Ltd. (Cayman Islands), Gtd. Sub. Yankee
Bonds,
7.63%, 09/14/10 250,000 254,070
-------------------------------------------------------------------------------
First Union Corp., Putable Unsec. Sub. Deb.,
6.55%, 10/15/35 185,000 180,830
-------------------------------------------------------------------------------
7.50%, 04/15/35 200,000 202,706
-------------------------------------------------------------------------------
MBNA America Bank N.A., Sr. Notes, 7.75%, 09/15/05 150,000 152,011
-------------------------------------------------------------------------------
Sanwa Finance Aruba AEC (Aruba), Gtd. Unsec. Sub.
Notes, 8.35%, 07/15/09 50,000 52,289
===============================================================================
841,906
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
BANKS (REGIONAL) - 1.61%
Bank of Tokyo-Mitsubishi Ltd. (The) (Japan), Sr. Sub.
Yankee Notes, 8.40%, 04/15/10 $ 30,000 $ 32,019
-------------------------------------------------------------------------------
Bank United - Series A, Medium Term Notes, 8.00%,
03/15/09 75,000 75,568
-------------------------------------------------------------------------------
Banponce Trust I - Series A, Gtd. Notes, 8.33%,
02/01/27 100,000 88,957
-------------------------------------------------------------------------------
Mercantile Bancorp. Inc., Jr. Unsec. Sub. Notes, 7.30%,
06/15/07 300,000 306,336
-------------------------------------------------------------------------------
NBD Bank N.A. Michigan, Putable Unsec. Sub. Deb.,
8.25%, 11/01/24 300,000 323,094
-------------------------------------------------------------------------------
Riggs Capital Trust II - Series C, Gtd. Sec. Bonds,
8.88%, 03/15/27 110,000 70,166
-------------------------------------------------------------------------------
Union Planters Bank N.A., Unsec. Sub. Notes, 6.50%,
03/15/08 150,000 137,553
-------------------------------------------------------------------------------
Union Planters Capital Trust, Gtd. Bonds, 8.20%,
12/15/26 100,000 85,783
-------------------------------------------------------------------------------
US Bancorp, Sub. Deb., 7.50%, 06/01/26 250,000 256,185
===============================================================================
1,375,661
===============================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.45%
AT&T Corp., Gtd. Bonds, 9.65%, 03/31/27 195,000 210,641
-------------------------------------------------------------------------------
AT&T Corp.-Liberty Media Corp., Sr. Unsec.
Bonds, 7.88%, 07/15/09 50,000 49,254
-------------------------------------------------------------------------------
Deb., 8.25%, 02/01/30 160,000 146,706
-------------------------------------------------------------------------------
British Sky Broadcasting Group PLC (United Kingdom),
Sr. Unsec. Gtd. Yankee Notes,
8.20%, 07/15/09 190,000 180,285
-------------------------------------------------------------------------------
Clear Channel Communications, Inc., Unsec. Deb., 7.25%,
10/15/27 200,000 180,166
-------------------------------------------------------------------------------
Comcast Cable Communications, Unsec. Unsub. Notes,
8.50%, 05/01/27 200,000 218,564
-------------------------------------------------------------------------------
Continental Cablevision, Inc., Sr. Deb., 9.50%,
08/01/13 400,000 439,244
-------------------------------------------------------------------------------
Cox Enterprises, Inc., Notes, 8.00%, 02/15/07 (Acquired
02/16/00-03/23/00; Cost $199,505)(a) 200,000 205,936
-------------------------------------------------------------------------------
CSC Holdings Inc., Sr. Unsec.
Notes, 7.88%, 12/15/07 275,000 278,006
-------------------------------------------------------------------------------
Deb., 7.88%, 02/15/18 200,000 188,888
-------------------------------------------------------------------------------
Series B, Notes, 8.13%, 07/15/09 150,000 154,098
-------------------------------------------------------------------------------
Lenfest Communications, Inc., Sr. Unsec.
Sub. Notes, 8.25%, 02/15/08 150,000 156,331
-------------------------------------------------------------------------------
Notes, 8.38%, 11/01/05 100,000 107,252
-------------------------------------------------------------------------------
TCA Cable TV, Inc., Sr. Unsec. Deb., 6.53%, 02/01/28 150,000 144,961
-------------------------------------------------------------------------------
TCI Communications, Inc., Sr. Deb., 9.80%, 02/01/12 250,000 292,482
===============================================================================
2,952,814
===============================================================================
|
AIM V.I. BALANCED FUND
FS-10
PRINCIPAL MARKET
AMOUNT VALUE
CHEMICALS - 0.11%
Airgas, Inc., Medium Term Notes, 7.14%, 03/08/04 $ 100,000 $ 91,989
===============================================================================
COMMUNICATIONS EQUIPMENT - 1.09%
Comverse Technology, Inc., Conv. Unsec. Sub. Deb.,
4.50%, 07/01/05 155,000 763,669
-------------------------------------------------------------------------------
Corning Inc., Sr. Conv. Unsec. Deb., 2.07%, 11/08/15(b) 238,000 169,872
===============================================================================
933,541
===============================================================================
COMPUTERS (HARDWARE) - 0.38%
Candescent Technologies Corp., Sr. Conv. Unsec. Gtd.
Sub. Deb. 8.00%, 05/01/03 (Acquired 11/06/98-08/31/00;
Cost $335,650)(a)(c) 448,000 327,040
===============================================================================
COMPUTERS (SOFTWARE & SERVICES) - 0.56%
VERITAS Software Corp., Conv. Unsec. Disc. Notes,
1.86%, 08/13/06(d) 208,000 483,870
===============================================================================
CONSUMER FINANCE - 1.49%
American General Finance Corp., Sr. Putable Notes,
8.45%, 10/15/09 180,000 195,849
-------------------------------------------------------------------------------
Capital One Financial Corp., Unsec. Notes, 7.25%,
05/01/06 165,000 154,059
-------------------------------------------------------------------------------
CitiFinancial Credit Co., Putable Notes, 7.88%,
02/01/25 200,000 210,550
-------------------------------------------------------------------------------
General Motors Acceptance Corp.,
Notes, 6.85%, 06/17/04 270,000 272,503
-------------------------------------------------------------------------------
Putable Notes, 9.00%, 10/15/02 100,000 104,325
-------------------------------------------------------------------------------
Household Finance Corp.,
Sr. Unsec. Notes, 6.88%, 03/01/07 100,000 98,537
-------------------------------------------------------------------------------
Unsec. Notes, 8.00%, 07/15/10 150,000 158,643
-------------------------------------------------------------------------------
MBNA Capital - Series A, Gtd. Bonds, 8.28%, 12/01/26 100,000 83,307
===============================================================================
1,277,773
===============================================================================
ELECTRIC COMPANIES - 2.76%
CILCORP, Inc., Sr. Unsec. Bonds, 9.38%, 10/15/29 150,000 166,596
-------------------------------------------------------------------------------
Cleveland Electric Illuminating Co. (The),
First Mortgage Bonds, 6.86%, 10/01/08 100,000 98,757
-------------------------------------------------------------------------------
Series D, Sr. Sec. Notes, 7.88%, 11/01/17 200,000 203,070
-------------------------------------------------------------------------------
CMS Energy Corp., Sr. Unsec. Notes, 8.13%, 05/15/02 200,000 199,128
-------------------------------------------------------------------------------
El Paso Electric Co.
Series D, Sec. First Mortgage Bonds, 8.90%, 02/01/06 150,000 161,854
-------------------------------------------------------------------------------
Series E, Sec. First Mortgage Bonds, 9.40%, 05/01/11 200,000 217,286
-------------------------------------------------------------------------------
Empire District Electric Co. (The), Sr. Notes, 7.70%,
11/15/04 150,000 155,857
-------------------------------------------------------------------------------
Niagara Mohawk Power Corp. - Series H, Sr. Unsec. Disc.
Notes, 8.50%, 07/01/10(d) 200,000 173,096
-------------------------------------------------------------------------------
Public Service Company of New Mexico - Series A, Sr.
Unsec. Notes, 7.10%, 08/01/05 130,000 125,960
-------------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC COMPANIES - (CONTINUED)
Southern Energy, Inc., Sr. Notes, 7.90%, 07/15/09
(Acquired 07/21/99; Cost $274,898)(a) $ 275,000 $ 275,817
-------------------------------------------------------------------------------
Texas-New Mexico Power Co., Sr. Sec. Notes, 6.25%,
01/15/09 250,000 230,440
-------------------------------------------------------------------------------
Unicom Corp. - Series 94, First Mortgage Notes, 7.50%,
07/01/13 200,000 208,538
-------------------------------------------------------------------------------
UtiliCorp United Inc., Sr. Unsec. Putable Notes, 6.70%,
10/15/06 150,000 149,166
===============================================================================
2,365,565
===============================================================================
ELECTRICAL EQUIPMENT - 0.30%
General Electric Capital Corp. - Series A, Medium Term
Notes, 6.70%, 10/01/02 250,000 253,325
===============================================================================
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.10%
Israel Electric Corp. Ltd. (Israel), Yankee Deb.,
7.75%, 12/15/27 (Acquired 06/09/00;
Cost $87,798)(a) 100,000 88,985
===============================================================================
ENTERTAINMENT - 0.77%
Time Warner Inc.,
Sr. Unsec. Gtd. Deb., 7.57%, 02/01/24 220,000 220,007
-------------------------------------------------------------------------------
Unsec. Deb.,
8.05%, 01/15/16 120,000 125,743
-------------------------------------------------------------------------------
9.13%, 01/15/13 120,000 139,232
-------------------------------------------------------------------------------
9.15%, 02/01/23 150,000 174,286
===============================================================================
659,268
===============================================================================
FINANCIAL (DIVERSIFIED) - 3.00%
AIG SunAmerica Global Financing I, Sr. Unsec. Unsub.
Notes, 7.40%, 05/05/03 (Acquired 10/17/00; Cost
$254,103)(a) 250,000 257,355
-------------------------------------------------------------------------------
AIG SunAmerica Global Financing II, Sr. Sec. Notes,
7.60%, 06/15/05 (Acquired 06/08/00;
Cost $250,000)(a) 250,000 264,137
-------------------------------------------------------------------------------
Associates Corp. of North America, Sr. Deb., 6.95%,
11/01/18 50,000 47,296
-------------------------------------------------------------------------------
Beaver Valley II Funding Corp., Sec. Lease Obligations
Deb., 9.00%, 06/01/17 200,000 219,706
-------------------------------------------------------------------------------
CIT Group, Inc. (The), Sr. Medium Term Notes, 5.91%,
11/23/05 200,000 189,364
-------------------------------------------------------------------------------
Citicorp Lease - Class A2, Series 1999-1, Pass Through
Ctfs., 8.04%, 12/15/19 (Acquired 06/01/00-09/19/00;
Cost $349,188)(a) 350,000 356,314
-------------------------------------------------------------------------------
Citigroup Inc.,
Deb., 6.63%, 01/15/28 150,000 133,851
-------------------------------------------------------------------------------
Unsec. Sub. Notes, 7.25%, 10/01/10 135,000 139,802
-------------------------------------------------------------------------------
Dow Capital B.V. (Netherlands), Gtd. Yankee Deb.,
9.20%, 06/01/10 150,000 171,931
-------------------------------------------------------------------------------
Ford Holdings, Inc., Unsec. Unsub. Gtd. Deb., 9.30%,
03/01/30 120,000 136,566
-------------------------------------------------------------------------------
Heller Financial, Inc., Sr. Unsec. Notes, 8.00%,
06/15/05 150,000 155,418
-------------------------------------------------------------------------------
|
AIM V.I. BALANCED FUND
FS-11
PRINCIPAL MARKET
AMOUNT VALUE
FINANCIAL (DIVERSIFIED) - (CONTINUED)
Pinnacle Partners, Sr. Notes, 8.83%, 08/15/04 (Acquired
08/02/00; Cost $300,000)(a) $ 300,000 $ 310,449
-------------------------------------------------------------------------------
Source One Mortgage Services Corp., Deb., 9.00%,
06/01/12 80,000 92,002
-------------------------------------------------------------------------------
Sun Canada Financial Co., Gtd. Sub. Notes, 6.63%,
12/15/07 (Acquired 03/15/00; Cost $91,980)(a) 100,000 99,688
===============================================================================
2,573,879
===============================================================================
FOODS - 0.30%
ConAgra, Inc., Sr. Unsec. Putable Notes, 7.13%,
10/01/26 250,000 256,593
===============================================================================
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.13%
Procter & Gamble Co. (The), Putable Deb., 8.00%,
09/01/24 100,000 114,275
===============================================================================
INSURANCE (LIFE/HEALTH) - 0.15%
Torchmark Corp., Notes, 7.88%, 05/15/23 145,000 132,663
===============================================================================
INSURANCE (PROPERTY - CASUALTY) - 0.40%
GE Global Insurance Holdings Corp., Unsec. Notes,
7.75%, 06/15/30 125,000 133,049
-------------------------------------------------------------------------------
Terra Nova Insurance PLC (United Kingdom), Sr. Unsec.
Gtd. Yankee Notes,
7.00%, 05/15/08 150,000 145,419
-------------------------------------------------------------------------------
7.20%, 08/15/07 70,000 68,762
===============================================================================
347,230
===============================================================================
INVESTMENT BANKING/BROKERAGE - 0.98%
Bear Stearns Cos., Inc.,
Sr. Unsec. Notes, 7.63%, 12/07/09 100,000 101,622
-------------------------------------------------------------------------------
Notes, 7.80%, 08/15/07 150,000 154,542
-------------------------------------------------------------------------------
Lehman Brothers Holdings Inc.,
Bonds, 7.88%, 08/15/10 100,000 103,321
-------------------------------------------------------------------------------
Unsec. Notes, 8.50%, 08/01/15 200,000 212,120
-------------------------------------------------------------------------------
Putable Sr. Notes, 8.80%, 03/01/15 160,000 173,602
-------------------------------------------------------------------------------
Lehman Brothers Inc., Sr. Sub. Notes,
7.38%, 01/15/07 45,000 45,356
-------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Unsec. Notes, 6.88%,
11/15/18 50,000 46,883
===============================================================================
837,446
===============================================================================
MANUFACTURING (DIVERSIFIED) - 0.38%
Honeywell International Inc., Unsec. Unsub. Notes,
7.50%, 03/01/10 300,000 325,038
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
NATURAL GAS - 2.32%
CMS Panhandle Holding Co., Sr. Notes, 6.13%, 03/15/04 $ 200,000 $ 195,374
-------------------------------------------------------------------------------
Coastal Corp. (The), Sr. Putable Unsec. Deb., 6.70%,
02/15/27 150,000 148,986
-------------------------------------------------------------------------------
Ferrellgas Partners L.P., - Series B, Sr. Sec. Gtd.
Notes, 9.38%, 06/15/06 50,000 46,750
-------------------------------------------------------------------------------
Kinder Morgan Energy Partners, L.P., Sr. Unsec. Notes,
6.30%, 02/01/09 200,000 191,928
-------------------------------------------------------------------------------
Kinder Morgan, Inc., Unsec. Deb., 7.35%, 08/01/26 200,000 207,198
-------------------------------------------------------------------------------
KN Capital Trust I - Series B, Unsec. Gtd. Bonds,
8.56%, 04/15/27 150,000 140,606
-------------------------------------------------------------------------------
National Fuel Gas Co. - Series D, Medium Term Notes,
6.30%, 05/27/08 100,000 95,527
-------------------------------------------------------------------------------
Northern Border Partners, L.P. - Series A, Sr. Gtd.
Unsec. Unsub. Notes, 8.88%, 06/15/10 300,000 326,355
-------------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee Deb.,
8.50%, 12/15/12 150,000 167,970
-------------------------------------------------------------------------------
Sonat Inc., Sr. Unsec. Notes, 7.63%, 07/15/11 160,000 167,496
-------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., Unsec. Deb., 7.50%,
04/01/17 200,000 197,886
-------------------------------------------------------------------------------
Williams Cos., Inc. (The), Notes, 7.63%, 07/15/19 100,000 100,188
===============================================================================
1,986,264
===============================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 0.41%
NRG Energy, Inc., Sr. Unsec. Notes, 7.50%, 06/01/09 200,000 199,110
-------------------------------------------------------------------------------
Petroleum Geo-Services A.S.A. (Norway),
Sr. Unsec. Yankee Notes, 7.13%, 03/30/28 60,000 48,508
-------------------------------------------------------------------------------
Yankee Notes, 7.50%, 03/31/07 100,000 100,351
===============================================================================
347,969
===============================================================================
OIL & GAS (EXPLORATION & PRODUCTION) - 0.67%
Anadarko Petroleum Corp., Unsec. Deb., 7.73%, 09/15/96 150,000 156,660
-------------------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec. Notes, 6.88%,
12/01/07 170,000 168,244
-------------------------------------------------------------------------------
ONEOK, Inc., Unsec. Notes, 7.75%, 08/15/06 100,000 104,039
-------------------------------------------------------------------------------
Union Pacific Resources Group Inc., Unsec. Deb., 7.50%,
10/15/26 140,000 142,694
===============================================================================
571,637
===============================================================================
OIL & GAS (REFINING & MARKETING) - 0.15%
Petroleos Mexicanos (Mexico) - Series P, Putable Unsec.
Unsub. Yankee Notes, 9.50%, 09/15/27 125,000 131,673
===============================================================================
|
AIM V.I. BALANCED FUND
FS-12
PRINCIPAL MARKET
AMOUNT VALUE
OIL (DOMESTIC INTEGRATED) - 0.45%
Amerada Hess Corp., Bonds, 7.88%, 10/01/29 $ 200,000 $ 219,564
-------------------------------------------------------------------------------
Occidental Petroleum Corp., Sr. Unsec. Notes, 8.45%,
02/15/29 150,000 165,753
===============================================================================
385,317
===============================================================================
OIL (INTERNATIONAL INTEGRATED) - 0.22%
YPF Sociedad Anonima (Argentina), Yankee
Bonds, 9.13%, 02/24/09 70,000 71,824
-------------------------------------------------------------------------------
Notes, 8.00%, 02/15/04 120,000 119,006
===============================================================================
190,830
===============================================================================
POWER PRODUCERS (INDEPENDENT) - 0.34%
AES Corp. (The), Sr. Unsec. Sub. Notes, 10.25%,
07/15/06 100,000 103,750
-------------------------------------------------------------------------------
CE Generation LLC, Sr. Sec. Sub. Deb., 7.42%, 12/15/18 194,800 187,368
===============================================================================
291,118
===============================================================================
PUBLISHING (NEWSPAPERS) - 0.49%
News America Holdings, Inc.,
Putable Notes, 8.45%, 08/01/34 200,000 207,690
-------------------------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 200,000 214,072
===============================================================================
421,762
===============================================================================
RAILROADS - 0.24%
Norfolk Southern Corp., Notes, 7.05%, 05/01/37 200,000 203,400
===============================================================================
REAL ESTATE INVESTMENT TRUSTS - 0.18%
ERP Operating L.P., Unsec. Notes, 7.13%, 10/15/17 70,000 62,073
-------------------------------------------------------------------------------
Spieker Properties, Inc., Unsec. Unsub. Deb., 7.35%,
12/01/17 100,000 93,232
===============================================================================
155,305
===============================================================================
SAVINGS & LOAN COMPANIES - 0.41%
Dime Capital Trust I - Series A, Gtd. Bonds, 9.33%,
05/06/27 140,000 120,637
-------------------------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec. Unsub. Notes, 7.13%,
02/15/04 75,000 74,636
-------------------------------------------------------------------------------
Washington Mutual Capital I, Sec. Gtd. Sub. Bonds,
8.38%, 06/01/27 55,000 50,892
-------------------------------------------------------------------------------
Washington Mutual, Inc., Jr. Unsec. Sub. Notes, 8.25%,
04/01/10 100,000 105,428
===============================================================================
351,593
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
SOVEREIGN DEBT - 0.96%
British Columbia (Province of) (Canada), Unsec. Unsub.
Yankee Notes, 5.38%, 10/29/08 $ 50,000 $ 47,915
------------------------------------------------------------------------------
Hydro-Quebec - Series B (Canada), Gtd. Medium Term
Yankee Notes, 8.62%, 12/15/11 200,000 234,696
------------------------------------------------------------------------------
Manitoba (Province of) - Series AZ (Canada), Putable
Yankee Deb., 7.75%, 07/17/16 200,000 222,434
------------------------------------------------------------------------------
Newfoundland (Province of) (Canada), Yankee Deb.,
9.00%, 06/01/19 100,000 118,043
------------------------------------------------------------------------------
Quebec (Province of) (Canada),
Series A, Medium Term Putable Yankee Notes, 6.29%,
03/06/26(d) 100,000 101,332
------------------------------------------------------------------------------
Unsec. Yankee Deb., 6.50%, 01/17/06 100,000 102,518
==============================================================================
826,938
==============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.18%
Vodafone AirTouch PLC (United Kingdom), Unsec. Unsub.
Yankee Notes, 7.75%, 02/15/10
(Acquired 02/07/00; Cost $149,072)(a) 150,000 155,085
==============================================================================
TELECOMMUNICATIONS (LONG DISTANCE) - 0.70%
MCI Communications Corp., Sr. Unsec. Putable Deb.,
7.13%, 06/15/27 200,000 202,500
------------------------------------------------------------------------------
Sprint Corp., Putable Deb., 9.00%, 10/15/19 200,000 209,936
------------------------------------------------------------------------------
WorldCom, Inc., Notes, 8.00%, 05/15/06 180,000 183,487
==============================================================================
595,923
==============================================================================
TELEPHONE - 0.85%
AT&T Canada Inc. (Canada), Sr. Unsec.
Sub. Yankee Notes, 7.63%, 03/15/05 200,000 199,538
------------------------------------------------------------------------------
Yankee Notes, 7.65%, 09/15/06 100,000 99,423
------------------------------------------------------------------------------
Deutsche Telekom International Finance B.V.
(Netherlands), Unsec. Unsub. Yankee Bonds, 8.00%,
06/15/10 130,000 132,717
------------------------------------------------------------------------------
GTE Corp., Unsec. Deb., 6.84%, 04/15/18 100,000 92,957
------------------------------------------------------------------------------
Koninklijke (Royal) KPN N.V. (Netherlands), Sr. Unsec.
Unsub. Yankee Notes, 7.50%, 10/01/05 (Acquired
09/27/00; Cost $49,968)(a) 50,000 48,510
------------------------------------------------------------------------------
Qwest Capital Funding Inc., Unsec. Gtd. Notes, 7.90%,
08/15/10 (Acquired 08/24/00; Cost $150,483)(a) 150,000 155,331
==============================================================================
728,476
==============================================================================
|
AIM V.I. BALANCED FUND
FS-13
PRINCIPAL MARKET
AMOUNT VALUE
WASTE MANAGEMENT - 0.47%
Browning-Ferris Industries, Inc.,
Unsec. Deb., 7.40%, 09/15/35 $ 200,000 $ 145,000
---------------------------------------------------------------------------
Waste Management, Inc.,
Putable Unsec. Notes 7.10%, 08/01/26 250,000 247,820
---------------------------------------------------------------------------
Sr. Unsec. Notes, 7.13%, 12/15/17 10,000 8,942
===========================================================================
401,762
===========================================================================
Total U.S. Dollar Denominated Bonds & Notes (Cost
$25,570,062) 26,397,636
===========================================================================
COMMON STOCKS & OTHER EQUITY INTERESTS - 47.31%
AEROSPACE/DEFENSE - 1.12%
General Dynamics Corp. 7,500 585,000
---------------------------------------------------------------------------
Northrop Grumman Corp. 4,500 373,500
===========================================================================
958,500
===========================================================================
BANKS (MAJOR REGIONAL) - 0.40%
Bank of New York Co., Inc. (The) 6,200 342,162
===========================================================================
BANKS (MONEY CENTER) - 0.78%
J.P. Morgan Chase & Co. 14,700 667,931
===========================================================================
BIOTECHNOLOGY - 0.76%
Genzyme Corp.(e) 7,200 647,550
===========================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.29%
Clear Channel Communications, Inc.(e) 6,300 305,156
---------------------------------------------------------------------------
Entravision Communications Corp. - Class A(e) 7,900 145,162
---------------------------------------------------------------------------
General Motors Corp. - Class H(e) 10,200 234,600
---------------------------------------------------------------------------
Hispanic Broadcasting Corp.(e) 10,700 272,850
---------------------------------------------------------------------------
Infinity Broadcasting Corp. - Class A(e) 10,350 289,153
---------------------------------------------------------------------------
Univision Communications Inc. - Class A(e) 17,500 716,406
===========================================================================
1,963,327
===========================================================================
COMMUNICATIONS EQUIPMENT - 1.35%
Corning Inc. 4,800 253,500
---------------------------------------------------------------------------
JDS Uniphase Corp.(e) 2,400 100,050
---------------------------------------------------------------------------
Nokia Oyj-ADR (Finland) 7,400 321,900
---------------------------------------------------------------------------
Nortel Networks Corp. (Canada) 9,600 307,800
---------------------------------------------------------------------------
Redback Networks Inc.(e) 4,300 176,300
===========================================================================
1,159,550
===========================================================================
COMPUTERS (HARDWARE) - 0.77%
Sun Microsystems, Inc.(e) 17,400 485,025
---------------------------------------------------------------------------
Sycamore Networks, Inc.(e) 4,700 175,075
===========================================================================
660,100
===========================================================================
COMPUTERS (NETWORKING) - 1.51%
Cisco Systems, Inc.(e) 18,600 711,450
---------------------------------------------------------------------------
Juniper Networks, Inc.(e) 3,200 403,400
---------------------------------------------------------------------------
VeriSign, Inc.(e) 2,400 178,050
===========================================================================
1,292,900
===========================================================================
|
MARKET
SHARES VALUE
COMPUTERS (PERIPHERALS) - 1.37%
Brocade Communications Systems, Inc.(e) 4,000 $ 367,250
--------------------------------------------------------------------------
EMC Corp.(e) 12,100 804,650
==========================================================================
1,171,900
==========================================================================
COMPUTERS (SOFTWARE & SERVICES) - 3.23%
America Online, Inc.(e) 9,500 330,600
--------------------------------------------------------------------------
Ariba, Inc.(e) 5,000 268,750
--------------------------------------------------------------------------
BEA Systems, Inc.(e) 5,900 397,144
--------------------------------------------------------------------------
Check Point Software Technologies Ltd. (Israel)(e) 3,700 494,181
--------------------------------------------------------------------------
Internet Security Systems, Inc.(e) 4,700 368,656
--------------------------------------------------------------------------
i2 Technologies, Inc.(e) 5,800 315,375
--------------------------------------------------------------------------
Oracle Corp.(e) 14,400 418,500
--------------------------------------------------------------------------
VERITAS Software Corp.(e) 2,000 175,000
==========================================================================
2,768,206
==========================================================================
ELECTRIC COMPANIES - 0.31%
Southern Co. (The) 8,000 266,000
==========================================================================
ELECTRICAL EQUIPMENT - 0.73%
General Electric Co. 13,000 623,187
==========================================================================
ELECTRONICS (DEFENSE) - 0.51%
Raytheon Co. - Class B 14,200 441,087
==========================================================================
ELECTRONICS (SEMICONDUCTORS) - 2.03%
Analog Devices, Inc.(e) 10,000 511,875
--------------------------------------------------------------------------
Intel Corp. 10,900 329,725
--------------------------------------------------------------------------
Microchip Technology Inc.(e) 5,175 113,527
--------------------------------------------------------------------------
SDL, Inc.(e) 2,700 400,106
--------------------------------------------------------------------------
Vitesse Semiconductor Corp.(e) 6,900 381,656
==========================================================================
1,736,889
==========================================================================
ENGINEERING & CONSTRUCTION - 0.43%
Quanta Services, Inc.(e) 11,500 370,156
==========================================================================
ENTERTAINMENT - 0.59%
Time Warner Inc. 3,000 156,720
--------------------------------------------------------------------------
Viacom Inc. - Class B(e) 7,418 346,791
==========================================================================
503,511
==========================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.23%
Applied Materials, Inc.(e) 5,100 194,756
==========================================================================
FINANCIAL (DIVERSIFIED) - 2.54%
American Express Co. 8,300 455,981
--------------------------------------------------------------------------
Citigroup Inc. 16,000 817,000
--------------------------------------------------------------------------
Fannie Mae 2,700 234,225
--------------------------------------------------------------------------
Freddie Mac 4,000 275,500
--------------------------------------------------------------------------
MGIC Investment Corp. 5,800 391,138
==========================================================================
2,173,844
==========================================================================
|
AIM V.I. BALANCED FUND
FS-14
MARKET
SHARES VALUE
HEALTH CARE (DIVERSIFIED) - 1.09%
Abbott Laboratories 8,800 $ 426,250
---------------------------------------------------------------------
American Home Products Corp. 8,000 508,400
=====================================================================
934,650
=====================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.24%
Medicis Pharmaceutical Corp. - Class A(e) 3,500 206,938
=====================================================================
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 2.14%
Allergan, Inc. 4,000 390,813
---------------------------------------------------------------------
Merck & Co., Inc. 6,000 561,750
---------------------------------------------------------------------
Pfizer Inc. 11,200 515,200
---------------------------------------------------------------------
Pharmacia Corp. 6,000 366,000
=====================================================================
1,833,763
=====================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.29%
Baxter International, Inc. 6,000 529,875
---------------------------------------------------------------------
Medtronic, Inc. 9,600 579,600
=====================================================================
1,109,475
=====================================================================
INSURANCE (MULTI-LINE) - 0.88%
American International Group, Inc. 7,700 758,931
=====================================================================
INSURANCE BROKERS - 0.78%
Marsh & McLennan Cos., Inc. 5,700 666,900
=====================================================================
INVESTMENT BANKING/BROKERAGE - 2.52%
Goldman Sachs Group, Inc. (The) 5,800 620,238
---------------------------------------------------------------------
Merrill Lynch & Co., Inc. 7,700 525,044
---------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 7,600 602,300
---------------------------------------------------------------------
Schwab (Charles) Corp. (The) 14,500 411,438
=====================================================================
2,159,020
=====================================================================
INVESTMENT MANAGEMENT - 0.44%
Stilwell Financial, Inc. 9,600 378,600
=====================================================================
MANUFACTURING (DIVERSIFIED) - 0.36%
Tyco International Ltd. (Bermuda) 5,600 310,800
=====================================================================
NATURAL GAS - 2.06%
Dynegy Inc. - Class A 10,400 583,050
---------------------------------------------------------------------
Enron Corp. 6,800 565,250
---------------------------------------------------------------------
Williams Cos., Inc. (The) 15,400 615,038
=====================================================================
1,763,338
=====================================================================
|
MARKET
SHARES VALUE
OIL & GAS (EXPLORATION & PRODUCTION) - 1.28%
Apache Corp. 9,400 $ 658,588
--------------------------------------------------------------------
Kerr-McGee Corp. 6,500 435,094
====================================================================
1,093,682
====================================================================
OIL (INTERNATIONAL INTEGRATED) - 1.20%
Exxon Mobil Corp. 5,300 460,769
--------------------------------------------------------------------
TotalFinaElf S.A. (France) 3,800 565,233
====================================================================
1,026,002
====================================================================
POWER PRODUCERS (INDEPENDENT) - 0.53%
AES Corp. (The)(e) 8,200 454,075
====================================================================
RETAIL (BUILDING SUPPLIES) - 0.29%
Home Depot, Inc. (The) 5,400 246,713
====================================================================
RETAIL (FOOD CHAINS) - 0.76%
Safeway Inc.(e) 10,400 650,000
====================================================================
RETAIL (GENERAL MERCHANDISE) - 0.71%
Target Corp. 19,000 612,750
====================================================================
RETAIL (SPECIALTY) - 0.66%
Bed Bath & Beyond Inc.(e) 18,600 416,175
--------------------------------------------------------------------
Linens 'n Things, Inc.(e) 5,400 149,175
====================================================================
565,350
====================================================================
SERVICES (ADVERTISING/MARKETING) - 1.25%
Lamar Advertising Co.(e) 9,600 370,500
--------------------------------------------------------------------
Omnicom Group Inc. 8,500 704,438
====================================================================
1,074,938
====================================================================
SERVICES (COMPUTER SYSTEMS) - 0.16%
Critical Path, Inc.(e) 4,600 141,450
====================================================================
SERVICES (DATA PROCESSING) - 0.32%
DST Systems, Inc.(e) 4,100 274,700
====================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.76%
Amdocs Ltd. (United Kingdom)(e) 9,000 596,250
--------------------------------------------------------------------
Level 3 Communications, Inc.(e) 5,060 166,031
--------------------------------------------------------------------
NTT DoCoMo, Inc. (Japan) 17 292,898
--------------------------------------------------------------------
Openwave Systems Inc.(e) 5,700 273,244
--------------------------------------------------------------------
Western Wireless Corp. - Class A(e) 4,500 176,344
====================================================================
1,504,767
====================================================================
|
AIM V.I. BALANCED FUND
FS-15
MARKET
SHARES VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 0.12%
Global Crossing Ltd. (Bermuda)(e) 7,054 $ 100,960
================================================================================
TELEPHONE - 5.52%
BellSouth Corp. 9,500 388,906
--------------------------------------------------------------------------------
Broadwing Inc.(e) 11,614 264,944
--------------------------------------------------------------------------------
Korea Telecom Corp. - ADR (South Korea) 3,184 98,704
--------------------------------------------------------------------------------
McLeodUSA, Inc. - Class A(e) 26,400 372,900
--------------------------------------------------------------------------------
Qwest Communications International Inc.(e) 13,000 533,000
--------------------------------------------------------------------------------
SBC Communications Inc. 14,100 673,275
--------------------------------------------------------------------------------
Telecom Italia S.p.A. (Italy) 52,200 313,718
--------------------------------------------------------------------------------
Telefonica S.A. (Spain)(e) 25,835 426,982
--------------------------------------------------------------------------------
Time Warner Telecom Inc. - Class A(e) 6,900 437,719
--------------------------------------------------------------------------------
Verizon Communications Inc. 15,700 786,963
--------------------------------------------------------------------------------
Vodafone Group PLC (United Kingdom) 118,330 434,385
================================================================================
4,731,496
================================================================================
Total Common Stocks & Other Equity Interests (Cost
$38,415,687) 40,540,854
================================================================================
DOMESTIC PREFERRED STOCKS - 1.23%
OIL & GAS (EXPLORATION & PRODUCTION) - 0.56%
Kerr-McGee Corp. - $1.83 Pfd. DECS 8,700 479,587
================================================================================
POWER PRODUCERS (INDEPENDENT) - 0.67%
AES Trust III - $3.38 Conv. Pfd. 1,400 120,400
--------------------------------------------------------------------------------
Calpine Capital Trust III - $2.50 Conv. Pfd.
(Acquired 08/03/00; Cost $375,000)(a) 7,500 452,813
================================================================================
573,213
================================================================================
Total Domestic Preferred Stocks
(Cost $839,574) 1,052,800
================================================================================
PRINCIPAL
AMOUNT(f)
NON-U.S. DOLLAR DENOMINATED
BONDS & NOTES - 0.37%
CANADA - 0.07%
Clearnet Communications Inc. (Telecommunications -
Cellular/Wireless), Sr. Unsec. Disc. Notes,
10.75%, 02/15/09(b) CAD 50,000 26,748
--------------------------------------------------------------------------------
Export Development Corp. (Sovereign Debt), Sr.
Unsec. Unsub. Bonds, 6.50%, 12/21/04 NZD 75,000 32,687
================================================================================
59,435
================================================================================
NETHERLANDS - 0.04%
Mannesmann Finance B.V. (Machinery - Diversified),
Gtd. Unsec. Unsub. Euro Notes,
4.75%, 05/27/09 EUR 10,000 8,535
--------------------------------------------------------------------------------
Tecnost International Finance N.V. (Telephone)-
Series E, Gtd. Medium Term Euro Notes,
6.13%, 07/30/09 EUR 30,000 26,904
================================================================================
35,439
================================================================================
|
PRINCIPAL MARKET
AMOUNT(f) VALUE
NEW ZEALAND - 0.08%
International Bank for Reconstruction & Development -
Class E (Banks - Money Center), Unsec. Medium Term
Notes, 5.50%, 04/15/04 NZD 150,000 $ 63,931
==============================================================================
UNITED KINGDOM - 0.05%
British Sky Broadcasting Group PLC (Broadcasting -
Television, Radio & Cable), Sr. Gtd. Unsec.
Unsub. Bonds, 7.75%, 07/09/09 GBP 30,000 42,104
==============================================================================
UNITED STATES OF AMERICA - 0.13%
John Hancock Global Funding Ltd. (Insurance -
Life/Health) - Series 99-H, Sr. Sec. Sub.
Medium Term Notes, 6.75%, 02/15/06 AUD 200,000 113,209
==============================================================================
Total Non-U.S. Dollar Denominated
Bonds & Notes (Cost $337,904) 314,118
==============================================================================
U.S. GOVERNMENT AGENCY SECURITIES - 0.89%
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") - 0.68%
Medium Term Notes
6.18%, 03/15/01 300,000 299,976
------------------------------------------------------------------------------
Pass through certificates
6.50%, 11/01/28 283,568 280,554
==============================================================================
580,530
==============================================================================
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") - 0.21%
Pass through certificates
6.50%, 03/15/29 187,383 185,391
==============================================================================
Total U.S. Government Agency Securities
(Cost $774,729) 765,921
==============================================================================
U.S. TREASURY SECURITIES - 9.62%
U.S. TREASURY BONDS - 0.23%
6.13%, 11/15/27(g) 180,000 193,784
==============================================================================
U.S. TREASURY NOTES - 9.39%
6.63%, 05/31/02 950,000 966,473
------------------------------------------------------------------------------
5.88%, 11/15/04 1,000,000 1,026,390
------------------------------------------------------------------------------
6.75%, 05/15/05(g) 1,400,000 1,491,350
------------------------------------------------------------------------------
6.50%, 08/15/05 to 02/15/10(g) 3,000,000 3,219,450
------------------------------------------------------------------------------
6.88%, 05/15/06(g) 1,000,000 1,081,940
------------------------------------------------------------------------------
5.75%, 08/15/10(g) 250,000 262,070
==============================================================================
8,047,673
==============================================================================
Total U.S. Treasury Securities
(Cost $7,887,060) 8,241,457
==============================================================================
|
AIM V.I. BALANCED FUND
FS-16
MARKET
SHARES VALUE
MONEY MARKET FUNDS - 9.17%
STIC Liquid Assets Portfolio(h) 3,930,278 $ 3,930,278
--------------------------------------------------------------------
STIC Prime Portfolio(h) 3,930,278 3,930,278
====================================================================
Total Money Market Funds (Cost $7,860,556) 7,860,556
====================================================================
TOTAL INVESTMENTS - 99.39%
(Cost $81,685,572) 85,173,342
====================================================================
OTHER ASSETS LESS LIABILITIES - 0.61% 519,938
====================================================================
NET ASSETS - 100.00% $85,693,280
====================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt AUD - Australian Dollar CAD - Canadian Dollars |
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DECS - Dividend Enhanced Convertible Stock
Disc. - Discounted
EUR - Euro GBP - British Pound Sterling Gtd. - Guaranteed NZD - New Zealand Dollar Pfd. - Preferred RAPS - Redeemable and Putable Security Sec. - Secured Sr. - Senior Sub. - Subordinated |
Unsec. - Unsecured
Unsub. - Unsubordinated
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/00 was $3,575,878, which represents 4.17% of the Fund's net assets.
(b) Zero coupon bond issued at a discount. The interest rate shown represents
the yield to maturity at issue.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(e) Non-income producing security.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 7.
(h) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. BALANCED FUND
FS-17
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $81,685,572) $85,173,342 ------------------------------------------------------------ Foreign currencies, at value (cost $2,432) 1,079 ------------------------------------------------------------ Receivables for: Investments sold 157,711 ------------------------------------------------------------ Fund shares sold 344,843 ------------------------------------------------------------ Dividends and interest 683,719 ------------------------------------------------------------ Investment for deferred compensation plan 14,920 ============================================================ Total assets 86,375,614 ============================================================ LIABILITIES: Payables for: Investments purchased 359,664 ------------------------------------------------------------ Fund shares reacquired 125 ------------------------------------------------------------ Foreign currency contracts outstanding 3,347 ------------------------------------------------------------ Deferred compensation plan 14,920 ------------------------------------------------------------ Variation margin 133,650 ------------------------------------------------------------ Accrued advisory fees 53,107 ------------------------------------------------------------ Accrued administrative services fees 79,359 ------------------------------------------------------------ Accrued operating expenses 38,162 ============================================================ Total liabilities 682,334 ============================================================ Net assets applicable to shares outstanding $85,693,280 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 6,879,628 ============================================================ Net asset value $ 12.46 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Interest $ 2,139,278
-----------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $1,248) 179,034
-----------------------------------------------------------------------------
Dividends from affiliated money market funds 389,749
=============================================================================
Total investment income 2,708,061
=============================================================================
EXPENSES:
Advisory fees 520,878
-----------------------------------------------------------------------------
Administrative services fees 133,727
-----------------------------------------------------------------------------
Custodian fees 47,944
-----------------------------------------------------------------------------
Trustees' fees 6,698
-----------------------------------------------------------------------------
Other 53,811
=============================================================================
Total expenses 763,058
=============================================================================
Less: Expenses paid indirectly (470)
-----------------------------------------------------------------------------
Net expenses 762,588
=============================================================================
Net investment income 1,945,473
=============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FOREIGN CURRENCY CONTRACTS, FUTURES
CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,983,636)
-----------------------------------------------------------------------------
Foreign currencies (40,011)
-----------------------------------------------------------------------------
Foreign currency contracts 32,945
-----------------------------------------------------------------------------
Futures contracts (1,208,277)
-----------------------------------------------------------------------------
Option contracts written 48,282
=============================================================================
(3,150,697)
=============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (2,677,414)
-----------------------------------------------------------------------------
Foreign currencies 2,879
-----------------------------------------------------------------------------
Foreign currency contracts (11,669)
-----------------------------------------------------------------------------
Futures contracts (328,271)
-----------------------------------------------------------------------------
Option contracts written (3,921)
=============================================================================
(3,018,396)
=============================================================================
Net gain (loss) on investment securities, foreign currencies,
foreign currency contracts, futures contracts and option
contracts (6,169,093)
=============================================================================
Net increase (decrease) in net assets resulting from operations $(4,223,620)
_____________________________________________________________________________
=============================================================================
|
See Notes to Financial Statements.
AIM V.I. BALANCED FUND
FS-18
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
----------- -----------
OPERATIONS:
Net investment income $ 1,945,473 $ 746,439
----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities,
foreign currencies, foreign currency contracts,
futures contracts and option contracts (3,150,697) 8,710
----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies, foreign currency contracts,
futures contracts and option contracts (3,018,396) 5,577,116
============================================================================
Net increase (decrease) in net assets resulting
from operations (4,223,620) 6,332,265
============================================================================
Distributions to shareholders from net investment
income (132,329) (600,086)
============================================================================
Distributions to shareholders from net realized
gains (22,166) (230,004)
============================================================================
Share transactions - net 41,764,325 32,461,559
============================================================================
Net increase in net assets 37,386,210 37,963,734
============================================================================
NET ASSETS:
Beginning of year 48,307,070 10,343,336
============================================================================
End of year $85,693,280 $48,307,070
____________________________________________________________________________
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $83,762,305 $41,997,980
----------------------------------------------------------------------------
Undistributed net investment income 1,791,617 122,628
----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities,
foreign currencies, foreign currency contracts,
futures contracts and option contracts (3,120,050) (91,342)
----------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, foreign currency contracts,
futures contracts and option contracts 3,259,408 6,277,804
============================================================================
$85,693,280 $48,307,070
____________________________________________________________________________
============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Balanced Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
achieve as high a total return to investors as possible, consistent with
preservation of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on
an exchange (except convertible bonds) is valued at its last sales price
as of the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of
prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations,
AIM V.I. BALANCED FUND
FS-19
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the
customary trading session of the NYSE which would not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under
the supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$144,155 and undistributed net realized gains increased by $144,155 as a
result of differing book/tax treatment of foreign currency transactions. Net
assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
The Fund has a capital loss carryforward of $2,283,751 as of December 31,
2000 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2008.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to
attempt to minimize the risk to the Fund from adverse changes in the
relationship between currencies. The Fund may also enter into a foreign
currency contract for the purchase or sale of a security denominated in a
foreign currency in order to "lock in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value
of the foreign currency changes unfavorably.
Outstanding foreign currency contracts at December 31, 2000 were as
follows:
CONTRACT TO UNREALIZED
SETTLEMENT ---------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -----------------------------------------
03/09/01 AUD 150,000 $ 81,757 $ 83,491 $(1,734)
-------------------------------------------------------------
03/30/01 AUD 40,000 21,972 22,267 (295)
-------------------------------------------------------------
03/30/01 NZD 200,000 87,140 88,458 (1,318)
=============================================================
$190,869 $194,216 $(3,347)
_____________________________________________________________
=============================================================
|
G. Futures Contracts - The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
H. Covered Call Options - The Fund may write call options, on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a
written call option expires on the stipulated expiration date, or if the
Fund enters into a closing purchase transaction, the Fund realizes a gain
(or a loss if the closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized
gain or loss on the underlying security, and the liability related to such
option is extinguished. If a written option is exercised, the Fund
realizes a gain or a loss from the sale of the underlying security and the
proceeds of the sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option
AIM V.I. BALANCED FUND
FS-20
period, in return for the premium paid by the purchaser of the option, the
Fund has given up the opportunity for capital appreciation above the
exercise price should the market price of the underlying security increase,
but has retained the risk of loss should the price of the underlying
security decline. During the option period, the Fund may be required at any
time to deliver the underlying security against payment of the exercise
price. This obligation is terminated upon the expiration of the option
period or at such earlier time at which the Fund effects a closing purchase
transaction by purchasing (at a price which may be higher than that received
when the call option was written) a call option identical to the one
originally written.
I. Put Options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
Fund to hedge securities it owns by locking in a minimum price at which
the Fund can sell. If security prices fall, the put option could be
exercised to offset all or a portion of the Fund's resulting losses. At
the same time, because the maximum the Fund has at risk is the cost of the
option, purchasing put options does not eliminate the potential for the
Fund to profit from an increase in the value of the securities hedged.
J. Bond Premiums - It has been the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes. In November 2000, a
revised AICPA Audit and Accounting Guide, Audits of Investment Companies,
was issued and is effective for fiscal years beginning after December 15,
2000. The revised Guide will require the Fund to amortize premium and
discount on all fixed-income securities by the cumulative amount of
amortization that would have been recognized had amortization been in
effect from the purchase date of each holding. Adopting this accounting
principle will not effect the Fund's net asset value, but will change the
classification of certain amounts between interest income and realized and
unrealized gain/loss in the Statement of Operations. The Fund expects that
the impact of the adoption of this principle will not be material to the
financial statements.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $150 million of the Fund's average daily net assets, plus 0.50% of
the Fund's average daily net assets in excess of $150 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $133,727 of which AIM retained $50,000 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,375
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $470 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $470.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000
are summarized as follows:
CALL OPTION
CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------
Beginning of year 47 $20,258
-------------------------------------
Written 141 59,542
-------------------------------------
Closed (151) (59,937)
-------------------------------------
Exercised (17) (8,694)
-------------------------------------
Expired (20) (11,169)
=====================================
End of year -- --
_____________________________________
=====================================
|
NOTE 7 - FUTURES CONTRACTS
On December 31, 2000, $733,500 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
---------------- -----------------------------------------
S&P 500 Index 21 Mar-01/Buy $ 7,008,750 $(107,366)
-----------------------------------------------------------------
Nasdaq 100 Index 3 Mar-01/Buy 712,350 (116,571)
=================================================================
$ 7,721,100 $(223,937)
_________________________________________________________________
=================================================================
|
AIM V.I. BALANCED FUND
FS-21
NOTE 8 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $69,999,068 and $30,852,446, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $7,511,398 ------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (4,030,893) ========================================================================= Net unrealized appreciation of investment securities $3,480,505 _________________________________________________________________________ ========================================================================= |
Cost of investments for tax purposes is $81,692,837.
NOTE 9 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and
1999 were as follows:
2000 1999
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Sold 3,449,849 $45,353,531 2,956,052 $34,512,915
--------------------------------------------------------------------------
Issued as reinvestment of
dividends 12,061 154,495 66,460 830,090
--------------------------------------------------------------------------
Reacquired (285,543) (3,743,701) (247,878) (2,881,446)
==========================================================================
3,176,367 $41,764,325 2,774,634 $32,461,559
__________________________________________________________________________
==========================================================================
|
NOTE 10 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
MAY 1, 1998
(DATE OPERATIONS
YEAR ENDED COMMENCED)
DECEMBER 31, THROUGH
------------------- DECEMBER 31,
2000(a) 1999(a) 1998
------- ------- ----------------
Net asset value, beginning of period $ 13.04 $ 11.14 $ 10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.37 0.31 0.12
--------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (0.93) 1.83 1.18
================================================================================
Total from investment operations (0.56) 2.14 1.30
================================================================================
Less distributions:
Dividends from net investment income (0.02) (0.17) (0.14)
================================================================================
Distributions from net realized gains -- (0.07) (0.02)
================================================================================
Total distributions (0.02) (0.24) (0.16)
================================================================================
Net asset value, end of period $ 12.46 $ 13.04 $ 11.14
________________________________________________________________________________
================================================================================
Total return(b) (4.28)% 19.31% 13.02%
________________________________________________________________________________
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $85,693 $48,307 $10,343
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.10%(c) 1.21% 1.18%(d)
================================================================================
Without fee waivers 1.10%(c) 1.31% 2.83%(d)
================================================================================
Ratio of net investment income to average
net assets 2.80%(c) 2.66% 3.71%(d)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 49% 57% 9%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $69,450,457.
(d) Annualized.
AIM V.I. BALANCED FUND
FS-22
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Blue Chip Fund, a series of shares of beneficial interests of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets and the financial highlights for the year then ended and for the period December 29, 1999 (date operations commenced) through December 31, 1999. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Blue Chip Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for the year then ended and for the period December 29, 1999 (date operations commenced) through December 31, 1999 in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. BLUE CHIP FUND
FS-23
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INERESTS - 89.31%
AIRLINES - 0.24%
Delta Air Lines, Inc. 1,400 $ 70,262
=====================================================================
BANKS (MAJOR REGIONAL) - 0.90%
Fifth Third Bancorp 4,500 268,875
=====================================================================
BANKS (MONEY CENTER) - 1.31%
J.P. Morgan Chase & Co. 8,600 390,762
=====================================================================
BEVERAGES (NON-ALCOHOLIC) - 0.43%
Coca-Cola Co. (The) 2,100 127,969
=====================================================================
BIOTECHNOLOGY - 1.89%
Amgen Inc.(a) 8,800 562,650
=====================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.56%
AT&T Corp. - Liberty Media Corp. - Class A(a) 12,300 166,819
=====================================================================
CHEMICALS - 0.85%
Air Products & Chemicals, Inc. 3,600 147,600
---------------------------------------------------------------------
Du Pont (E. I.) de Nemours & Co. 2,200 106,287
=====================================================================
253,887
=====================================================================
COMMUNICATIONS EQUIPMENT - 4.58%
Comverse Technology, Inc.(a) 2,000 217,250
---------------------------------------------------------------------
JDS Uniphase Corp.(a) 6,600 275,137
---------------------------------------------------------------------
Nokia Oyj - ADR (Finland) 6,900 300,150
---------------------------------------------------------------------
Nortel Networks Corp. (Canada) 17,800 570,712
=====================================================================
1,363,249
=====================================================================
COMPUTERS (HARDWARE) - 2.07%
International Business Machines Corp. 1,700 144,500
---------------------------------------------------------------------
Sun Microsystems, Inc.(a) 16,900 471,087
=====================================================================
615,587
=====================================================================
COMPUTERS (NETWORKING) - 3.17%
Cisco Systems, Inc.(a) 22,700 868,275
---------------------------------------------------------------------
Juniper Networks, Inc.(a) 600 75,637
=====================================================================
943,912
=====================================================================
COMPUTERS (PERIPHERALS) - 2.39%
EMC Corp.(a) 10,700 711,550
=====================================================================
COMPUTERS (SOFTWARE & SERVICES) - 5.58%
America Online, Inc.(a) 5,300 184,440
---------------------------------------------------------------------
Microsoft Corp.(a) 8,600 373,025
---------------------------------------------------------------------
Oracle Corp.(a) 19,700 572,531
---------------------------------------------------------------------
VERITAS Software Corp.(a) 6,100 533,750
=====================================================================
1,663,746
=====================================================================
DISTRIBUTORS (FOOD & HEALTH) - 0.89%
Sysco Corp. 8,800 264,000
=====================================================================
ELECTRIC COMPANIES - 0.60%
Duke Energy Corp. 2,100 179,025
=====================================================================
|
MARKET
SHARES VALUE
ELECTRICAL EQUIPMENT - 6.16%
General Electric Co. 30,600 $ 1,466,887
-----------------------------------------------------------------
Sanmina Corp.(a) 4,800 367,800
=================================================================
1,834,687
=================================================================
ELECTRONICS (SEMICONDUCTORS) - 1.77%
Intel Corp. 4,800 145,200
-----------------------------------------------------------------
PMC-Sierra, Inc.(a) 700 55,037
-----------------------------------------------------------------
Texas Instruments Inc. 2,500 118,437
-----------------------------------------------------------------
Xilinx, Inc.(a) 4,500 207,562
=================================================================
526,236
=================================================================
ENTERTAINMENT - 1.75%
Time Warner Inc. 5,500 287,320
-----------------------------------------------------------------
Viacom Inc. - Class B(a) 5,000 233,750
=================================================================
521,070
=================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.44%
Applied Materials, Inc.(a) 3,400 129,837
=================================================================
FINANCIAL (DIVERSIFIED) - 7.55%
American Express Co. 8,800 483,450
-----------------------------------------------------------------
Citigroup Inc. 16,400 837,425
-----------------------------------------------------------------
Fannie Mae 4,900 425,075
-----------------------------------------------------------------
Freddie Mac 4,400 303,050
-----------------------------------------------------------------
State Street Corp. 1,600 198,736
=================================================================
2,247,736
=================================================================
HEALTH CARE (DIVERSIFIED) - 1.31%
American Home Products Corp. 3,000 190,650
-----------------------------------------------------------------
Johnson & Johnson 1,900 199,619
=================================================================
390,269
=================================================================
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 11.07%
Allergan, Inc. 5,600 542,150
-----------------------------------------------------------------
Merck & Co., Inc. 6,100 571,113
-----------------------------------------------------------------
Pfizer Inc. 24,100 1,108,600
-----------------------------------------------------------------
Pharmacia Corp. 10,300 628,300
-----------------------------------------------------------------
Schering-Plough Corp. 7,900 448,325
=================================================================
3,298,488
=================================================================
HEALTH CARE (MANAGED CARE) - 0.60%
UnitedHealth Group Inc. 2,900 177,988
=================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 2.37%
Applera Corp. - Applied Biosystems Group 1,800 169,313
-----------------------------------------------------------------
Medtronic, Inc. 8,900 537,338
=================================================================
706,651
=================================================================
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.82%
Colgate-Palmolive Co. 3,800 245,290
=================================================================
|
AIM V.I. BLUE CHIP FUND
FS-24
MARKET
SHARES VALUE
INSURANCE (MULTI-LINE) - 2.65%
American International Group, Inc. 8,000 $ 788,500
=========================================================================
INVESTMENT BANKING/BROKERAGE - 3.11%
Merrill Lynch & Co., Inc. 5,200 354,575
-------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 7,200 570,600
=========================================================================
925,175
=========================================================================
MANUFACTURING (DIVERSIFIED) - 4.14%
Tyco International Ltd. (Bermuda) 16,700 926,850
-------------------------------------------------------------------------
United Technologies Corp. 3,900 306,638
=========================================================================
1,233,488
=========================================================================
NATURAL GAS - 2.27%
Dynegy Inc. - Class A 2,600 145,763
-------------------------------------------------------------------------
El Paso Energy Corp. 2,900 207,713
-------------------------------------------------------------------------
Enron Corp. 3,900 324,188
=========================================================================
677,664
=========================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 1.26%
Halliburton Co. 4,000 145,000
-------------------------------------------------------------------------
Schlumberger Ltd. 2,900 231,819
=========================================================================
376,819
=========================================================================
OIL (INTERNATIONAL INTEGRATED) - 3.30%
Exxon Mobil Corp. 9,700 843,294
-------------------------------------------------------------------------
Royal Dutch Petroleum Co. - ADR - New York Shares
(Netherlands) 2,300 139,294
=========================================================================
982,588
=========================================================================
PAPER & FOREST PRODUCTS - 0.28%
Bowater Inc. 1,500 84,563
=========================================================================
POWER PRODUCERS (INDEPENDENT) - 0.62%
Calpine Corp.(a) 4,100 184,756
=========================================================================
RAILROADS - 0.27%
Canadian National Railway Co. (Canada) 2,700 80,156
=========================================================================
RETAIL (BUILDING SUPPLIES) - 1.72%
Home Depot, Inc. (The) 11,200 511,700
=========================================================================
RETAIL (FOOD CHAINS) - 1.40%
Safeway Inc.(a) 6,700 418,750
=========================================================================
RETAIL (GENERAL MERCHANDISE) - 3.43%
Costco Wholesale Corp.(a) 5,000 199,688
-------------------------------------------------------------------------
Target Corp. 8,900 287,025
-------------------------------------------------------------------------
Wal-Mart Stores, Inc. 10,100 536,563
=========================================================================
1,023,276
=========================================================================
SERVICES (ADVERTISING/MARKETING) - 0.70%
Interpublic Group of Companies, Inc. (The) 4,900 208,556
=========================================================================
SERVICES (DATA PROCESSING) - 1.70%
First Data Corp. 5,900 310,856
-------------------------------------------------------------------------
Fiserv, Inc.(a) 4,100 194,494
=========================================================================
505,350
=========================================================================
|
MARKET
SHARES VALUE
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.02%
Vodafone AirTouch PLC - ADR (United Kingdom) 8,500 $ 304,406
======================================================================
TELEPHONE - 2.14%
BellSouth Corp. 3,300 135,094
----------------------------------------------------------------------
SBC Communications Inc. 10,500 501,375
======================================================================
636,469
======================================================================
Total Common Stocks & Other Equity Interests
(Cost $28,461,303) 26,602,761
======================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES - 0.50%
U.S. TREASURY BILLS - 0.50%
6.16%, 03/01/01(b)(c) $ 50,000 49,498
----------------------------------------------------------------------
5.77%, 03/22/01(b)(c) 100,000 98,790
======================================================================
Total U.S. Treasury Securities (Cost $148,288) 148,288
======================================================================
SHARES
MONEY MARKET FUNDS - 12.57%
STIC Liquid Assets Portfolio(d) 1,872,910 1,872,910
----------------------------------------------------------------------
STIC Prime Portfolio(d) 1,872,910 1,872,910
======================================================================
Total Money Market Funds (Cost $3,745,820) 3,745,820
======================================================================
TOTAL INVESTMENTS - 102.38%
(COST $32,355,411) 30,496,869
======================================================================
LIABILITIES LESS OTHER ASSETS - (2.38%) (710,171)
======================================================================
NET ASSETS - 100.00% $29,786,698
______________________________________________________________________
======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 7.
(c) Interest rate represents the rate of discount paid or received at the time
of purchase by the Fund.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. BLUE CHIP FUND
FS-25
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $32,355,411) $30,496,869 ============================================================ Receivables for: Fund shares sold 358,169 ------------------------------------------------------------ Dividends 31,982 ------------------------------------------------------------ Investment for deferred compensation plan 5,361 ============================================================ Total assets 30,892,381 ============================================================ LIABILITIES: Payables for: Investments purchased 1,020,881 ------------------------------------------------------------ Deferred compensation plan 5,361 ------------------------------------------------------------ Variation margin 20,930 ------------------------------------------------------------ Accrued advisory fees 39,617 ------------------------------------------------------------ Accrued administrative services fees 4,235 ------------------------------------------------------------ Accrued operating expenses 14,659 ============================================================ Total liabilities 1,105,683 ============================================================ Net assets applicable to shares outstanding $29,786,698 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 3,244,239 ============================================================ Net asset value $ 9.18 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $303) $ 59,252
-----------------------------------------------------------------------------
Dividends from affiliated money market funds 86,820
-----------------------------------------------------------------------------
Interest 3,798
=============================================================================
Total investment income 149,870
=============================================================================
EXPENSES:
Advisory fees 82,552
-----------------------------------------------------------------------------
Administrative services fees 50,000
-----------------------------------------------------------------------------
Custodian fees 42,434
-----------------------------------------------------------------------------
Printing 25,954
-----------------------------------------------------------------------------
Professional fees 25,203
-----------------------------------------------------------------------------
Trustees' fees 6,507
-----------------------------------------------------------------------------
Other 1,669
=============================================================================
Total expenses 234,319
=============================================================================
Less:Fees waived and expenses reimbursed (90,254)
-----------------------------------------------------------------------------
Expenses paid indirectly (1,644)
-----------------------------------------------------------------------------
Net expenses 142,421
=============================================================================
Net investment income 7,449
=============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (817,692)
-----------------------------------------------------------------------------
Futures contracts (114,171)
=============================================================================
(931,863)
=============================================================================
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities (1,858,547)
-----------------------------------------------------------------------------
Futures contracts (45,013)
=============================================================================
(1,903,560)
=============================================================================
Net gain (loss) from investment securities and futures
contracts (2,835,423)
=============================================================================
Net increase (decrease) in net assets resulting from operations $(2,827,974)
_____________________________________________________________________________
=============================================================================
|
See Notes to Financial Statements.
AIM V.I. BLUE CHIP FUND
FS-26
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 2000 and the period December 29, 1999 (date operations commenced) to December 31, 1999
2000 1999
----------- ----------
OPERATIONS:
Net investment income $ 7,449 $ 168
-------------------------------------------------------------------------------
Net realized gain (loss) from investment securities
and futures contracts (931,863) --
-------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation)
of investment securities and futures contracts (1,903,560) (574)
===============================================================================
Net increase (decrease) in net assets resulting from
operations (2,827,974) (406)
===============================================================================
Distributions to shareholders from net investment
income (5,295) --
-------------------------------------------------------------------------------
Share transactions - net 31,620,363 1,000,010
===============================================================================
Net increase in net assets 28,787,094 999,604
===============================================================================
NET ASSETS:
Beginning of year 999,604 --
===============================================================================
End of year $29,786,698 $ 999,604
_______________________________________________________________________________
===============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $32,620,351 $ 999,988
-------------------------------------------------------------------------------
Undistributed net investment income 2,344 190
-------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and futures contracts (931,863) --
-------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and futures contracts (1,904,134) (574)
===============================================================================
$29,786,698 $ 999,604
_______________________________________________________________________________
===============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Blue Chip Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
achieve long-term growth of capital, with a secondary objective of current
income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
AIM V.I. BLUE CHIP FUND
FS-27
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $427,121 as of December 31, 2000 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2008.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Futures Contracts - The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. During the year
ended December 31, 2000, AIM waived fees of $82,552 and reimbursed expenses of
$7,702.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, AIM was paid $50,000 for such services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,306
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $1,644 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $1,644.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
AIM V.I. BLUE CHIP FUND
FS-28
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $30,807,407 and $1,528,447, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,429,999 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (3,366,242) ========================================================================== Net unrealized appreciation (depreciation) of investment securities $(1,936,243) __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $32,433,112.
NOTE 7 - FUTURES CONTRACTS
On December 31, 2000, $96,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-------- ---------------------------------------
S&P 500 Mini 23 Mar-01/Buy $1,535,250 $(45,591)
============================================================
|
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2000 and the
period December 29, 1999 (date operations commenced) through December 31, 1999
were as follows:
2000 1999
---------------------- ------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ----------------
Sold 3,269,461 $32,869,874 100,001 $1,000,010
-------------------------------------------------------------------------------
Issued as reinvestment of dividends 556 5,295 -- --
-------------------------------------------------------------------------------
Reacquired (125,779) (1,254,806) -- --
===============================================================================
3,144,238 $31,620,363 100,001 $1,000,010
_______________________________________________________________________________
===============================================================================
|
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
DECEMBER 29,
1999 (DATE
OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2000(a) 1999
------------ -------------
Net asset value, beginning of period $ 10.00 $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02 --
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (0.84) --
================================================================================
Total from investment operations (0.82) --
================================================================================
Less distributions paid from net investment income 0.00 --
================================================================================
Net asset value, end of period $ 9.18 $10.00
________________________________________________________________________________
================================================================================
Total return (8.18)% --
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $29,787 $1,000
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.31%(b) 1.30%(c)
--------------------------------------------------------------------------------
Without fee waivers 2.13%(b) 12.49%(c)
________________________________________________________________________________
================================================================================
Ratio of net investment income to average net
assets 0.07%(b) 3.07%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 15% --
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $11,006,982.
(c) Annualized.
AIM V.I. BLUE CHIP FUND
FS-29
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Capital Appreciation Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Capital Appreciation Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. CAPITAL APPRECIATION FUND
FS-30
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS - 89.31%
BANKS (MAJOR REGIONAL) - 0.71%
Northern Trust Corp. 133,100 $ 10,855,969
============================================================================
BANKS (MONEY CENTER) - 0.75%
J.P. Morgan Chase & Co. 253,200 11,504,775
============================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.63%
Comcast Corp. - Class A(a) 342,000 14,278,500
----------------------------------------------------------------------------
General Motors Corp. - Class H(a) 760,300 17,486,900
----------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 487,200 12,423,600
----------------------------------------------------------------------------
Univision Communications Inc. - Class A(a) 282,500 11,564,844
============================================================================
55,753,844
============================================================================
COMMUNICATIONS EQUIPMENT - 6.40%
ADC Telecommunications, Inc.(a) 848,900 15,386,312
----------------------------------------------------------------------------
Alcatel - ADR (France) 168,000 9,397,500
----------------------------------------------------------------------------
Comverse Technology, Inc.(a) 339,700 36,899,912
----------------------------------------------------------------------------
Corning Inc. 590,200 31,169,937
----------------------------------------------------------------------------
JDS Uniphase Corp.(a) 126,000 5,252,625
============================================================================
98,106,286
============================================================================
COMPUTERS (HARDWARE) - 1.86%
Palm, Inc.(a) 423,000 11,976,187
----------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 592,200 16,507,575
============================================================================
28,483,762
============================================================================
COMPUTERS (NETWORKING) - 3.05%
Cisco Systems, Inc.(a) 634,600 24,273,450
----------------------------------------------------------------------------
Juniper Networks, Inc.(a) 127,900 16,123,394
----------------------------------------------------------------------------
VeriSign, Inc.(a) 85,700 6,357,869
============================================================================
46,754,713
============================================================================
COMPUTERS (PERIPHERALS) - 2.55%
Brocade Communications Systems, Inc.(a) 243,600 22,365,525
----------------------------------------------------------------------------
EMC Corp.(a) 252,000 16,758,000
============================================================================
39,123,525
============================================================================
|
MARKET
SHARES VALUE
COMPUTERS (SOFTWARE & SERVICES) - 11.28%
Ariba, Inc.(a) 254,200 $ 13,663,250
------------------------------------------------------------------------
BEA Systems, Inc.(a) 211,700 14,250,056
------------------------------------------------------------------------
Business Objects S.A. - ADR (France)(a) 23,900 1,353,337
------------------------------------------------------------------------
Check Point Software Technologies Ltd. - ADR
(Israel)(a) 302,300 40,375,944
------------------------------------------------------------------------
i2 Technologies, Inc.(a) 235,200 12,789,000
------------------------------------------------------------------------
Intuit Inc.(a) 332,000 13,093,250
------------------------------------------------------------------------
Microsoft Corp.(a) 465,200 20,178,050
------------------------------------------------------------------------
Siebel Systems, Inc.(a) 171,400 11,590,925
------------------------------------------------------------------------
Unisys Corp.(a) 609,400 8,912,475
------------------------------------------------------------------------
VERITAS Software Corp.(a) 421,900 36,916,250
========================================================================
173,122,537
========================================================================
CONSUMER FINANCE - 3.25%
Capital One Financial Corp. 259,500 17,078,344
------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 35,600 1,788,900
------------------------------------------------------------------------
MBNA Corp. 353,500 13,057,406
------------------------------------------------------------------------
Providian Financial Corp. 311,000 17,882,500
========================================================================
49,807,150
========================================================================
DISTRIBUTORS (FOOD & HEALTH) - 0.26%
Cardinal Health, Inc. 39,400 3,925,225
========================================================================
ELECTRICAL EQUIPMENT - 0.69%
American Power Conversion Corp.(a) 344,400 4,261,950
------------------------------------------------------------------------
Sanmina Corp.(a) 82,800 6,344,550
========================================================================
10,606,500
========================================================================
ELECTRONICS (INSTRUMENTATION) - 1.04%
Agilent Technologies, Inc.(a) 134,400 7,358,400
------------------------------------------------------------------------
Waters Corp.(a) 102,800 8,583,800
========================================================================
15,942,200
========================================================================
ELECTRONICS (SEMICONDUCTORS) - 5.13%
Altera Corp.(a) 378,000 9,946,125
------------------------------------------------------------------------
Analog Devices, Inc.(a) 431,700 22,097,644
------------------------------------------------------------------------
Celestica Inc. - ADR (Canada)(a) 332,700 18,048,975
------------------------------------------------------------------------
Linear Technology Corp. 168,000 7,770,000
------------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 171,900 8,218,969
------------------------------------------------------------------------
Microchip Technology Inc.(a) 354,150 7,769,166
------------------------------------------------------------------------
PMC-Sierra, Inc.(a) 62,100 4,882,612
========================================================================
78,733,491
========================================================================
|
AIM V.I. CAPITAL APPRECIATION FUND
FS-31
MARKET
SHARES VALUE
ENTERTAINMENT - 0.44%
Time Warner Inc. 128,000 $ 6,686,720
===========================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.42%
KLA-Tencor Corp.(a) 191,000 6,434,312
===========================================================================
FINANCIAL (DIVERSIFIED) - 5.60%
American Express Co. 400,000 21,975,000
---------------------------------------------------------------------------
Citigroup Inc. 300,000 15,318,750
---------------------------------------------------------------------------
Freddie Mac 83,100 5,723,512
---------------------------------------------------------------------------
J.P. Morgan & Co., Inc. 189,000 31,279,500
---------------------------------------------------------------------------
State Street Corp. 93,700 11,638,477
===========================================================================
85,935,239
===========================================================================
FOOTWEAR - 0.60%
NIKE, Inc. - Class B 166,100 9,270,456
===========================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.76%
Elan Corp. PLC - ADR (Ireland)(a) 126,000 5,898,375
---------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 84,000 11,161,500
---------------------------------------------------------------------------
Medicis Pharmaceutical Corp. - Class A(a) 168,000 9,933,000
===========================================================================
26,992,875
===========================================================================
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 1.52%
Pfizer Inc. 505,900 23,271,400
===========================================================================
HEALTH CARE (HOSPITAL MANAGEMENT) - 2.14%
HCA - Healthcare Co. (The) 255,200 11,231,352
---------------------------------------------------------------------------
Health Management Associates, Inc. - Class A(a) 684,200 14,197,150
---------------------------------------------------------------------------
Tenet Healthcare Corp.(a) 168,000 7,465,500
===========================================================================
32,894,002
===========================================================================
HEALTH CARE (MANAGED CARE) - 0.63%
Wellpoint Health Networks Inc.(a) 84,000 9,681,000
===========================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.30%
Applera Corp. - Applied Biosystems Group 252,000 23,703,750
---------------------------------------------------------------------------
Biomet, Inc. 294,050 11,670,109
---------------------------------------------------------------------------
Medtronic, Inc. 252,000 15,214,500
===========================================================================
50,588,359
===========================================================================
INSURANCE (LIFE/HEALTH) - 0.80%
AFLAC, Inc. 170,300 12,293,531
===========================================================================
INSURANCE (MULTI-LINE) - 0.96%
American International Group, Inc. 150,000 14,784,375
===========================================================================
|
MARKET
SHARES VALUE
INVESTMENT BANKING/BROKERAGE - 5.57%
Goldman Sachs Group, Inc. (The) 287,800 $ 30,776,612
--------------------------------------------------------------------
Merrill Lynch & Co., Inc. 184,800 12,601,050
--------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 336,000 26,628,000
--------------------------------------------------------------------
Schwab (Charles) Corp. (The) 546,100 15,495,588
====================================================================
85,501,250
====================================================================
INVESTMENT MANAGEMENT - 0.65%
Stilwell Financial, Inc. 252,000 9,938,250
====================================================================
LEISURE TIME (PRODUCTS) - 1.22%
Harley-Davidson, Inc. 470,400 18,698,400
====================================================================
MANUFACTURING (DIVERSIFIED) - 0.74%
Danaher Corp. 166,500 11,384,438
====================================================================
NATURAL GAS - 0.65%
Enron Corp. 119,600 9,941,750
====================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 6.01%
BJ Services Co.(a) 83,800 5,771,725
--------------------------------------------------------------------
Cooper Cameron Corp.(a) 187,900 12,413,144
--------------------------------------------------------------------
ENSCO International Inc. 294,000 10,014,375
--------------------------------------------------------------------
Grant Prideco, Inc.(a) 317,900 6,973,931
--------------------------------------------------------------------
Nabors Industries, Inc.(a) 357,700 21,157,955
--------------------------------------------------------------------
R&B Falcon Corp.(a) 224,700 5,154,056
--------------------------------------------------------------------
Rowan Cos., Inc.(a) 309,400 8,353,800
--------------------------------------------------------------------
Smith International, Inc.(a) 187,700 13,995,381
--------------------------------------------------------------------
Weatherford International, Inc.(a) 178,000 8,410,500
====================================================================
92,244,867
====================================================================
OIL & GAS (EXPLORATION & PRODUCTION) - 0.90%
Anadarko Petroleum Corp. 107,000 7,605,560
--------------------------------------------------------------------
Kerr-McGee Corp. 93,700 6,272,044
====================================================================
13,877,604
====================================================================
RESTAURANTS - 0.46%
Brinker International, Inc.(a) 168,000 7,098,000
====================================================================
RETAIL (BUILDING SUPPLIES) - 0.58%
Lowe's Cos., Inc. 201,100 8,948,950
====================================================================
RETAIL (COMPUTERS & ELECTRONICS) - 0.95%
CDW Computer Centers, Inc.(a) 145,900 4,066,963
--------------------------------------------------------------------
RadioShack Corp. 244,900 10,484,781
====================================================================
14,551,744
====================================================================
RETAIL (DEPARTMENT STORES) - 1.35%
Kohl's Corp.(a) 339,400 20,703,400
====================================================================
RETAIL (DISCOUNTERS) - 0.29%
Family Dollar Stores, Inc. 204,300 4,379,681
====================================================================
|
AIM V.I. CAPITAL APPRECIATION FUND
FS-32
MARKET
SHARES VALUE
RETAIL (FOOD CHAINS) - 0.86%
Safeway Inc.(a) 210,000 $ 13,125,000
====================================================================
RETAIL (SPECIALTY) - 1.44%
Bed Bath & Beyond Inc.(a) 836,300 18,712,213
--------------------------------------------------------------------
Tiffany & Co. 104,800 3,314,300
====================================================================
22,026,513
====================================================================
RETAIL (SPECIALTY - APPAREL) - 2.00%
Intimate Brands, Inc. 228,400 3,426,000
--------------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 210,400 5,733,400
--------------------------------------------------------------------
Talbots, Inc. (The) 212,400 9,690,750
--------------------------------------------------------------------
TJX Companies, Inc. (The) 423,800 11,760,450
====================================================================
30,610,600
====================================================================
SERVICES (ADVERTISING/MARKETING) - 2.09%
Lamar Advertising Co.(a) 378,000 14,588,438
--------------------------------------------------------------------
Omnicom Group Inc. 211,400 17,519,775
====================================================================
32,108,213
====================================================================
SERVICES (COMPUTER SYSTEMS) - 1.58%
Electronic Data Systems Corp. 189,000 10,914,750
--------------------------------------------------------------------
SunGard Data Systems Inc.(a) 282,800 13,326,950
====================================================================
24,241,700
====================================================================
SERVICES (DATA PROCESSING) - 2.42%
Ceridian Corp.(a) 84,000 1,674,750
--------------------------------------------------------------------
DST Systems, Inc.(a) 52,400 3,510,800
--------------------------------------------------------------------
Fiserv, Inc.(a) 506,875 24,044,883
--------------------------------------------------------------------
Paychex, Inc. 163,718 7,960,788
====================================================================
37,191,221
====================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.78%
Crown Castle International Corp.(a) 297,000 8,037,563
--------------------------------------------------------------------
Openwave Systems Inc.(a) 82,600 3,959,638
====================================================================
11,997,201
====================================================================
Total Common Stocks & Other Equity Interests
(Cost $1,154,966,950) 1,370,121,028
====================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
CONVERTIBLE BONDS - 0.47%
ELECTRONICS (SEMICONDUCTORS) - 0.47%
Celestica Inc. (Canada), Conv. LYON Yankee Bonds,
3.75%, 08/01/20(b) (Cost $8,203,984) $16,628,000 $ 7,233,180
=============================================================================
SHARES
MONEY MARKET FUNDS - 7.94%
STIC Liquid Assets Portfolio(c) 60,930,923 60,930,923
-----------------------------------------------------------------------------
STIC Prime Portfolio(c) 60,930,923 60,930,923
=============================================================================
Total Money Market Funds
(Cost $121,861,846) 121,861,846
=============================================================================
TOTAL INVESTMENTS - 97.72%
(Cost $1,285,032,780) 1,499,216,054
=============================================================================
OTHER ASSETS LESS LIABILITIES - 2.28% 34,992,647
=============================================================================
NET ASSETS - 100.00% $1,534,208,701
_____________________________________________________________________________
=============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Conv.- Convertible
LYON - Liquid Yield Option Notes
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Zero coupon bond issued at a discount. The interest rate shown represents
the yield to maturity at issue.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
FS-33
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $1,285,032,780) $1,499,216,054 ------------------------------------------------------------------ Receivables for: Investments sold 386,008 ------------------------------------------------------------------ Fund shares sold 41,917,087 ------------------------------------------------------------------ Dividends and interest 1,109,430 ------------------------------------------------------------------ Investment for deferred compensation plan 45,553 ------------------------------------------------------------------ Other assets 67,317 ================================================================== Total assets 1,542,741,449 ================================================================== LIABILITIES: Payables for: Investments purchased 4,856,250 ------------------------------------------------------------------ Fund shares reacquired 1,289,871 ------------------------------------------------------------------ Deferred compensation plan 45,553 ------------------------------------------------------------------ Accrued advisory fees 754,758 ------------------------------------------------------------------ Accrued administrative services fees 1,529,766 ------------------------------------------------------------------ Accrued operating expenses 56,550 ================================================================== Total liabilities 8,532,748 ================================================================== Net assets applicable to shares outstanding $1,534,208,701 __________________________________________________________________ ================================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 49,747,880 ================================================================== Net asset value $ 30.84 __________________________________________________________________ ================================================================== |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends from affiliated money market funds $ 6,972,707
------------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $20,275) 2,410,257
------------------------------------------------------------------------------
Interest 204,903
==============================================================================
Total investment income 9,587,867
==============================================================================
EXPENSES:
Advisory fees 8,988,195
------------------------------------------------------------------------------
Administrative services fees 2,727,893
------------------------------------------------------------------------------
Custodian fees 142,637
------------------------------------------------------------------------------
Trustees' fees 12,636
------------------------------------------------------------------------------
Other 301,505
==============================================================================
Total expenses 12,172,866
==============================================================================
Less: Expenses paid indirectly (11,229)
==============================================================================
Net expenses 12,161,637
==============================================================================
Net investment income (loss) (2,573,770)
==============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 52,594,064
------------------------------------------------------------------------------
Option contracts written 5,877,884
==============================================================================
58,471,948
==============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (277,015,143)
------------------------------------------------------------------------------
Foreign currencies (28)
------------------------------------------------------------------------------
Option contracts written 443,738
==============================================================================
(276,571,433)
==============================================================================
Net gain (loss) from investment securities and option
contracts (218,099,485)
==============================================================================
Net increase (decrease) in net assets resulting from
operations $(220,673,255)
______________________________________________________________________________
==============================================================================
|
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
FS-34
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
-------------- --------------
OPERATIONS:
Net investment income (loss) $ (2,573,770) $ (442,132)
-----------------------------------------------------------------------------
Net realized gain from investment securities
and option contracts 58,471,948 41,929,457
-----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies and option contracts (276,571,433) 297,348,409
=============================================================================
Net increase (decrease) in net assets
resulting from operations (220,673,255) 338,835,734
=============================================================================
Distributions to shareholders from net
investment income -- (738,724)
-----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains (41,744,897) (23,048,204)
-----------------------------------------------------------------------------
Share transactions - net 665,409,393 168,920,651
=============================================================================
Net increase in net assets 402,991,241 483,969,457
=============================================================================
NET ASSETS:
Beginning of year 1,131,217,460 647,248,003
=============================================================================
End of year $1,534,208,701 $1,131,217,460
_____________________________________________________________________________
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,262,896,014 $ 599,987,913
-----------------------------------------------------------------------------
Undistributed net investment income (loss) (64,088) (47,777)
-----------------------------------------------------------------------------
Undistributed net realized gain from
investment securities and option contracts 57,193,570 40,522,686
-----------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 214,183,205 490,754,638
=============================================================================
$1,534,208,701 $1,131,217,460
_____________________________________________________________________________
=============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Capital Appreciation Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is growth of
capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts
AIM V.I. CAPITAL APPRECIATION FUND
FS-35
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was increased by
$2,557,459, undistributed net realized gains decreased by $56,167 and paid in
capital decreased by $2,501,292 as a result of net operating loss
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal
to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset
and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option
written. The current market value of a written option is the mean between
the last bid and asked prices on that day. If a written call option expires
on the stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or a loss if the closing
purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
F. Put Options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
Fund to hedge securities it owns by locking in a minimum price at which the
Fund can sell. If security prices fall, the put option could be exercised
to offset all or a portion of the Fund's resulting losses. At the same
time, because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund.
For the year ended December 31, 2000, the Fund paid AIM $2,727,893 of which
AIM retained $130,011 for such services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $6,707
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $11,229 under an expense offset arrangement which resulted
in a reduction of the Fund's total expenses of $11,229.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
AIM V.I. CAPITAL APPRECIATION FUND
FS-36
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $1,859,956,914 and $1,325,688,897, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $305,922,349 --------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (98,025,381) =========================================================================== Net unrealized appreciation of investment securities $207,896,968 ___________________________________________________________________________ =========================================================================== |
Cost of investments for tax purposes is $1,291,319,086.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000
are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------
Beginning of year 145 $ 59,230
-----------------------------------------
Written 26,228 11,522,799
-----------------------------------------
Closed (22,331) (9,866,043)
-----------------------------------------
Exercised (3,947) (1,697,787)
-----------------------------------------
Expired (95) (18,199)
=========================================
End of year -- $ --
_________________________________________
=========================================
|
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and
1999 were as follows:
2000 1999
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
Sold 20,934,800 $ 781,849,779 10,987,866 $ 295,821,855
-----------------------------------------------------------------------------
Issued as reinvestment
of dividends 1,298,442 41,744,897 746,374 23,786,928
-----------------------------------------------------------------------------
Issued in connection
with acquisitions* -- -- 1,111,610 29,381,435
-----------------------------------------------------------------------------
Reacquired (4,279,024) (158,185,283) (6,741,717) (180,069,567)
=============================================================================
17,954,218 $ 665,409,393 6,104,133 $ 168,920,651
_____________________________________________________________________________
=============================================================================
|
* As of the close of business on October 15, 1999, the Fund acquired all the net assets GT Global Variable America Fund ("Variable America Fund") pursuant to a plan of reorganization approved by Variable America Fund's shareholders on August 25, 1999. The acquisition was accomplished by a tax- free exchange of 1,111,610 shares of the Fund for 1,874,912 shares of Variable America Fund as of the close of business on October 15, 1999. Variable America Fund's net assets at that date were $29,381,435, including $3,238,580 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $757,029,224.
AIM V.I. CAPITAL APPRECIATION FUND
FS-37
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- -------- -------- --------
Net asset value,
beginning of period $ 35.58 $ 25.20 $ 21.75 $ 19.43 $ 16.55
-----------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) (0.05) (0.02) 0.02 0.03 0.02
-----------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (3.79) 11.17 4.12 2.58 2.89
===================================================================================
Total from investment
operations (3.84) 11.15 4.14 2.61 2.91
===================================================================================
Less distributions:
Dividends from net
investment income -- (0.02) (0.04) (0.02) (0.03)
-----------------------------------------------------------------------------------
Distributions from net
realized gains (0.90) (0.75) (0.65) (0.27) --
===================================================================================
Total distributions (0.90) (0.77) (0.69) (0.29) (0.03)
===================================================================================
Net asset value, end of
period $ 30.84 $ 35.58 $ 25.20 $ 21.75 $ 19.43
___________________________________________________________________________________
===================================================================================
Total return (10.91)% 44.61% 19.30% 13.51% 17.58%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $1,534,209 $1,131,217 $647,248 $522,642 $370,063
___________________________________________________________________________________
===================================================================================
Ratio of expenses to
average net assets 0.82%(a) 0.73% 0.67% 0.68% 0.73%
___________________________________________________________________________________
===================================================================================
Ratio of net investment
income (loss) to
average net assets (0.17)%(a) (0.06)% 0.11% 0.18% 0.18%
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate 98% 65% 83% 65% 59%
___________________________________________________________________________________
===================================================================================
|
(a) Ratios are based on average daily net assets of $1,477,199,248.
AIM V.I. CAPITAL APPRECIATION FUND
FS-38
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Capital Development Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Capital Development Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998 in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-39
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS - 94.19%
AEROSPACE/DEFENSE - 0.51%
Goodrich (B.F.) Co. 10,600 $ 385,575
======================================================================
AGRICULTURAL PRODUCTS - 0.99%
Monsanto Co. 27,500 744,219
======================================================================
BANKS (REGIONAL) - 2.49%
Golden State Bancorp Inc. 27,500 864,531
----------------------------------------------------------------------
UCBH Holdings, Inc. 4,800 223,800
----------------------------------------------------------------------
Zions Bancorp. 12,400 774,225
======================================================================
1,862,556
======================================================================
BEVERAGES (ALCOHOLIC) - 0.54%
Constellation Brands, Inc. - Class A(a) 6,900 405,375
======================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.05%
Adelphia Communications Corp. - Class A(a) 10,000 516,250
----------------------------------------------------------------------
Charter Communications, Inc. - Class A(a) 19,900 451,481
----------------------------------------------------------------------
Cox Radio, Inc. - Class A(a) 17,400 392,587
----------------------------------------------------------------------
Entercom Communications Corp.(a) 5,000 172,187
======================================================================
1,532,505
======================================================================
COMMUNICATIONS EQUIPMENT - 0.94%
Digital Lightwave, Inc.(a) 12,300 389,756
----------------------------------------------------------------------
Dycom Industries, Inc.(a) 8,700 312,656
======================================================================
702,412
======================================================================
COMPUTERS (PERIPHERALS) - 0.72%
QLogic Corp.(a) 7,000 539,000
======================================================================
COMPUTERS (SOFTWARE & SERVICES) - 7.90%
Affiliated Computer Services, Inc. - Class A(a) 12,500 758,594
----------------------------------------------------------------------
Cadence Design Systems, Inc.(a) 28,800 792,000
----------------------------------------------------------------------
IntraNet Solutions, Inc.(a) 8,200 418,200
----------------------------------------------------------------------
Intuit Inc.(a) 15,300 603,394
----------------------------------------------------------------------
Nucentrix Broadband Networks, Inc.(a) 5,000 56,250
----------------------------------------------------------------------
Peregrine Systems, Inc.(a) 41,200 813,700
----------------------------------------------------------------------
Rational Software Corp.(a) 9,200 358,225
----------------------------------------------------------------------
Retek Inc.(a) 11,800 287,625
----------------------------------------------------------------------
Secure Computing Corp.(a) 25,400 250,825
----------------------------------------------------------------------
SERENA Software, Inc.(a) 11,700 400,542
----------------------------------------------------------------------
Sybase, Inc.(a) 35,900 711,269
----------------------------------------------------------------------
Titan Corp. (The)(a) 28,600 464,750
======================================================================
5,915,374
======================================================================
|
MARKET
SHARES VALUE
CONSUMER FINANCE - 3.14%
American Capital Strategies, Ltd. 29,800 $ 750,587
-------------------------------------------------------------------------
AmeriCredit Corp.(a) 27,700 754,825
-------------------------------------------------------------------------
Capital One Financial Corp. 12,800 842,400
=========================================================================
2,347,812
=========================================================================
ELECTRIC COMPANIES - 2.93%
CMS Energy Corp. 27,200 861,900
-------------------------------------------------------------------------
Constellation Energy Group 19,000 856,187
-------------------------------------------------------------------------
NRG Energy, Inc.(a) 17,100 475,594
=========================================================================
2,193,681
=========================================================================
ELECTRICAL EQUIPMENT - 3.65%
APW Ltd.(a) 25,800 870,750
-------------------------------------------------------------------------
C-MAC Industries Inc. (Canada)(a) 16,300 723,312
-------------------------------------------------------------------------
Sensormatic Electronics Corp.(a) 35,200 706,200
-------------------------------------------------------------------------
Viasystems Group, Inc.(a) 52,300 434,744
=========================================================================
2,735,006
=========================================================================
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.55%
Avnet, Inc. 19,200 412,800
=========================================================================
ELECTRONICS (DEFENSE) - 0.75%
Aeroflex Inc.(a) 19,500 562,148
=========================================================================
ELECTRONICS (INSTRUMENTATION) - 4.13%
Alpha Industries, Inc.(a) 12,800 473,600
-------------------------------------------------------------------------
Garmin Ltd.(a) 27,800 549,050
-------------------------------------------------------------------------
Methode Electronics, Inc. - Class A 22,400 513,800
-------------------------------------------------------------------------
Tektronix, Inc. 27,200 916,300
-------------------------------------------------------------------------
Varian Inc.(a) 18,800 636,850
=========================================================================
3,089,600
=========================================================================
ELECTRONICS (SEMICONDUCTORS) - 1.83%
Celestica Inc. (Canada)(a) 11,500 623,875
-------------------------------------------------------------------------
Micrel, Inc.(a) 12,200 410,987
-------------------------------------------------------------------------
Microchip Technology Inc.(a) 15,400 337,837
=========================================================================
1,372,699
=========================================================================
ENGINEERING & CONSTRUCTION - 0.30%
Quanta Services, Inc.(a) 7,100 228,531
=========================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.72%
Novellus Systems, Inc.(a) 11,800 424,062
-------------------------------------------------------------------------
Varian Semiconductor Equipment Associates, Inc.(a) 4,800 114,000
=========================================================================
538,062
=========================================================================
|
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-40
MARKET
SHARES VALUE
FINANCIAL (DIVERSIFIED) - 3.95%
Allied Capital Corp. 23,600 $ 492,650
----------------------------------------------------------------------
Ambac Financial Group, Inc. 14,350 836,784
----------------------------------------------------------------------
SEI Investments Co. 7,100 795,200
----------------------------------------------------------------------
USA Education Inc. 12,200 829,600
======================================================================
2,954,234
======================================================================
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 1.24%
Harrah's Entertainment, Inc.(a) 35,200 928,400
======================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 3.27%
Alpharma Inc. - Class A 17,800 780,975
----------------------------------------------------------------------
Biovail Corp. (Canada)(a) 20,100 780,684
----------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 17,162 887,061
======================================================================
2,448,720
======================================================================
HEALTH CARE (HOSPITAL MANAGEMENT) - 2.76%
Community Health Systems(a) 22,100 773,500
----------------------------------------------------------------------
Health Management Associates, Inc. - Class A(a) 27,600 572,700
----------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 14,400 721,800
======================================================================
2,068,000
======================================================================
HEALTH CARE (MANAGED CARE) - 1.92%
First Health Group Corp.(a) 16,900 786,906
----------------------------------------------------------------------
Oxford Health Plans, Inc.(a) 7,200 284,400
----------------------------------------------------------------------
Trigon Healthcare, Inc.(a) 4,700 365,719
======================================================================
1,437,025
======================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.97%
Edwards Lifesciences Corp.(a) 32,700 580,425
----------------------------------------------------------------------
PolyMedica Corp.(a) 4,300 143,512
======================================================================
723,937
======================================================================
HEALTH CARE (SPECIALIZED SERVICES) - 2.53%
Laboratory Corp. of America Holdings(a) 4,700 827,200
----------------------------------------------------------------------
Lincare Holdings, Inc.(a) 18,700 1,067,069
======================================================================
1,894,269
======================================================================
INSURANCE (LIFE/HEALTH) - 1.49%
Annuity and Life Re (Holdings), Ltd. (Bermuda) 11,900 380,056
----------------------------------------------------------------------
Clarica Life Insurance Co. (Canada) 12,900 360,746
----------------------------------------------------------------------
Nationwide Financial Services, Inc. - Class A 7,900 375,250
======================================================================
1,116,052
======================================================================
INSURANCE (PROPERTY - CASUALTY) - 2.67%
Ace, Ltd. (Bermuda) 17,600 746,900
----------------------------------------------------------------------
Radian Group Inc. 6,093 457,356
----------------------------------------------------------------------
XL Capital Ltd. - Class A (Bermuda) 9,100 795,113
======================================================================
1,999,369
======================================================================
INVESTMENT MANAGEMENT - 1.48%
Affiliated Managers Group, Inc.(a) 11,400 625,575
----------------------------------------------------------------------
Stilwell Financial, Inc. 12,200 481,138
======================================================================
1,106,713
======================================================================
|
MARKET
SHARES VALUE
INVESTMENTS - 5.42%
Nasdaq 100 Shares(a) 9,400 $ 548,725
----------------------------------------------------------------------
S&P Mid-Cap 400 Depository Receipts 37,200 3,510,750
======================================================================
4,059,475
======================================================================
MANUFACTURING (SPECIALIZED) - 0.91%
Mettler-Toledo International Inc.(a) 12,600 685,125
======================================================================
NATURAL GAS - 2.78%
El Paso Energy Corp. 11,900 852,338
----------------------------------------------------------------------
Kinder Morgan, Inc. 23,500 1,226,406
======================================================================
2,078,744
======================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 6.14%
Baker Hughes Inc. 13,600 565,250
----------------------------------------------------------------------
BJ Services Co.(a) 12,200 840,275
----------------------------------------------------------------------
Cooper Cameron Corp.(a) 9,500 627,594
----------------------------------------------------------------------
Global Marine, Inc.(a) 24,500 695,188
----------------------------------------------------------------------
Grant Prideco, Inc.(a) 21,700 476,044
----------------------------------------------------------------------
Key Energy Services, Inc.(a) 77,000 803,688
----------------------------------------------------------------------
Pride International, Inc.(a) 23,800 586,075
======================================================================
4,594,114
======================================================================
OIL & GAS (EXPLORATION & PRODUCTION) - 2.17%
EOG Resources, Inc. 16,100 880,469
----------------------------------------------------------------------
Ocean Energy, Inc. 11,200 194,600
----------------------------------------------------------------------
Spinnaker Exploration Co.(a) 13,000 552,500
======================================================================
1,627,569
======================================================================
OIL & GAS (REFINING & MARKETING) - 1.13%
Valero Energy Corp. 22,700 844,156
======================================================================
PAPER & FOREST PRODUCTS - 1.01%
Georgia-Pacific Group 24,300 756,338
======================================================================
RAILROADS - 1.00%
GATX Corp. 15,000 748,125
======================================================================
REAL ESTATE INVESTMENT TRUSTS - 0.61%
Apartment Investment & Management Co. - Class A 9,200 459,425
======================================================================
RESTAURANTS - 0.73%
CEC Entertainment Inc.(a) 15,925 543,441
======================================================================
RETAIL (DISCOUNTERS) - 0.63%
Dollar Tree Stores, Inc.(a) 19,200 470,400
======================================================================
RETAIL (FOOD CHAINS) - 0.83%
BJ's Wholesale Club, Inc.(a) 16,200 621,675
======================================================================
RETAIL (SPECIALTY) - 0.92%
Rent-A-Center, Inc.(a) 7,000 241,500
----------------------------------------------------------------------
Venator Group, Inc.(a) 29,000 449,500
======================================================================
691,000
======================================================================
|
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-41
MARKET
SHARES VALUE
RETAIL (SPECIALTY - APPAREL) - 1.08%
Abercrombie & Fitch Co. - Class A(a) 31,600 $ 632,000
---------------------------------------------------------------------
Too Inc.(a) 14,200 177,500
=====================================================================
809,500
=====================================================================
SAVINGS & LOAN COMPANIES - 0.05%
Local Financial Corp.(a) 2,800 36,750
=====================================================================
SERVICES (ADVERTISING/MARKETING) - 0.94%
Lamar Advertising Co.(a) 18,250 704,336
=====================================================================
SERVICES (COMMERCIAL & CONSUMER) - 2.59%
Copart, Inc.(a) 21,100 453,650
---------------------------------------------------------------------
Edison Schools Inc.(a) 10,000 315,000
---------------------------------------------------------------------
Iron Mountain Inc.(a) 13,450 499,331
---------------------------------------------------------------------
TeleTech Holdings, Inc.(a) 36,600 672,525
=====================================================================
1,940,506
=====================================================================
SERVICES (COMPUTER SYSTEMS) - 2.11%
Insight Enterprises, Inc.(a) 25,612 459,415
---------------------------------------------------------------------
SunGard Data Systems Inc.(a) 23,800 1,121,575
=====================================================================
1,580,990
=====================================================================
SERVICES (DATA PROCESSING) - 2.69%
BISYS Group, Inc. (The)(a) 10,000 521,250
---------------------------------------------------------------------
Ceridian Corp.(a) 24,100 480,494
---------------------------------------------------------------------
Concord EFS, Inc.(a) 16,000 703,000
---------------------------------------------------------------------
Learning Tree International, Inc.(a) 6,200 306,900
=====================================================================
2,011,644
=====================================================================
SERVICES (EMPLOYMENT) - 1.07%
Heidrick & Struggles International, Inc.(a) 11,100 466,894
---------------------------------------------------------------------
Korn/Ferry International(a) 15,700 333,625
=====================================================================
800,519
=====================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.93%
Arch Wireless, Inc.(a) 32,800 20,500
---------------------------------------------------------------------
Nextel Partners, Inc. - Class A(a) 20,600 346,338
---------------------------------------------------------------------
o2wireless Solutions, Inc.(a) 12,900 120,131
---------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 11,400 666,900
---------------------------------------------------------------------
Rural Cellular Corp. - Class A(a) 5,700 168,863
---------------------------------------------------------------------
Western Multiplex Corp. - Class A(a) 18,200 125,125
=====================================================================
1,447,857
=====================================================================
TELEPHONE - 1.03%
Broadwing Inc.(a) 33,768 770,333
=====================================================================
Total Common Stocks & Other Equity Interests
(Cost $62,877,133) 70,526,096
=====================================================================
|
MARKET
SHARES VALUE
WARRANTS - 0.00%
TELECOMMUNICATIONS (LONG DISTANCE) - 0.00%
RateXchange Corp. - Wts., expiring 03/21/03
(Cost $3,253) 1,033 $ 0
===================================================================
MONEY MARKET FUNDS - 6.67%
STIC Liquid Assets Portfolio(b) 2,497,367 2,497,367
-------------------------------------------------------------------
STIC Prime Portfolio(b) 2,497,367 2,497,367
===================================================================
Total Money Market Funds (Cost $4,994,734) 4,994,734
===================================================================
TOTAL INVESTMENTS--100.86%
(COST $67,875,120) 75,520,830
===================================================================
LIABILITIES LESS OTHER ASSETS - (0.86%) (646,772)
===================================================================
NET ASSETS - 100.00% $74,874,058
===================================================================
|
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
INVESTMENT ABBREVIATIONS:
Wts. - Warrants
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-42
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $67,875,120) $75,520,830 ------------------------------------------------------------ Receivables for: Investments sold 850,350 ------------------------------------------------------------ Fund shares sold 89,571 ------------------------------------------------------------ Dividends and interest 73,684 ------------------------------------------------------------ Investment for deferred compensation plan 14,780 ------------------------------------------------------------ Other assets 610 ============================================================ Total assets 76,549,825 ============================================================ LIABILITIES: Payables for: Investments purchased 1,462,643 ------------------------------------------------------------ Fund shares reacquired 74,139 ------------------------------------------------------------ Deferred compensation plan 14,780 ------------------------------------------------------------ Accrued advisory fees 51,835 ------------------------------------------------------------ Accrued administrative services fees 54,064 ------------------------------------------------------------ Accrued operating expenses 18,306 ============================================================ Total liabilities 1,675,767 ============================================================ Net assets applicable to shares outstanding $74,874,058 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 5,762,341 ============================================================ Net asset value $ 12.99 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $515) $ 182,977
----------------------------------------------------------------------------
Dividends from affiliated money market funds 261,697
----------------------------------------------------------------------------
Interest 1,480
============================================================================
Total investment income 446,154
============================================================================
EXPENSES:
Advisory fees 298,327
----------------------------------------------------------------------------
Administrative services fees 144,741
----------------------------------------------------------------------------
Custodian fees 53,281
----------------------------------------------------------------------------
Professional fees 29,469
----------------------------------------------------------------------------
Trustees' fees 6,620
----------------------------------------------------------------------------
Other 17,872
============================================================================
Total expenses 550,310
============================================================================
Less:Fees waived (76,606)
----------------------------------------------------------------------------
Expenses paid indirectly (1,089)
----------------------------------------------------------------------------
Net expenses 472,615
----------------------------------------------------------------------------
Net investment income (loss) (26,461)
============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities (5,417,443)
----------------------------------------------------------------------------
Foreign currencies 444
----------------------------------------------------------------------------
Option contracts written 28,987
============================================================================
(5,388,012)
============================================================================
Change in net unrealized appreciation of:
Investment securities 5,336,054
============================================================================
Net gain (loss) from investment securities, foreign currencies
and option contracts (51,958)
============================================================================
Net increase (decrease) in net assets resulting from operations $ (78,419)
____________________________________________________________________________
============================================================================
|
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-43
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
----------- -----------
OPERATIONS:
Net investment income (loss) $ (26,461) $ (15,062)
------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and option
contracts (5,388,012) 8,448
------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and option
contracts 5,336,054 2,014,708
==============================================================================
Net increase (decrease) in net assets resulting
from operations (78,419) 2,008,094
==============================================================================
Share transactions - net 63,917,546 5,854,369
==============================================================================
Net increase in net assets 63,839,127 7,862,463
==============================================================================
NET ASSETS:
Beginning of year 11,034,931 3,172,468
==============================================================================
End of year $74,874,058 $11,034,931
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $72,877,180 $ 8,979,016
------------------------------------------------------------------------------
Undistributed net investment income (loss) (14,925) (8,290)
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
option contracts (5,633,907) (245,451)
------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and option contracts 7,645,710 2,309,656
==============================================================================
$74,874,058 $11,034,931
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Capital Development Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is long-term
growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-44
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was increased by
$19,826, undistributed net realized gains decreased by $444, and paid-in
capital decreased by $19,382 as a result of differing book/tax treatment of
foreign currency transactions and net operating loss reclassifications. Net
assets of the Fund were unaffected by the reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $2,948,335 as of December 31, 2000 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, through the year 2008.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal
to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset
and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option
written. The current market value of a written option is the mean between
the last bid and asked prices on that day. If a written call option expires
on the stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or a loss if the closing
purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Put Options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, the Fund pays an option premium. The option's underlying instrument
may be a security or a futures contract. Put options may be used by the
Fund to hedge securities it owns by locking in a minimum price at which the
Fund can sell. If security prices fall, the put option could be exercised
to offset all or a portion of the Fund's resulting losses. At the same
time, because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. During the year
ended December 31, 2000, AIM waived fees of $76,606.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-45
December 31, 2000, the Fund paid AIM $144,741 of which AIM retained $50,000
for such services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,336
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $1,089 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $1,089.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $101,083,966 and $39,906,933, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $11,773,744 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (4,996,924) ========================================================================== Net unrealized appreciation of investment securities $ 6,776,820 __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $68,744,010.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000
are summarized as follows:
CALL OPTION
CONTRACTS
-------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-----------------
Beginning of year -- $ --
---------------------------------------
Written 224 227,271
---------------------------------------
Closed (170) (178,002)
---------------------------------------
Expired (54) (49,269)
=======================================
End of year -- $ --
_______________________________________
=======================================
|
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and
1999 were as follows:
2000 1999
---------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- -------- -----------
Sold 5,063,336 $67,018,133 746,789 $ 7,361,857
----------------------------------------------------------
Reacquired (229,233) (3,100,587) (163,001) (1,507,488)
==========================================================
4,834,103 $63,917,546 583,788 $ 5,854,369
__________________________________________________________
==========================================================
|
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-46
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31, MAY 1, 1998
----------------------- (DATE OPERATIONS COMMENCED)
2000(a) 1999(a) TO DECEMBER 31, 1998(a)
----------- ----------- ---------------------------
Net asset value,
beginning of period $ 11.89 $ 9.21 $10.00
-----------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) (0.01) (0.03) 0.03
-----------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 1.11 2.71 (0.78)
===================================================================================
Total from investment
operations 1.10 2.68 (0.75)
===================================================================================
Less distributions from
net investment income -- -- (0.04)
===================================================================================
Net asset value, end of
period $ 12.99 $11.89 $ 9.21
___________________________________________________________________________________
===================================================================================
Total return(b) 9.25% 29.10% (7.51)%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $ 74,874 $ 11,035 $3,172
___________________________________________________________________________________
===================================================================================
Ratio of expenses to
average net assets:
With fee waivers 1.19%(c) 1.23% 1.21%(d)
-----------------------------------------------------------------------------------
Without fee waivers 1.38%(c) 3.42% 5.80%(d)
___________________________________________________________________________________
===================================================================================
Ratio of net investment
income (loss) to
average net assets (0.07)%(c) (0.32)% 0.62%(d)
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate 110% 132% 45%
___________________________________________________________________________________
===================================================================================
|
(a) Calculated using average shares outstanding.
(b) Totals returns are not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $39,776,995.
(d) Annualized.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-47
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Dent Demographic Trends Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets and the financial highlights for the year then ended and for the period December 29, 1999 (date operations commenced) through December 31, 1999. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Dent Demographic Trends Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for the year then ended and for the period December 29, 1999 (date operations commenced) through December 31, 1999 in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-48
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY INTERESTS - 97.91%
BANKS (MONEY CENTER) - 3.41%
J.P. Morgan Chase & Co. 31,000 $ 1,408,562
====================================================================
BANKS (REGIONAL) - 1.65%
Dah Sing Financial Group (Hong Kong) 75,000 404,823
--------------------------------------------------------------------
Silicon Valley Bancshares(a) 8,000 276,500
====================================================================
681,323
====================================================================
BIOTECHNOLOGY - 3.60%
Amgen Inc.(a) 9,500 607,406
--------------------------------------------------------------------
BioChem Pharma, Inc. (Canada)(a) 5,100 163,200
--------------------------------------------------------------------
Celgene Corp.(a) 5,000 162,500
--------------------------------------------------------------------
ImmunoGen, Inc.(a) 7,000 150,062
--------------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(a)(b) 3,000 185,625
--------------------------------------------------------------------
Protein Design Labs, Inc.(a) 2,500 217,187
====================================================================
1,485,980
====================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.96%
AT&T Corp. - Liberty Media Corp. - Class A(a) 12,000 162,750
--------------------------------------------------------------------
Cox Communications, Inc. - Class A(a) 5,000 232,812
====================================================================
395,562
====================================================================
COMMUNICATIONS EQUIPMENT - 6.26%
Comverse Technology, Inc.(a) 10,000 1,086,250
--------------------------------------------------------------------
Corning Inc. 11,000 580,937
--------------------------------------------------------------------
Nortel Networks Corp. (Canada) 11,500 368,719
--------------------------------------------------------------------
Redback Networks Inc.(a) 7,500 307,500
--------------------------------------------------------------------
UTStarcom, Inc.(a) 15,500 240,250
====================================================================
2,583,656
====================================================================
COMPUTERS (HARDWARE) - 0.91%
Sun Microsystems, Inc.(a) 13,500 376,312
====================================================================
COMPUTERS (NETWORKING) - 5.59%
Cisco Systems, Inc.(a) 25,000 956,250
--------------------------------------------------------------------
Emulex Corp.(a) 3,500 279,781
--------------------------------------------------------------------
Juniper Networks, Inc.(a) 8,500 1,071,531
====================================================================
2,307,562
====================================================================
COMPUTERS (PERIPHERALS) - 4.60%
Brocade Communications Systems, Inc.(a) 12,000 1,101,750
--------------------------------------------------------------------
EMC Corp.(a) 12,000 798,000
====================================================================
1,899,750
====================================================================
|
MARKET
SHARES VALUE
COMPUTERS (SOFTWARE & SERVICES) - 10.75%
America Online, Inc.(a) 5,500 $ 191,400
-------------------------------------------------------------------------
Ariba, Inc.(a) 5,500 295,625
-------------------------------------------------------------------------
BEA Systems, Inc.(a) 6,000 403,875
-------------------------------------------------------------------------
Check Point Software Technologies Ltd. (Israel)(a) 3,200 427,400
-------------------------------------------------------------------------
i2 Technologies, Inc.(a) 7,000 380,625
-------------------------------------------------------------------------
NetIQ Corp.(a) 2,800 244,650
-------------------------------------------------------------------------
Oracle Corp.(a) 22,500 653,906
-------------------------------------------------------------------------
Siebel Systems, Inc.(a) 4,000 270,500
-------------------------------------------------------------------------
VERITAS Software Corp.(a) 17,500 1,531,250
-------------------------------------------------------------------------
Vitria Technology, Inc.(a) 5,000 38,750
=========================================================================
4,437,981
=========================================================================
ELECTRONICS (INSTRUMENTATION) - 2.12%
Waters Corp.(a) 10,500 876,750
=========================================================================
ELECTRONICS (SEMICONDUCTORS) - 5.59%
Analog Devices, Inc.(a) 7,000 358,313
-------------------------------------------------------------------------
Celestica Inc. (Canada)(a) 15,000 813,750
-------------------------------------------------------------------------
SDL, Inc.(a) 4,800 711,300
-------------------------------------------------------------------------
TranSwitch Corp.(a) 3,000 117,375
-------------------------------------------------------------------------
Triquint Semiconductor, Inc.(a) 7,000 305,813
=========================================================================
2,306,551
=========================================================================
ENTERTAINMENT - 2.02%
Time Warner Inc. 16,000 835,840
=========================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.85%
Lam Research Corp.(a) 10,000 145,000
-------------------------------------------------------------------------
Teradyne, Inc.(a) 5,500 204,875
=========================================================================
349,875
=========================================================================
FINANCIAL (DIVERSIFIED) - 4.44%
American Express Co. 12,000 659,250
-------------------------------------------------------------------------
Citigroup Inc. 23,000 1,174,438
=========================================================================
1,833,688
=========================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.90%
Andrx Group(a) 3,500 202,563
-------------------------------------------------------------------------
Genentech, Inc.(a) 9,000 733,500
-------------------------------------------------------------------------
Shire Pharmaceuticals Group PLC - ADR
(United Kingdom)(a) 5,700 262,556
=========================================================================
1,198,619
=========================================================================
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-49
MARKET
SHARES VALUE
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 8.11%
Allergan, Inc. 6,000 $ 580,875
----------------------------------------------------------------------
Pfizer Inc. 35,000 1,610,000
----------------------------------------------------------------------
Pharmacia Corp. 19,000 1,159,000
======================================================================
3,349,875
======================================================================
HEALTH CARE (HOSPITAL MANAGEMENT) - 1.38%
Health Management Associates, Inc. - Class A(a) 27,500 570,625
======================================================================
HEALTH CARE (MANAGED CARE) - 2.89%
First Health Group Corp.(a) 13,000 605,313
----------------------------------------------------------------------
UnitedHealth Group Inc. 9,600 589,200
======================================================================
1,194,513
======================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.31%
Applera Corp. - Applied Biosystems Group 9,000 846,563
----------------------------------------------------------------------
Medtronic, Inc. 5,000 301,875
----------------------------------------------------------------------
Novoste Corp.(a) 8,000 220,000
======================================================================
1,368,438
======================================================================
HEALTH CARE (SPECIALIZED SERVICES) - 1.19%
HEALTHSOUTH Corp.(a) 30,000 489,375
======================================================================
INSURANCE (MULTI-LINE) - 2.86%
American International Group, Inc. 12,000 1,182,750
======================================================================
INSURANCE BROKERS - 1.13%
Marsh & McLennan Cos., Inc. 4,000 468,000
======================================================================
INVESTMENT BANKING/BROKERAGE - 9.58%
Goldman Sachs Group, Inc. (The) 8,000 855,500
----------------------------------------------------------------------
Merrill Lynch & Co., Inc. 12,000 818,250
----------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 17,000 1,347,250
----------------------------------------------------------------------
Schwab (Charles) Corp. (The) 33,000 936,375
======================================================================
3,957,375
======================================================================
INVESTMENT MANAGEMENT - 1.05%
Stilwell Financial, Inc. 11,000 433,813
======================================================================
INVESTMENTS - 1.41%
Nasdaq 100 Shares(a) 10,000 583,750
======================================================================
LEISURE TIME (PRODUCTS) - 1.06%
Harley-Davidson, Inc. 11,000 437,250
======================================================================
MANUFACTURING (DIVERSIFIED) - 1.61%
Tyco International Ltd. (Bermuda) 12,000 666,000
======================================================================
NATURAL GAS - 0.60%
Enron Corp. 3,000 249,375
======================================================================
RETAIL (COMPUTERS & ELECTRONICS) - 0.14%
Tweeter Home Entertainment Group, Inc.(a) 4,600 56,063
======================================================================
|
MARKET
SHARES VALUE
RETAIL (DEPARTMENT STORES) - 1.04%
Kohl's Corp.(a) 7,000 $ 427,000
======================================================================
RETAIL (SPECIALTY - APPAREL) - 1.09%
Abercrombie & Fitch Co. - Class A(a) 22,500 450,000
======================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 3.81%
China Mobile Ltd. - ADR (Hong Kong)(a) 8,000 217,000
----------------------------------------------------------------------
Openwave Systems Inc.(a) 10,000 479,375
----------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 9,500 555,750
----------------------------------------------------------------------
Research in Motion Ltd. (Canada)(a) 4,000 322,200
======================================================================
1,574,325
======================================================================
Total Common Stocks & Other Equity Interests
(Cost $43,668,844) 40,436,538
======================================================================
MONEY MARKET FUNDS - 5.80%
STIC Liquid Assets Portfolio(c) 1,198,198 1,198,198
----------------------------------------------------------------------
STIC Prime Portfolio(c) 1,198,198 1,198,198
======================================================================
Total Money Market Funds (Cost $2,396,396) 2,396,396
======================================================================
TOTAL INVESTMENTS - 103.71%
(Cost $46,065,240) 42,832,934
======================================================================
LIABILITIES LESS OTHER ASSETS - (3.71%) (1,533,346)
======================================================================
NET ASSETS - 100.00% $41,299,588
======================================================================
|
INVESTMENT ABBREVIATIONS:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-50
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $46,065,240) $42,832,934 ------------------------------------------------------------ Receivables for: Fund shares sold 99,371 ------------------------------------------------------------ Dividends 14,293 ------------------------------------------------------------ Investment for deferred compensation plan 5,379 ============================================================ Total assets 42,951,977 ============================================================ LIABILITIES: Payables for: Investments purchased 1,573,912 ------------------------------------------------------------ Fund shares reacquired 1,622 ------------------------------------------------------------ Options written (premiums received $13,472) 7,125 ------------------------------------------------------------ Deferred compensation plan 5,379 ------------------------------------------------------------ Accrued advisory fees 32,152 ------------------------------------------------------------ Accrued administrative services fees 15,808 ------------------------------------------------------------ Accrued operating expenses 16,391 ============================================================ Total liabilities 1,652,389 ============================================================ Net assets applicable to shares outstanding $41,299,588 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 5,032,393 ============================================================ Net asset value $ 8.21 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends from affiliated money market funds $ 97,165
-----------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $329) 47,235
-----------------------------------------------------------------------------
Interest 1,755
=============================================================================
Total investment income 146,155
=============================================================================
EXPENSES:
Advisory fees 176,047
-----------------------------------------------------------------------------
Administrative services fees 62,153
-----------------------------------------------------------------------------
Custodian fees 36,512
-----------------------------------------------------------------------------
Printing 25,948
-----------------------------------------------------------------------------
Trustees' fees 6,611
-----------------------------------------------------------------------------
Other 29,363
=============================================================================
Total expenses 336,634
=============================================================================
Less:Fees waived (47,600)
=============================================================================
Expenses paid indirectly (168)
=============================================================================
Net expenses 288,866
=============================================================================
Net investment income (loss) (142,711)
=============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FUTURES CONTRACTS AND OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities (6,292,636)
-----------------------------------------------------------------------------
Foreign currencies (80)
-----------------------------------------------------------------------------
Futures contracts (11,576)
=============================================================================
(6,304,292)
=============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (3,232,309)
-----------------------------------------------------------------------------
Futures contracts 578
-----------------------------------------------------------------------------
Option contracts written 6,347
=============================================================================
(3,225,384)
=============================================================================
Net gain (loss) from investment securities, foreign currencies,
futures contracts and option contracts (9,529,676)
=============================================================================
Net increase (decrease) in net assets resulting from operations $(9,672,387)
_____________________________________________________________________________
=============================================================================
|
See Notes to Financial Statements.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-51
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 2000 and the period December 29, 1999 (date operations commenced) to December 31, 1999
2000 1999
----------- ---------
OPERATIONS:
Net investment income (loss) $ (142,711) $ 163
------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and futures contracts (6,304,292) --
------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation)
of investment securities, foreign currencies,
futures contracts and option contracts (3,225,384) (574)
==============================================================================
Net increase (decrease) in net assets resulting from
operations (9,672,387) (411)
==============================================================================
Distributions to shareholders from net investment
income (477) --
------------------------------------------------------------------------------
Share transactions - net 49,972,853 1,000,010
==============================================================================
Net increase in net assets 40,299,989 999,599
==============================================================================
NET ASSETS:
Beginning of year 999,599 --
==============================================================================
End of year $41,299,588 $ 999,599
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $50,835,171 $ 999,988
------------------------------------------------------------------------------
Undistributed net investment income (loss) (5,413) 185
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
futures contracts (6,304,212) --
------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies, futures contracts
and option contracts (3,225,958) (574)
==============================================================================
$41,299,588 $ 999,599
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Dent Demographic Trends Fund (the "Fund") is a series portfolio of
AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is long-term
growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-52
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was increased by
$137,590 undistributed net realized gains were increased by $80 and paid in
capital was decreased by $137,670 as a result of differing book/tax treatment
of nondeductible organizational expenses, foreign currency transactions and
net operating loss reclassifications. Net assets of the Fund were unaffected
by the reclassifications discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $3,120,883 which may be carried forward to offset future
taxable gains, if any, which expires, if not previously utilized, in the
year 2008.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal
to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset
and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option
written. The current market value of a written option is the mean between
the last bid and asked prices on that day. If a written call option expires
on the stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or a loss if the closing
purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Futures Contracts - The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-53
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). H.S. Dent Advisors, Inc. ("H.S. Dent") is the Fund's
subadvisor. Under the terms of the master investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $2
billion of the Fund's average daily net assets, plus 0.80% of the Fund's
average daily net assets in excess of $2 billion. Under the terms of a
subadvisory agreement between AIM and H.S. Dent, AIM pays H.S. Dent at the
annual rate of 0.13% of the first $1 billion of the Fund's average daily net
assets, plus 0.10% of the next $1 billion of the Fund's average daily net
assets, plus 0.07% of the Fund's average daily net assets exceeding $2
billion. During the year ended December 31, 2000, AIM waived fees of $47,600.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $62,153 of which AIM retained $50,000 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,315
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $168 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $168.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $67,985,183 and $18,018,663, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 2,450,393 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (6,966,089) ========================================================================== Net unrealized appreciation (depreciation) of investment securities $(4,515,696) __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $47,348,630.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000
are summarized as follows:
CALL OPTION
CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------
Beginning of year -- $ --
-------------------------------------
Written 30 13,472
=====================================
End of year 30 $13,472
_____________________________________
=====================================
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-54
Open call option contracts written as of December 31, 2000 were as follows:
DECEMBER 31,
CONTRACT STRIKE NUMBER OF PREMIUMS 2000 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- --------------------------------------------------
Millennium
Pharmaceuticals, Inc. Jan-01 $75 30 $13,472 $7,125 $6,347
====================================================================================
|
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2000 and the
period December 29, 1999 (date operations commenced) through December 31, 1999
were as follows:
2000 1999
---------------------- ------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ----------------
Sold 5,158,240 $52,212,162 100,001 $1,000,010
-------------------------------------------------------------------------------
Issued as reinvestment of dividends 54 477 -- --
-------------------------------------------------------------------------------
Reacquired (225,902) (2,239,786) -- --
===============================================================================
4,932,392 $49,972,853 100,001 $1,000,010
_______________________________________________________________________________
===============================================================================
|
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
DECEMBER 29,
1999
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2000(a) 1999
------------ ----------------
Net asset value, beginning of period $ 10.00 $10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment loss (0.07) --
-------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (1.72) --
===============================================================================
Total from investment operations (1.79) --
===============================================================================
Less distributions from net investment income 0.00 --
===============================================================================
Net asset value, end of period $ 8.21 $10.00
_______________________________________________________________________________
===============================================================================
Total return(b) (17.90)% --
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $41,300 $1,000
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers 1.40%(c) 1.40%(d)
===============================================================================
Without fee waivers 1.63%(c) 12.58%(d)
_______________________________________________________________________________
===============================================================================
Ratio of net investment income (loss) to
average net assets (0.69)%(c) 2.96%(d)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 92% --
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $20,711,350.
(d) Annualized.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-55
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Diversified Income Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Diversified Income Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-56
SCHEDULE OF INVESTMENTS
December 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS & NOTES - 78.96%
AIR FREIGHT - 0.43%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 $ 350,000 $ 362,250
===============================================================================
AIRLINES - 2.58%
Air 2 US - Series C, Equipment Trust Ctfs., 10.13%,
10/01/20 (Acquired 10/28/99; Cost $550,000)(a) 550,000 587,741
-------------------------------------------------------------------------------
Delta Air Lines, Inc.,
Unsec. Notes, 7.90%, 12/15/09 500,000 480,820
-------------------------------------------------------------------------------
Deb., 10.38%, 12/15/22 600,000 628,974
-------------------------------------------------------------------------------
Dunlop Standard Aerospace Holdings PLC (United
Kingdom), Sr. Unsec. Sub. Yankee Notes,
11.88%, 05/15/09 460,000 461,150
===============================================================================
2,158,685
===============================================================================
AUTOMOBILES - 1.47%
DaimlerChrysler N.A. Holding Corp.,
Gtd. Unsec. Notes, 7.40%, 01/20/05 870,000 876,377
-------------------------------------------------------------------------------
Gtd. Notes, 8.00%, 06/15/10 350,000 353,818
===============================================================================
1,230,195
===============================================================================
BANKS (MAJOR REGIONAL) - 3.27%
BB&T Corp., RAPS Sub. Notes, 6.38%, 06/30/05 400,000 387,468
-------------------------------------------------------------------------------
Crestar Financial Corp., Sub. Notes, 8.75%, 11/15/04 90,000 96,435
-------------------------------------------------------------------------------
Midland Bank PLC (United Kingdom), Unsec. Sub. Yankee
Notes, 7.65%, 05/01/25 245,000 253,717
-------------------------------------------------------------------------------
NCNB Corp., Sub. Notes, 9.38%, 09/15/09 500,000 570,560
-------------------------------------------------------------------------------
Regions Financial Corp., Putable Sub. Notes,
7.75%, 09/15/24 500,000 518,590
-------------------------------------------------------------------------------
Republic New York Corp.,
Sub. Deb., 9.50%, 04/15/14 350,000 408,649
-------------------------------------------------------------------------------
Sub. Notes, 9.70%, 02/01/09 440,000 501,732
===============================================================================
2,737,151
===============================================================================
BANKS (MONEY CENTER) - 1.51%
BSCH Issuances Ltd. (Cayman Islands), Gtd. Sub. Yankee
Bonds, 7.63%, 09/14/10 350,000 355,698
-------------------------------------------------------------------------------
First Union Corp., Putable Unsec. Deb.,
6.55%, 10/15/35 100,000 97,746
-------------------------------------------------------------------------------
7.50%, 04/15/35 800,000 810,824
===============================================================================
1,264,268
===============================================================================
BANKS (REGIONAL) - 2.23%
Banponce Trust I - Series A, Gtd. Notes,
8.33%, 02/01/27 250,000 222,392
-------------------------------------------------------------------------------
Mercantile Bancorp. Inc., Jr. Unsec. Sub. Notes, 7.30%,
06/15/07 500,000 510,560
-------------------------------------------------------------------------------
NBD Bank N.A. Michigan, Putable Unsec. Sub. Deb.,
8.25%, 11/01/24 435,000 468,486
-------------------------------------------------------------------------------
Riggs Capital Trust II - Series C, Gtd. Sec. Bonds,
8.88%, 03/15/27 500,000 318,935
-------------------------------------------------------------------------------
Union Planters Bank N.A., Unsec. Sub. Notes,
6.50%, 03/15/08 190,000 174,234
-------------------------------------------------------------------------------
Union Planters Capital Trust, Gtd. Bonds, 8.20%,
12/15/26 200,000 171,566
===============================================================================
1,866,173
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
BROADCASTING (TELEVISION, RADIO & CABLE) - 9.75%
Adelphia Communications Corp., Sr. Unsec. Notes,
10.88%, 10/01/10 $ 350,000 $ 336,000
------------------------------------------------------------------------------
AT&T Corp. - Liberty Media Corp.,
Sr. Unsec. Bonds, 7.88%, 07/15/09 190,000 187,165
------------------------------------------------------------------------------
Sr. Unsec. Deb., 8.25%, 02/01/30 525,000 481,378
------------------------------------------------------------------------------
British Sky Broadcasting Group PLC (United Kingdom),
Sr. Unsec. Gtd. Yankee Notes,
8.20%, 07/15/09 795,000 754,352
------------------------------------------------------------------------------
Clear Channel Communications, Inc., Unsec. Deb.,
7.25%, 10/15/27 200,000 180,166
------------------------------------------------------------------------------
Comcast Cable Communications, Unsec. Unsub. Notes,
8.50%, 05/01/27 500,000 546,410
------------------------------------------------------------------------------
Cox Enterprises, Inc., Notes, 8.00%, 02/15/07
(Acquired 02/16/00; Cost $496,265)(a) 500,000 514,840
------------------------------------------------------------------------------
CSC Holdings Inc.,
Sr. Unsec. Deb., 7.63%, 07/15/18 550,000 506,770
------------------------------------------------------------------------------
Sr. Unsec. Notes, 7.88%, 12/15/07 1,050,000 1,061,476
------------------------------------------------------------------------------
Sr. Unsec. Deb., 7.88%, 02/15/18 500,000 472,220
------------------------------------------------------------------------------
Series B, Sr. Unsec. Notes, 8.13%, 07/15/09 350,000 359,562
------------------------------------------------------------------------------
Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes,
10.25%, 11/01/07(b) 600,000 463,500
------------------------------------------------------------------------------
Knology Holdings, Inc., Sr. Unsub. Disc. Notes,
11.88%, 10/15/07(b) 1,000,000 202,500
------------------------------------------------------------------------------
Lenfest Communications, Inc.,
Sr. Unsec. Sub. Notes, 8.25%, 02/15/08 800,000 833,768
------------------------------------------------------------------------------
Sr. Unsec. Notes, 8.38%, 11/01/05 1,000,000 1,072,520
------------------------------------------------------------------------------
United Pan-Europe Communications N.V. (Netherlands) -
Series B, Sr. Unsec. Disc. Yankee Notes, 13.75%,
02/01/10(b) 600,000 189,000
==============================================================================
8,161,627
==============================================================================
COMPUTERS (NETWORKING) - 0.40%
Exodus Communications, Inc., Sr. Unsec. Notes, 11.25%,
07/01/08 375,000 331,875
==============================================================================
COMPUTERS (PERIPHERALS) - 0.25%
Equinix, Inc., Sr. Unsec. Notes, 13.00%, 12/01/07 300,000 210,750
==============================================================================
CONSUMER FINANCE - 2.00%
American General Finance Corp., Sr. Putable Notes,
8.45%, 10/15/09 300,000 326,415
------------------------------------------------------------------------------
Capital One Financial Corp., Unsec. Notes,
7.25%, 05/01/06 530,000 494,856
------------------------------------------------------------------------------
Household Finance Corp., Sr. Unsec. Notes,
6.88%, 03/01/07 400,000 394,148
------------------------------------------------------------------------------
MBNA Capital - Series A, Gtd. Bonds,
8.28%, 12/01/26 550,000 458,188
==============================================================================
1,673,607
==============================================================================
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-57
PRINCIPAL MARKET
AMOUNT VALUE
ELECTRIC COMPANIES - 6.16%
CILCORP, Inc., Sr. Unsec. Bonds, 9.38%, 10/15/29 $ 450,000 $ 499,788
-------------------------------------------------------------------------------
Cleveland Electric Illuminating Co. (The),
First Mortgage Bonds, 6.86%, 10/01/08 270,000 266,644
-------------------------------------------------------------------------------
Series D, Sr. Sec. Notes, 7.88%, 11/01/17 500,000 507,675
-------------------------------------------------------------------------------
El Paso Electric Co.,
Series D, Sec. First Mortgage Bonds,
8.90%, 02/01/06 400,000 431,612
-------------------------------------------------------------------------------
Series E, Sec. First Mortgage Bonds,
9.40%, 05/01/11 150,000 162,964
-------------------------------------------------------------------------------
Niagara Mohawk Power Corp. - Series H, Sr. Unsec. Disc.
Notes, 8.50%, 07/01/10(b) 2,000,000 1,730,960
-------------------------------------------------------------------------------
Public Service Company of New Mexico - Series A,
Sr. Unsec. Notes, 7.10%, 08/01/05 140,000 135,649
-------------------------------------------------------------------------------
Southern Energy, Inc., Sr. Notes, 7.90%, 07/15/09
(Acquired 12/03/99; Cost $980,670)(a) 1,000,000 1,002,970
-------------------------------------------------------------------------------
Texas-New Mexico Power Co., Sr. Sec. Notes,
6.25%, 01/15/09 450,000 414,792
===============================================================================
5,153,054
===============================================================================
ELECTRICAL EQUIPMENT - 0.63%
Emerson Electric Co., Unsec. Notes, 7.13%, 08/15/10 500,000 529,555
===============================================================================
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.61%
Israel Electric Corp. Ltd. (Israel),
Sr. Sec. Medium Term Yankee Notes, 7.75%, 03/01/09
(Acquired 04/13/00; Cost $320,720)(a) 330,000 328,172
-------------------------------------------------------------------------------
Yankee Deb., 7.75%, 12/15/27 (Acquired
06/09/00; Cost $175,596)(a) 200,000 177,970
===============================================================================
506,142
===============================================================================
ENGINEERING & CONSTRUCTION - 0.31%
Washington Group International, Inc., Sr. Unsec. Gtd.
Notes, 11.00%, 07/01/10(c) 350,000 261,625
===============================================================================
ENTERTAINMENT - 2.05%
Callahan Nordrhein Westfalen (Germany), Sr. Unsec.
Yankee Notes, 14.00%, 07/15/10 (Acquired
06/29/00-08/11/00; Cost $278,750)(a) 280,000 253,400
-------------------------------------------------------------------------------
Time Warner Inc.,
Sr. Unsec. Gtd. Deb., 7.57%, 02/01/24 200,000 200,006
-------------------------------------------------------------------------------
Unsec. Deb., 8.05%, 01/15/16 100,000 104,786
-------------------------------------------------------------------------------
Unsec. Deb., 9.13%, 01/15/13 400,000 464,108
-------------------------------------------------------------------------------
Unsec. Deb., 9.15%, 02/01/23 600,000 697,146
===============================================================================
1,719,446
===============================================================================
FINANCIAL (DIVERSIFIED) - 2.88%
AIG SunAmerica Global Financing I, Sr. Unsec. Unsub.
Notes, 7.40%, 05/05/03 (Acquired 10/17/00; Cost
$254,103)(a) 250,000 257,355
-------------------------------------------------------------------------------
AIG SunAmerica Global Financing II, Sr. Sec. Notes,
7.60%, 06/15/05 (Acquired 06/08/00;
Cost $350,000)(a) 350,000 369,792
-------------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
FINANCIAL (DIVERSIFIED) - (CONTINUED)
Ford Holdings, Inc., Unsec. Unsub. Gtd. Deb.,
9.30%, 03/01/30 $ 180,000 $ 204,849
-------------------------------------------------------------------------------
Heller Financial, Inc., Sr. Unsec. Notes,
8.00%, 06/15/05 250,000 259,030
-------------------------------------------------------------------------------
Hutchison Delta Finance Ltd. - Series REGS (Cayman
Islands), Conv. Gtd. Unsec. Euro Notes,
7.00%, 11/08/02 500,000 598,750
-------------------------------------------------------------------------------
Pinnacle Partners, Sr. Notes, 8.83%, 08/15/04 (Acquired
08/02/00; Cost $500,000)(a) 500,000 517,415
-------------------------------------------------------------------------------
Source One Mortgage Services Corp., Deb.,
9.00%, 06/01/12 180,000 207,005
===============================================================================
2,414,196
===============================================================================
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.52%
Hollywood Casino Corp., Sr. Sec. Gtd. Notes,
11.25%, 05/01/07 125,000 129,062
-------------------------------------------------------------------------------
Park Place Entertainment Corp., Sr. Unsec. Sub. Notes,
8.88%, 09/15/08 300,000 304,500
===============================================================================
433,562
===============================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 0.61%
Warner Chilcott, Inc., Sr. Unsec. Gtd. Sub. Notes,
12.63%, 02/15/08(c) 500,000 512,500
===============================================================================
HOMEBUILDING - 0.30%
K. Hovanian Enterprises Inc., Sr. Unsec. Gtd. Notes,
10.50%, 10/01/07(c) 270,000 249,750
===============================================================================
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.48%
Procter & Gamble Co. (The), Putable Deb.,
8.00%, 09/01/24 350,000 399,962
===============================================================================
INSURANCE (LIFE/HEALTH) - 0.30%
Americo Life, Inc., Sr. Sub. Notes, 9.25%, 06/01/05 75,000 70,875
-------------------------------------------------------------------------------
Torchmark Corp., Notes, 7.88%, 05/15/23 200,000 182,984
===============================================================================
253,859
===============================================================================
INSURANCE (PROPERTY - CASUALTY) - 0.57%
GE Global Insurance Holdings Corp., Unsec. Notes,
7.75%, 06/15/30 450,000 478,975
===============================================================================
INVESTMENT BANKING/BROKERAGE - 2.06%
Lehman Brothers Holdings Inc.,
Unsec. Notes, 8.50%, 08/01/15 660,000 699,996
-------------------------------------------------------------------------------
Putable Sr. Notes, 8.80%, 03/01/15 230,000 249,552
-------------------------------------------------------------------------------
Series E, Medium Term Disc. Notes,
9.26%, 02/10/28(d) 1,300,000 114,920
-------------------------------------------------------------------------------
Lehman Brothers Inc., Sr. Sub. Notes,
7.38%, 01/15/07 470,000 473,713
-------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., Unsec. Notes,
6.88%, 11/15/18 200,000 187,532
===============================================================================
1,725,713
===============================================================================
LODGING - HOTELS - 0.60%
John Q. Hammons Hotels, Inc., Sec. First Mortgage
Notes, 9.75%, 10/01/05 550,000 500,500
===============================================================================
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-58
PRINCIPAL MARKET
AMOUNT VALUE
MACHINERY (DIVERSIFIED) - 0.21%
Actuant Corp., Sr. Unsec. Gtd. Sub. Bonds,
13.00%, 05/01/09 $ 185,000 $ 172,975
=============================================================================
MANUFACTURING (DIVERSIFIED) - 1.09%
Glenoit Corp., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 04/15/07(e) 340,000 42,500
-----------------------------------------------------------------------------
Honeywell International Inc., Unsec. Unsub. Notes,
7.50%, 03/01/10 800,000 866,768
=============================================================================
909,268
=============================================================================
MANUFACTURING (SPECIALIZED) - 0.62%
MMI Products, Inc. - Series B, Sr. Unsec. Sub. Notes,
11.25%, 04/15/07 380,000 372,400
-----------------------------------------------------------------------------
Tekni-Plex, Inc. - Series B, Sr. Unsec. Gtd. Sub.
Notes, 12.75%, 06/15/10 185,000 148,925
=============================================================================
521,325
=============================================================================
METALS MINING - 0.56%
Centaur Mining and Exploration Ltd. (Australia), Sr.
Gtd. Yankee Notes, 11.00%, 12/01/07 550,000 101,750
-----------------------------------------------------------------------------
Rio Algom Ltd. (Canada), Unsec. Yankee Deb., 7.05%,
11/01/05 370,000 370,115
=============================================================================
471,865
=============================================================================
NATURAL GAS - 4.54%
Coastal Corp. (The), Sr. Putable Unsec. Deb.,
6.70%, 02/15/27 450,000 446,958
-----------------------------------------------------------------------------
Dynegy Inc., Sr. Unsec. Deb., 7.13%, 05/15/18 600,000 566,508
-----------------------------------------------------------------------------
Enron Corp. - Series A, Medium Term Notes,
8.38%, 05/23/05 200,000 214,462
-----------------------------------------------------------------------------
KeySpan Corp., Sr. Unsec. Unsub. Notes,
7.25%, 11/15/05 250,000 260,115
-----------------------------------------------------------------------------
KN Capital Trust I - Series B, Unsec. Gtd. Bonds,
8.56%, 04/15/27 350,000 328,080
-----------------------------------------------------------------------------
Northern Border Partners, L.P. - Series A, Sr. Gtd.
Unsec. Unsub. Notes, 8.88%, 06/15/10 600,000 652,710
-----------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee Deb.,
8.50%, 12/15/12 500,000 559,900
-----------------------------------------------------------------------------
Sonat Inc., Sr. Unsec. Notes, 7.63%, 07/15/11 500,000 523,425
-----------------------------------------------------------------------------
Williams Cos., Inc. (The), Notes, 7.63%, 07/15/19 250,000 250,470
=============================================================================
3,802,628
=============================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 2.26%
NRG Energy, Inc., Sr. Unsec. Notes, 7.50%, 06/01/09 500,000 497,775
-----------------------------------------------------------------------------
Petroleum Geo-Services A.S.A. (Norway),
Sr. Unsec. Yankee Notes, 7.13%, 03/30/28 200,000 161,692
-----------------------------------------------------------------------------
Yankee Notes, 7.50%, 03/31/07 550,000 551,931
-----------------------------------------------------------------------------
Pride International, Inc., Sr. Unsec. Notes,
10.00%, 06/01/09 100,000 105,000
-----------------------------------------------------------------------------
R & B Falcon Corp. - Series B, Sr. Unsec. Notes,
6.95%, 04/15/08 620,000 573,500
=============================================================================
1,889,898
=============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS (EXPLORATION & PRODUCTION) - 3.41%
Anadarko Petroleum Corp., Unsec. Deb.,
7.73%, 09/15/96 $ 200,000 $ 208,880
-------------------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec. Notes, 6.88%,
12/01/07 500,000 494,835
-------------------------------------------------------------------------------
Noble Affiliates, Inc., Sr. Unsec. Notes,
8.00%, 04/01/27 400,000 403,016
-------------------------------------------------------------------------------
ONEOK, Inc., Unsec. Notes, 7.75%, 08/15/06 400,000 416,156
-------------------------------------------------------------------------------
Parker & Parsley Petroleum Co., Sr. Unsec. Notes,
8.25%, 08/15/07 300,000 300,528
-------------------------------------------------------------------------------
Talisman Energy Inc. (Canada), Unsec. Unsub. Yankee
Deb., 7.13%, 06/01/07 500,000 504,860
-------------------------------------------------------------------------------
Triton Energy Ltd. (Cayman Islands), Sr. Unsec. Yankee
Notes, 8.88%, 10/01/07 165,000 167,475
-------------------------------------------------------------------------------
Union Pacific Resources Group Inc., Unsec. Deb., 7.50%,
10/15/26 350,000 356,734
===============================================================================
2,852,484
===============================================================================
OIL & GAS (REFINING & MARKETING) - 0.73%
Petroleos Mexicanos (Mexico) - Series P, Putable Unsec.
Unsub. Yankee Notes, 9.50%, 09/15/27 400,000 421,352
-------------------------------------------------------------------------------
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes,
11.13%, 07/01/06 250,000 188,750
===============================================================================
610,102
===============================================================================
OIL (DOMESTIC INTEGRATED) - 1.51%
Amerada Hess Corp., Bonds, 7.88%, 10/01/29 450,000 494,019
-------------------------------------------------------------------------------
Occidental Petroleum Corp., Sr. Unsec. Notes,
8.45%, 02/15/29 700,000 773,514
===============================================================================
1,267,533
===============================================================================
OIL (INTERNATIONAL INTEGRATED) - 1.11%
YPF Sociedad Anonima (Argentina),
Yankee Notes, 8.00%, 02/15/04 365,000 361,978
-------------------------------------------------------------------------------
Yankee Bonds, 9.13%, 02/24/09 550,000 564,328
===============================================================================
926,306
===============================================================================
PAPER & FOREST PRODUCTS - 0.74%
Domtar, Inc. (Canada), Unsec. Yankee Deb.,
9.50%, 08/01/16 600,000 620,250
===============================================================================
PHOTOGRAPHY/IMAGING - 0.08%
Polaroid Corp., Sr. Unsec. Notes, 11.50%, 02/15/06 120,000 70,200
===============================================================================
POWER PRODUCERS (INDEPENDENT) - 0.50%
AES Corp. (The), Sr. Unsec. Notes, 9.50%, 06/01/09 400,000 416,000
===============================================================================
PUBLISHING (NEWSPAPERS) - 2.80%
News America Holdings, Inc.,
Sr. Unsec. Gtd. Putable Bonds, 7.43%, 10/01/26 500,000 490,170
-------------------------------------------------------------------------------
Putable Notes, 8.45%, 08/01/34 700,000 726,915
-------------------------------------------------------------------------------
Sr. Gtd. Deb., 9.25%, 02/01/13 1,000,000 1,070,360
-------------------------------------------------------------------------------
Tribune Co., Unsec. Sub. PHONES, 2.00%, 05/15/29 700 60,288
===============================================================================
2,347,733
===============================================================================
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-59
PRINCIPAL MARKET
AMOUNT VALUE
RAILROADS - 1.44%
CSX Corp., Sr. Unsec. Putable Deb., 7.25%, 05/01/27 $1,000,000 $ 1,021,300
-------------------------------------------------------------------------------
Railamerica Transportation Corp., Sr. Unsec. Gtd. Sub.
Notes, 12.88%, 08/15/10 200,000 181,000
===============================================================================
1,202,300
===============================================================================
REAL ESTATE INVESTMENT TRUSTS - 0.87%
ERP Operating L.P., Unsec. Notes, 7.13%, 10/15/17 400,000 354,704
-------------------------------------------------------------------------------
Spieker Properties, Inc., Unsec. Unsub. Deb.,
7.35%, 12/01/17 400,000 372,928
===============================================================================
727,632
===============================================================================
RETAIL (SPECIALTY) - 0.22%
Amazon.com, Inc., Conv. Unsec. Sub. Notes,
4.75%, 02/01/09(c) 500,000 187,500
===============================================================================
RETAIL (SPECIALTY-APPAREL) - 0.53%
Big 5 Corp. - Series B, Sr. Unsec. Notes,
10.88%, 11/15/07 500,000 445,000
===============================================================================
SAVINGS & LOAN COMPANIES - 2.20%
Dime Capital Trust I - Series A, Gtd. Bonds,
9.33%, 05/06/27 300,000 258,507
-------------------------------------------------------------------------------
St. Paul Bancorp, Inc., Sr. Unsec. Unsub. Notes, 7.13%,
02/15/04 245,000 243,812
-------------------------------------------------------------------------------
Sovereign Bancorp, Inc., Medium Term Sub. Notes, 8.00%,
03/15/03 800,000 771,760
-------------------------------------------------------------------------------
Washington Mutual Capital I, Sec. Gtd. Sub. Bonds,
8.38%, 06/01/27 190,000 175,807
-------------------------------------------------------------------------------
Washington Mutual, Inc., Jr. Unsec. Sub. Notes, 8.25%,
04/01/10 375,000 395,355
===============================================================================
1,845,241
===============================================================================
SERVICES (COMMERCIAL & CONSUMER) - 0.39%
Avis Group Holdings, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/01/09 300,000 324,750
===============================================================================
SERVICES (EMPLOYMENT) - 0.40%
MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.38%, 01/15/08 380,000 336,300
===============================================================================
SOVEREIGN DEBT - 1.82%
Newfoundland (Province of) (Canada), Yankee Deb.,
9.00%, 06/01/19 600,000 708,258
-------------------------------------------------------------------------------
Quebec (Province of) (Canada) - Series A, Medium Term
Putable Yankee Notes, 7.37%,
03/06/26(b) 800,000 810,656
===============================================================================
1,518,914
===============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.52%
Crown Castle International Corp., Sr. Unsec. Notes,
10.75%, 08/01/11 300,000 312,750
-------------------------------------------------------------------------------
Nextel International, Inc., Sr. Notes, 12.75%,
08/01/10(c) 150,000 123,750
===============================================================================
436,500
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 2.90%
360networks Inc. (Canada),
Sr. Unsec. Sub. Yankee Notes, 12.00%, 08/01/09 $ 170,000 $ 130,050
------------------------------------------------------------------------------
Sr. Yankee Notes, 12.50%, 12/15/05 210,000 174,300
------------------------------------------------------------------------------
Sr. Unsec. Yankee Notes, 13.00%, 05/01/08 100,000 80,000
------------------------------------------------------------------------------
Call-Net Enterprises, Inc. (Canada), Sr. Unsec. Disc.
Yankee Notes, 8.94%, 08/15/08(b) 290,000 88,450
------------------------------------------------------------------------------
Destia Communications, Inc., Sr. Unsec. Notes, 13.50%,
07/15/07 750,000 266,250
------------------------------------------------------------------------------
MCI Communications Corp., Sr. Unsec. Putable Deb.,
7.13%, 06/15/27 500,000 506,250
------------------------------------------------------------------------------
11.25%, 01/15/09 750,000 213,750
------------------------------------------------------------------------------
12.75%, 10/15/09 400,000 114,000
------------------------------------------------------------------------------
Sprint Corp., Putable Deb., 9.00%, 10/15/19 320,000 335,898
------------------------------------------------------------------------------
Tele1 Europe B.V. (Netherlands), Sr. Unsec. Yankee
Notes, 13.00%, 05/15/09 400,000 362,000
------------------------------------------------------------------------------
Versatel Telecom International N.V. (Netherlands), Sr.
Yankee Notes, 13.25%, 05/15/08 250,000 158,750
==============================================================================
2,429,698
==============================================================================
TELEPHONE - 2.79%
AT&T Canada Inc. (Canada), Sr. Unsec. Yankee Notes,
7.65%, 09/15/06 330,000 328,096
------------------------------------------------------------------------------
Intermedia Communications Inc. - Series B, Sr. Disc.
Notes, 11.25%, 07/15/07(b) 350,000 211,750
------------------------------------------------------------------------------
NTELOS Inc., Sr. Unsec. Notes, 13.00%, 08/15/10 275,000 193,875
------------------------------------------------------------------------------
NTL Inc. - Series B, Sr. Notes, 11.50%, 02/01/06(b) 230,000 201,250
------------------------------------------------------------------------------
Qwest Capital Funding Inc., Unsec. Gtd. Notes, 7.90%,
08/15/10 (Acquired 08/24/00; Cost $451,449)(a) 450,000 465,993
------------------------------------------------------------------------------
Verizon Global Funding Corp. - Series REGS, Conv. Euro
Bonds, 4.25%, 09/15/05 500,000 518,541
------------------------------------------------------------------------------
XO Communications, Inc., Sr. Unsec. Notes,
10.75%, 11/15/08 500,000 415,000
==============================================================================
2,334,505
==============================================================================
WASTE MANAGEMENT - 2.75%
Allied Waste North America Inc. - Series B, Sr. Unsec.
Gtd. Sub. Notes, 10.00%, 08/01/09 345,000 326,025
------------------------------------------------------------------------------
Browning-Ferris Industries, Inc.,
Unsec. Deb., 7.40%, 09/15/35 300,000 217,500
------------------------------------------------------------------------------
Deb., 9.25%, 05/01/21 350,000 313,250
------------------------------------------------------------------------------
Waste Management, Inc.,
Putable Unsec. Notes, 7.10%, 08/01/26 1,300,000 1,288,664
------------------------------------------------------------------------------
Sr. Unsec. Notes, 7.13%, 12/15/17 175,000 156,482
==============================================================================
2,301,921
==============================================================================
Total U.S. Dollar Denominated Bonds & Notes
(Cost $69,937,429) 66,104,248
==============================================================================
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-60
PRINCIPAL MARKET
AMOUNT(f) VALUE
NON-U.S. DOLLAR DENOMINATED BONDS & NOTES - 10.18%
CANADA - 6.08%
AT&T Canada Inc. (Telephone), Sr. Unsec. Unsub. Notes,
7.15%, 09/23/04 CAD 700,000 $ 460,887
-----------------------------------------------------------------------------
Bell Mobility Cellular Inc. (Telecommunications -
Cellular/Wireless), Unsec. Deb.,
6.55%, 06/02/08 CAD 750,000 491,232
-----------------------------------------------------------------------------
Canadian Pacific Ltd. (Manufacturing - Diversified),
Unsec. Medium Term Notes, 5.85%, 03/30/09 (Acquired
03/24/99; Cost $330,654)(a) CAD 500,000 311,213
-----------------------------------------------------------------------------
Clearnet Communications Inc. (Telecommunications -
Cellular/Wireless)
Sr. Unsec. Disc. Notes, 10.40%, 05/15/08(b) CAD 1,600,000 879,941
-----------------------------------------------------------------------------
Sr. Disc. Notes, 11.75%, 08/13/07(b) CAD 1,500,000 887,441
-----------------------------------------------------------------------------
Export Development Corp. (Sovereign Debt),
Sr. Unsec. Unsub. Bonds, 6.50%, 12/21/04 NZD 270,000 117,675
-----------------------------------------------------------------------------
Microcell Telecommunications Inc. (Telecommunications -
Cellular/Wireless) - Series B, Sr. Unsec. Disc. Notes,
11.13%, 10/15/07(b) CAD 1,000,000 471,635
-----------------------------------------------------------------------------
Ontario (Province of) (Sovereign Debt), Unsec.
Unsub. Notes, 6.25%, 12/03/08 NZD 700,000 299,931
-----------------------------------------------------------------------------
Rogers Cablesystems Ltd. (Broadcasting-Television, Radio
& Cable), Sr. Sec. Second Priority Deb.,
9.65%, 01/15/14 CAD 600,000 410,973
-----------------------------------------------------------------------------
TransCanada PipeLines Ltd. (Natural Gas) - Series Q,
Deb., 10.63%, 10/20/09 CAD 500,000 423,735
-----------------------------------------------------------------------------
Westcoast Energy Inc. (Natural Gas) - Series V,
Unsec. Deb., 6.45%, 12/18/06(c) CAD 500,000 338,077
=============================================================================
5,092,740
=============================================================================
CAYMAN ISLANDS - 0.86%
Sutton Bridge Financing Ltd. (Electric Companies),
Gtd. Notes, 8.63%, 06/30/22(c) GBP 450,000 721,742
=============================================================================
FRANCE - 0.47%
Vivendi Environnement (Services - Commercial &
Consumer), Sr. Conv. Gtd. Bonds,
1.50%, 01/01/05 EUR 150,000 392,543
=============================================================================
NETHERLANDS - 1.12%
Grapes Communications N.V. (Telecommunications -
Cellular/Wireless), Sr. Notes, 13.50%, 05/15/10 EUR 600,000 270,446
-----------------------------------------------------------------------------
Tecnost International Finance N.V. (Telephone) -
Series E, Gtd. Medium Term Euro Notes,
6.13%, 07/30/09 EUR 270,000 242,136
-----------------------------------------------------------------------------
Tele1 Europe B.V. (Telecommunications - Long Distance),
Sr. Euro Notes, 11.88%, 12/01/09 EUR 500,000 423,671
=============================================================================
936,253
=============================================================================
NEW ZEALAND - 0.51%
Inter-American Development Bank (Banks - Money Center),
Unsec. Bonds, 5.75%, 04/15/04 NZD 1,000,000 427,897
=============================================================================
NORWAY - 0.26%
Enitel ASA (Telecommunications - Long Distance),
Sr. Unsec. Unsub. Euro Notes, 12.50%, 04/15/10 EUR 380,000 217,672
=============================================================================
|
PRINCIPAL MARKET
AMOUNT(f) VALUE
UNITED KINGDOM - 0.69%
British Sky Broadcasting Group PLC (Broadcasting -
Television, Radio & Cable), Sr. Gtd. Unsec. Unsub.
Bonds, 7.75%, 07/09/09 GBP 270,000 $ 378,932
-------------------------------------------------------------------------------
Jazztel PLC (Telephone), Sr. Unsec. Notes,
13.25%, 12/15/09 EUR 310,000 196,380
===============================================================================
575,312
===============================================================================
UNITED STATES OF AMERICA - 0.19%
John Hancock Global Funding Ltd. (Insurance -
Life/Health) - Series 99-H, Sr. Sec. Sub. Medium Term
Notes, 6.75%, 02/15/06 AUD 275,000 155,662
===============================================================================
Total Non-U.S. Dollar Denominated Bonds & Notes
(Cost $9,788,770) 8,519,821
===============================================================================
SHARES
STOCKS & OTHER EQUITY INTERESTS - 2.15%
BANKS (MAJOR REGIONAL) - 1.16%
Societe Generale - Class A (France) 8,600 534,620
-------------------------------------------------------------------------------
Westpac Banking Corp., Ltd. (Australia) 60,000 440,429
===============================================================================
975,049
===============================================================================
BANKS (REGIONAL) - 0.76%
First Republic Capital Corp. - Series A - Pfd. (Acquired
05/26/99; Cost $750,000)(a) 750 639,188
===============================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.00%
Knology Inc. - Wts., expiring 10/22/07(c)(g)(h) 1,000 1,000
===============================================================================
COMMUNICATIONS EQUIPMENT - 0.00%
Loral Space & Communications Ltd.(h) 351 1,119
===============================================================================
COMPUTERS (PERIPHERALS) - 0.04%
Equinix, Inc. - Wts., expiring 12/01/07(c)(g)(h) 300 31,575
===============================================================================
ELECTRICAL EQUIPMENT - 0.00%
Electronic Retailing Systems International, Inc. - Wts.,
expiring 02/01/04(g)(h) 590 590
===============================================================================
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc. - Wts., expiring 04/15/03(g)(h) 230 2
===============================================================================
RAILROADS - 0.00%
Railamerica Transportation Corp. - Wts., expiring
08/15/10(c)(g)(h) 200 2,050
===============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.11%
Grapes Communications N.V. (Netherlands) - Wts., expiring
05/15/10(g)(h) 600 2,958
-------------------------------------------------------------------------------
WebLink Wireless, Inc.(h) 25,125 86,367
===============================================================================
89,325
===============================================================================
TELECOMMUNICATIONS (LONG DISTANCE) - 0.08%
Enitel ASA (Norway) - Wts., expiring 04/03/05(g)(h) 380 2,676
-------------------------------------------------------------------------------
Tele1 Europe B.V. - ADR (Netherlands)(h) 7,045 32,583
-------------------------------------------------------------------------------
Versatel Telecom International N.V. - ADR (Netherlands)(h) 3,223 27,798
===============================================================================
63,057
===============================================================================
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-61
MARKET
SHARES VALUE
TELEPHONE - 0.00%
NTELOS Inc. - Wts., expiring 08/15/10(c)(g)(h) 275 $ 2,063
==============================================================================
Total Stocks & Other Equity Interests
(Cost $2,152,089) 1,805,018
==============================================================================
PRINCIPAL
AMOUNT
ASSET-BACKED SECURITIES - 1.94%
AIRLINES - 0.82%
Airplanes Pass Through Trust - Series D, Gtd. Sub. Euro
Notes, 10.88%, 03/15/19 $ 296,310 219,164
------------------------------------------------------------------------------
United Air Lines, Inc. - Series 95A2, Pass Through
Ctfs., 9.56%, 10/19/18 425,000 468,133
==============================================================================
687,297
==============================================================================
FINANCIAL (DIVERSIFIED) - 1.12%
Beaver Valley II Funding Corp., Sec. Lease
Obligations Deb., 9.00%, 06/01/17 250,000 274,633
------------------------------------------------------------------------------
Citicorp Lease - Class A2, Series 1999-1, Pass Through
Ctfs., 8.04%, 12/15/19 (Acquired 06/01/00-07/14/00;
Cost $646,875)(a) 650,000 661,726
==============================================================================
936,359
==============================================================================
Total Asset-Backed Securities (Cost $1,681,301) 1,623,656
==============================================================================
U.S. GOVERNMENT AGENCY SECURITIES - 1.08%
FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC") - 0.03%
Medium Term Notes,
8.50%, 03/01/10 21,028 21,699
==============================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") - 1.05%
Pass Through Ctfs.,
7.50%, 04/01/29 to 10/01/29 867,667 881,390
==============================================================================
Total U.S. Government Agency Securities
(Cost $888,383) 903,089
==============================================================================
U.S. TREASURY SECURITIES - 0.77%
U.S. TREASURY BONDS - 0.77%
6.13%, 11/15/27 (Cost $617,531) 600,000 645,948
==============================================================================
SHARES
MONEY MARKET FUNDS - 3.10%
STIC Liquid Assets Portfolio(i) 1,296,929 1,296,929
------------------------------------------------------------------------------
STIC Prime Portfolio(i) 1,296,929 1,296,929
==============================================================================
Total Money Market Funds (Cost $2,593,858) 2,593,858
==============================================================================
TOTAL INVESTMENTS - 98.18%
(Cost $87,659,361) 82,195,638
==============================================================================
OTHER ASSETS LESS LIABILITIES - 1.82% 1,526,449
==============================================================================
NET ASSETS - 100.00% $83,722,087
==============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt AUD - Australian Dollar CAD - Canadian Dollar |
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
EUR - Euro GBP - British Pound Sterling Gtd. - Guaranteed Jr. - Junior NZD - New Zealand Dollar Pfd. - Preferred |
PHONES - Participation Hybrid Option Note Exchangeable Securities
RAPS - Redeemable and Putable Securities
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/00 was $6,087,775, which represented 7.27% of the Fund's net assets.
(b) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(d) Zero coupon bond issued at a discount. The interest rate shown represents
the yield to maturity at issue.
(e) Defaulted security. Currently, the issuer is partially in default with
respect to interest payments.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) Acquired as part of a unit with or in exchange for other securities.
(h) Non-income producing security.
(i) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
FS-62
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $87,659,361) $82,195,638 ------------------------------------------------------------ Foreign currencies, at value (cost $14,491) 14,632 ------------------------------------------------------------ Receivables for: Investments sold 108,021 ------------------------------------------------------------ Fund shares sold 67,890 ------------------------------------------------------------ Dividends and interest 1,717,330 ------------------------------------------------------------ Investment for deferred compensation plan 36,997 ------------------------------------------------------------ Other assets 2,242 ============================================================ Total assets 84,142,750 ============================================================ LIABILITIES: Payables for: Fund shares reacquired 20,801 ------------------------------------------------------------ Foreign currency contracts closed 1,961 ------------------------------------------------------------ Foreign currency contracts outstanding 170,562 ------------------------------------------------------------ Deferred compensation plan 36,997 ------------------------------------------------------------ Accrued advisory fees 40,775 ------------------------------------------------------------ Accrued administrative services fees 114,974 ------------------------------------------------------------ Accrued operating expenses 34,593 ============================================================ Total liabilities 420,663 ============================================================ Net assets applicable to shares outstanding $83,722,087 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 8,826,663 ============================================================ Net asset value $ 9.49 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Interest $ 7,648,652
-----------------------------------------------------------------------------
Dividends (net of foreign withholding tax of $2,817) 194,513
-----------------------------------------------------------------------------
Dividends from affiliated money market funds 119,104
=============================================================================
Total investment income 7,962,269
=============================================================================
EXPENSES:
Advisory fees 546,264
-----------------------------------------------------------------------------
Administrative services fees 165,818
-----------------------------------------------------------------------------
Custodian fees 35,181
-----------------------------------------------------------------------------
Trustees' fees 7,390
-----------------------------------------------------------------------------
Other 67,913
=============================================================================
Total expenses 822,566
=============================================================================
Less:Expenses paid indirectly (1,000)
=============================================================================
Net expenses 821,566
=============================================================================
Net investment income 7,140,703
=============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FOREIGN CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (6,302,965)
-----------------------------------------------------------------------------
Foreign currencies (59,437)
-----------------------------------------------------------------------------
Foreign currency contracts 754,264
=============================================================================
(5,608,138)
=============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (706,551)
-----------------------------------------------------------------------------
Foreign currencies 7,162
-----------------------------------------------------------------------------
Foreign currency contracts (218,391)
=============================================================================
(917,780)
=============================================================================
Net gain (loss) from investment securities, foreign currencies
and foreign currency contracts (6,525,918)
=============================================================================
Net increase in net assets resulting from operations $ 614,785
_____________________________________________________________________________
=============================================================================
|
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
FS-63
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income $ 7,140,703 $ 6,675,286
------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and foreign
currency contracts (5,608,138) (4,741,644)
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities, foreign
currencies and foreign currency contracts (917,780) (3,460,128)
==============================================================================
Net increase (decrease) in net assets resulting
from operations 614,785 (1,526,486)
==============================================================================
Distributions to shareholders from net investment
income (5,315,891) (6,334,513)
------------------------------------------------------------------------------
Share transactions - net (11,085,385) 10,924,224
==============================================================================
Net increase (decrease) in net assets (15,786,491) 3,063,225
==============================================================================
NET ASSETS:
Beginning of year 99,508,578 96,445,353
==============================================================================
End of year $ 83,722,087 $ 99,508,578
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 94,877,967 $105,971,017
------------------------------------------------------------------------------
Undistributed net investment income 5,514,469 5,259,129
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
foreign currency contracts (11,040,299) (7,009,298)
------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities, foreign currencies and
foreign currency contracts (5,630,050) (4,712,270)
==============================================================================
$ 83,722,087 $ 99,508,578
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Diversified Income Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to seek
to achieve a high level of current income. The Fund will seek to achieve its
objective by investing primarily in a diversified portfolio of foreign and
U.S. government and corporate debt securities, including lower rated high
yield debt securities (commonly known as "junk bonds"). These high yield bonds
may involve special risks in addition to the risks associated with investment
in higher rated debt securities. High yield bonds may be more susceptible to
real or perceived adverse economic and competitive industry conditions than
higher grade bonds. Also, the secondary market in which high yield bonds are
traded may be less liquid than the market for higher grade bonds.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are
AIM V.I. DIVERSIFIED INCOME FUND
FS-64
not readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's officers
in a manner specifically authorized by the Board of Trustees. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. For purposes of determining net asset value
per share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$1,569,472, undistributed net realized gains increased by $1,577,137, and
paid-in-capital decreased by $7,665 as a result of differences due to
differing book/tax treatment of foreign currency transactions and other
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $9,988,395 as of December 31, 2000 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2008.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
Outstanding foreign currency contracts at December 31, 2000 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT -------------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- ------- -------------------------------
03/09/01 AUD 250,000 $ 136,262 $ 139,152 $ (2,890)
01/10/01 CAD 1,300,000 866,840 866,846 (6)
02/06/01 CAD 3,900,000 2,552,356 2,601,982 (49,626)
01/26/01 EUR 1,000,000 840,150 940,368 (100,218)
01/24/01 GBP 130,000 188,539 194,495 (5,956)
03/30/01 NZD 1,800,000 784,260 796,126 (11,866)
-------------------------------------------------------------------
$5,368,407 $5,538,969 $(170,562)
===================================================================
|
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.60% of
the first $250 million of the Fund's average daily net assets, plus 0.55% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $165,818 of which AIM retained $50,000 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,409
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $1,000 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $1,000.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
AIM V.I. DIVERSIFIED INCOME FUND
FS-65
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $65,147,566 and $73,856,510, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 282,319 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (5,746,174) ========================================================================== Net unrealized appreciation (depreciation) of investment securities $(5,463,855) __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $87,659,493.
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and
1999 were as follows:
2000 1999
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------
Sold 1,240,619 $ 12,355,336 2,074,968 $ 22,313,329
-------------------------------------------------------------------------------
Issued as reinvestment of
dividends 564,919 5,315,891 626,559 6,334,513
-------------------------------------------------------------------------------
Issued in connection with
acquisitions* -- -- 1,744,335 18,512,585
-------------------------------------------------------------------------------
Reacquired (2,871,198) (28,756,612) (3,372,508) (36,236,203)
===============================================================================
(1,065,660) $(11,085,385) 1,073,354 $ 10,924,224
_______________________________________________________________________________
===============================================================================
|
* As of the close of business on October 15, 1999, the Fund acquired all the net assets GT Global Variable Strategic Income Fund ("Variable Strategic Income Fund") and GT Global Variable Global Government Income Fund ("Variable Global Government Income Fund") pursuant to a plan of reorganization approved by Variable Strategic Income Fund's shareholders and Variable Global Government Income Fund's shareholders on August 25, 1999. The acquisitions were accomplished by a tax-free exchange of 1,744,335 shares of the Fund for 1,088,436 shares of Variable Strategic Income Fund and 587,315 shares of Variable Global Government Income Fund outstanding as of the close of business on October 15, 1999. Variable Strategic Income Fund's net assets at that date were $12,226,436, including ($992,073) of unrealized depreciation, and Variable Global Government Income Fund's net assets at that date were $6,286,149, including ($488,448) of unrealized depreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $85,340,921.
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
-----------------------------------------------
2000(a) 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of
period $ 10.06 $ 10.94 $ 11.29 $ 10.33 $ 10.00
---------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.76 0.64 0.75 0.73 0.73
---------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized and
unrealized) (0.69) (0.85) (0.35) 0.24 0.28
=================================================================================
Total from investment
operations 0.07 (0.21) 0.40 0.97 1.01
=================================================================================
Less distributions:
Dividends from net investment
income (0.64) (0.67) (0.57) (0.01) (0.68)
---------------------------------------------------------------------------------
Distributions from net
realized gains -- -- (0.18) -- --
=================================================================================
Total distributions (0.64) (0.67) (0.75) (0.01) (0.68)
=================================================================================
Net asset value, end of period $ 9.49 $ 10.06 $ 10.94 $ 11.29 $ 10.33
_________________________________________________________________________________
=================================================================================
Total return 0.80% (1.92)% 3.58% 9.39% 10.19%
_________________________________________________________________________________
=================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $83,722 $99,509 $96,445 $89,319 $63,624
_________________________________________________________________________________
=================================================================================
Ratio of expenses to average
net assets 0.90%(b) 0.83% 0.77% 0.80% 0.86%
_________________________________________________________________________________
=================================================================================
Ratio of net investment income
to average net assets 7.84%(b) 7.20% 6.99% 6.90% 7.09%
_________________________________________________________________________________
=================================================================================
Portfolio turnover rate 74% 83% 50% 52% 76%
_________________________________________________________________________________
=================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $91,043,914.
AIM V.I. DIVERSIFIED INCOME FUND
FS-66
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Global Utilities Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Global Utilities Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. GLOBAL UTILITIES FUND
FS-67
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 68.68%
BROADCASTING (TELEVISION, RADIO & CABLE) - 1.31%
General Motors Corp. - Class H(a) 6,000 $ 138,000
-----------------------------------------------------------------
Univision Communications Inc. - Class A(a) 12,500 511,719
=================================================================
649,719
=================================================================
COMMUNICATIONS EQUIPMENT - 0.80%
Corning Inc. 2,400 126,750
-----------------------------------------------------------------
JDS Uniphase Corp.(a) 1,600 66,700
-----------------------------------------------------------------
Redback Networks Inc.(a) 4,900 200,900
=================================================================
394,350
=================================================================
COMPUTERS (HARDWARE) - 0.22%
Sycamore Networks, Inc.(a) 2,900 108,025
=================================================================
COMPUTERS (NETWORKING) - 1.15%
Cisco Systems, Inc.(a) 7,600 290,700
-----------------------------------------------------------------
Juniper Networks, Inc.(a) 2,200 277,337
=================================================================
568,037
=================================================================
COMPUTERS (SOFTWARE & SERVICES) - 0.55%
Ariba, Inc.(a) 2,800 150,500
-----------------------------------------------------------------
Henry (Jack) & Associates, Inc. 2,000 124,250
=================================================================
274,750
=================================================================
ELECTRIC COMPANIES - 30.76%
Allegheny Energy, Inc. 31,500 1,517,906
-----------------------------------------------------------------
Constellation Energy Group 30,000 1,351,875
-----------------------------------------------------------------
DTE Energy Co. 19,000 739,812
-----------------------------------------------------------------
Duke Energy Corp. 15,700 1,338,425
-----------------------------------------------------------------
Edison International 24,000 375,000
-----------------------------------------------------------------
Energy East Corp. 52,700 1,037,531
-----------------------------------------------------------------
Exelon Corp. 20,000 1,404,200
-----------------------------------------------------------------
FPL Group, Inc. 19,300 1,384,775
-----------------------------------------------------------------
Montana Power Co. (The) 14,600 302,950
-----------------------------------------------------------------
Niagara Mohawk Holdings Inc.(a) 54,900 916,144
-----------------------------------------------------------------
NRG Energy, Inc.(a) 31,500 876,094
-----------------------------------------------------------------
PG&E Corp. 19,000 380,000
-----------------------------------------------------------------
Pinnacle West Capital Corp. 30,300 1,443,037
-----------------------------------------------------------------
Reliant Energy, Inc. 18,200 788,287
-----------------------------------------------------------------
Southern Co. (The) 6,700 222,775
-----------------------------------------------------------------
Southern Energy, Inc.(a) 14,700 416,194
-----------------------------------------------------------------
Xcel Energy, Inc. 25,500 741,094
=================================================================
15,236,099
=================================================================
|
MARKET
SHARES VALUE
ELECTRICAL EQUIPMENT - 0.61%
Active Power, Inc.(a) 6,900 $ 151,369
-----------------------------------------------------------------
Capstone Turbine Corp.(a) 5,400 151,200
=================================================================
302,569
=================================================================
ELECTRONICS (SEMICONDUCTORS) - 1.01%
SDL, Inc.(a) 2,300 340,831
-----------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 2,900 160,406
=================================================================
501,237
=================================================================
ENGINEERING & CONSTRUCTION - 0.78%
Quanta Services, Inc.(a) 12,000 386,250
=================================================================
NATURAL GAS - 12.66%
Dynegy Inc. - Class A 30,100 1,687,481
-----------------------------------------------------------------
El Paso Energy Corp. 8,000 573,000
-----------------------------------------------------------------
Enron Corp. 11,000 914,375
-----------------------------------------------------------------
KeySpan Corp. 5,000 211,875
-----------------------------------------------------------------
NiSource Inc. 48,000 1,476,000
-----------------------------------------------------------------
Williams Cos., Inc. (The) 35,300 1,409,794
=================================================================
6,272,525
=================================================================
OIL & GAS (EXPLORATION & PRODUCTION) - 0.71%
Apache Corp. 5,000 350,312
=================================================================
POWER PRODUCERS (INDEPENDENT) - 1.41%
AES Corp. (The)(a) 12,600 697,725
=================================================================
SERVICES (COMMERCIAL & CONSUMER) - 0.75%
Convergys Corp.(a) 8,200 371,562
=================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.32%
Level 3 Communications, Inc.(a) 5,000 164,063
-----------------------------------------------------------------
Openwave Systems Inc.(a) 6,900 330,769
-----------------------------------------------------------------
Western Wireless Corp. - Class A(a) 4,100 160,669
=================================================================
655,501
=================================================================
TELEPHONE - 14.64%
BellSouth Corp. 13,400 548,563
-----------------------------------------------------------------
Broadwing Inc.(a) 39,924 910,766
-----------------------------------------------------------------
CenturyTel, Inc. 16,500 589,875
-----------------------------------------------------------------
McLeodUSA, Inc. - Class A(a) 42,600 601,725
-----------------------------------------------------------------
Qwest Communications International Inc.(a) 16,400 672,400
-----------------------------------------------------------------
SBC Communications Inc. 39,497 1,885,982
-----------------------------------------------------------------
Time Warner Telecom Inc. - Class A(a) 10,200 647,063
-----------------------------------------------------------------
Verizon Communications Inc. 27,886 1,397,786
=================================================================
7,254,160
=================================================================
Total Domestic Common Stocks
(Cost $25,126,004) 34,022,821
=================================================================
|
AIM V.I. GLOBAL UTILITIES FUND
FS-68
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 14.74%
BERMUDA - 0.10%
Global Crossing Ltd.
(Telecommunications - Long Distance)(a) 3,385 $ 48,448
===============================================================================
BRAZIL - 0.68%
Companhia Paranaense de Energia - Copel - ADR (Electric
Companies) 40,000 337,500
===============================================================================
CANADA - 1.30%
Nortel Networks Corp. (Communications Equipment) 5,700 182,756
-------------------------------------------------------------------------------
TELUS Corp. (Telephone) 4,955 137,244
-------------------------------------------------------------------------------
TELUS Corp. - Class A (Telephone) 1,651 43,198
-------------------------------------------------------------------------------
Westcoast Energy Inc. (Natural Gas) 11,400 278,588
===============================================================================
641,786
===============================================================================
FINLAND - 0.90%
Nokia Oyj - ADR (Communications Equipment) 10,200 443,700
===============================================================================
FRANCE - 1.45%
Suez Lyonnaise des Eaux S.A.
(Manufacturing - Diversified) 2,700 493,142
-------------------------------------------------------------------------------
TotalFinaElf S.A. (Oil - International Integrated) 1,500 223,118
===============================================================================
716,260
===============================================================================
GERMANY - 0.65%
E.On A.G. (Manufacturing - Diversified)(a) 5,320 323,724
===============================================================================
ITALY - 1.88%
ACEA S.p.A. (Water Utilities) 40,000 473,281
-------------------------------------------------------------------------------
AEM S.p.A. (Electric Companies) 68,100 200,161
-------------------------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 43,100 259,028
===============================================================================
932,470
===============================================================================
JAPAN - 1.06%
Nippon Telegraph & Telephone Corp. (Telecommunications -
Long Distance) 12 86,374
-------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. - ADR
(Telecommunications - Long Distance) 3,100 110,631
-------------------------------------------------------------------------------
NTT DoCoMo, Inc.
(Telecommunications - Cellular/Wireless) 19 327,357
===============================================================================
524,362
===============================================================================
SOUTH KOREA - 0.49%
Korea Telecom Corp. - ADR (Telephone) 7,812 242,172
===============================================================================
SPAIN - 2.05%
Endesa S.A. (Electric Companies) 23,600 402,233
-------------------------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 37,264 615,873
===============================================================================
1,018,106
===============================================================================
|
MARKET
SHARES VALUE
UNITED KINGDOM - 4.18%
Amdocs Ltd.
(Telecommunications - Cellular/Wireless)(a) 4,000 $ 265,000
------------------------------------------------------------------------------
COLT Telecom Group PLC (Telephone)(a) 13,000 279,920
------------------------------------------------------------------------------
Kelda Group PLC (Water Utilities) 56,874 330,820
------------------------------------------------------------------------------
National Grid Group PLC (Electric Companies) 13,113 119,314
------------------------------------------------------------------------------
ScottishPower PLC (Electric Companies) 72,350 572,299
------------------------------------------------------------------------------
United Utilities PLC (Water Utilities) 15,000 149,156
------------------------------------------------------------------------------
Vodafone Group PLC
(Telecommunications - Cellular/Wireless) 96,996 356,069
==============================================================================
2,072,578
==============================================================================
Total Foreign Stocks & Other Equity Interests (Cost
$7,129,213) 7,301,106
==============================================================================
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 3.45%
ELECTRIC COMPANIES - 0.40%
SEI Trust I - Series A, $3.13 Conv. Pfd. 3,200 198,400
==============================================================================
NATURAL GAS - 1.44%
El Paso Energy Cap Trust I - $2.38 Conv. Pfd. 8,000 712,000
==============================================================================
POWER PRODUCERS (INDEPENDENT) - 1.40%
Calpine Capital Trust III - $2.50 Conv. Pfd. (Acquired
08/03/00; Cost $575,000)(b) 11,500 694,313
==============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.21%
MediaOne Group, Inc. - $3.04 Conv. Pfd. 3,000 106,875
==============================================================================
Total Domestic Convertible Preferred Stocks
(Cost $1,323,743) 1,711,588
==============================================================================
PRINCIPAL
AMOUNT
U.S. DOLLAR DENOMINATED BONDS & NOTES - 4.09%
COMMUNICATIONS EQUIPMENT - 0.20%
Corning Inc., Sr. Conv. Unsec. Deb., 2.07%, 11/08/15(c) $ 142,000 101,352
==============================================================================
COMPUTERS (HARDWARE) - 0.67%
Candescent Technologies Corp., Sr. Conv. Unsec.
Gtd. Sub. Deb., 8.00%, 05/01/03 (Acquired 04/17/98-
07/12/99; Cost $426,925)(b)(d) 452,000 329,960
==============================================================================
ELECTRIC COMPANIES - 0.70%
Arizona Public Service Co., Deb., 8.00%, 12/30/15 75,000 76,791
------------------------------------------------------------------------------
Southern Energy, Inc., Sr. Notes, 7.90%, 07/15/09
(Acquired 09/26/00; Cost $160,000)(b) 270,000 270,802
==============================================================================
347,593
==============================================================================
NATURAL GAS - 2.01%
Dynegy Inc., Sr. Unsec. Deb., 7.13%, 05/15/18 100,000 94,418
------------------------------------------------------------------------------
Enron Corp., Sr. Sub. Deb., 8.25%, 09/15/12 400,000 435,528
------------------------------------------------------------------------------
Limestone Electron Trust, Sr. Notes, 8.63%, 03/15/03
(Acquired 03/15/00; Cost $450,000)(b) 450,000 463,410
==============================================================================
993,356
==============================================================================
|
AIM V.I. GLOBAL UTILITIES FUND
FS-69
PRINCIPAL MARKET
AMOUNT VALUE
POWER PRODUCERS (INDEPENDENT) - 0.21%
AES Corp. (The), Sr. Unsec. Sub. Notes, 10.25%,
07/15/06 $ 100,000 $ 103,750
==============================================================================
TELECOMMUNICATIONS (LONG DISTANCE) - 0.30%
AT&T Corp., Sr. Unsec. Notes, 7.75%, 03/01/07 150,000 149,718
==============================================================================
Total U.S. Dollar Denominated Bonds & Notes (Cost
$2,112,553) 2,025,729
==============================================================================
PRINCIPAL
AMOUNT(e)
NON-U.S. DOLLAR DENOMINATED BONDS & NOTES - 1.91%
CANADA - 0.68%
Clearnet Communications Inc. (Telecommunications -
Cellular/Wireless), Sr. Unsec. Disc. Notes, 10.75%,
02/15/09(f) CAD 300,000 160,489
------------------------------------------------------------------------------
Teleglobe Canada Inc. (Telephone), Unsec. Deb., 8.35%,
06/20/03 CAD 100,000 68,921
------------------------------------------------------------------------------
TransCanada PipeLines Ltd. (Natural Gas) - Series Q,
Deb., 10.63%, 10/20/09 CAD 125,000 105,934
==============================================================================
335,344
==============================================================================
UNITED KINGDOM - 1.23%
National Grid Co. PLC (Electric Companies), Conv.
Bonds,
4.25%, 02/17/08 (Acquired 02/05/98;
Cost $397,800)(b) GBP 240,000 536,495
------------------------------------------------------------------------------
Series RG, 4.25%, 02/17/08 GBP 32,000 73,569
==============================================================================
610,064
==============================================================================
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost
$774,039) 945,408
==============================================================================
SHARES
MONEY MARKET FUNDS - 8.64%
STIC Liquid Assets Portfolio(g) 2,139,922 2,139,922
------------------------------------------------------------------------------
STIC Prime Portfolio(g) 2,139,922 2,139,922
==============================================================================
Total Money Market Funds (Cost $4,279,844) 4,279,844
==============================================================================
TOTAL INVESTMENTS - 101.51%
(Cost $40,745,396) 50,286,496
==============================================================================
LIABILITIES LESS OTHER ASSETS - (1.51%) (750,274)
==============================================================================
NET ASSETS - 100.00% $49,536,222
______________________________________________________________________________
==============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
Disc. - Discounted
GBP - British Pound Sterling Gtd. - Guaranteed Pfd. - Preferred Sr. - Senior Sub. - Subordinated |
Unsec. - Unsecured
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/00 was $2,294,980, which represented 4.63% of the Fund's net assets.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the yield to maturity at issue.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(e) Foreign denominated security. Par value is denominated in currency
indicated.
(f) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(g) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
FS-70
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $40,745,396) $50,286,496 ------------------------------------------------------------ Foreign currencies, at value (cost $317,807) 348,795 ------------------------------------------------------------ Receivables for: Investments sold 248,519 ------------------------------------------------------------ Fund shares sold 200,937 ------------------------------------------------------------ Dividends and interest 140,152 ------------------------------------------------------------ Investment for deferred compensation plan 32,424 ============================================================ Total assets 51,257,323 ============================================================ LIABILITIES: Payables for: Investments purchased 1,555,732 ------------------------------------------------------------ Fund shares reacquired 1,328 ------------------------------------------------------------ Deferred compensation plan 32,424 ------------------------------------------------------------ Accrued advisory fees 25,867 ------------------------------------------------------------ Accrued administrative services fees 69,811 ------------------------------------------------------------ Accrued operating expenses 35,939 ============================================================ Total liabilities 1,721,101 ============================================================ Net assets applicable to shares outstanding $49,536,222 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 2,341,389 ============================================================ Net asset value $ 21.16 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $22,422) $ 607,173
-----------------------------------------------------------------------------
Dividends from affiliated money market funds 266,926
-----------------------------------------------------------------------------
Interest 227,725
=============================================================================
Total investment income 1,101,824
=============================================================================
EXPENSES:
Advisory fees 307,312
-----------------------------------------------------------------------------
Administrative services fees 111,856
-----------------------------------------------------------------------------
Custodian fees 39,344
-----------------------------------------------------------------------------
Trustees' fees 7,071
-----------------------------------------------------------------------------
Printing 22,142
-----------------------------------------------------------------------------
Professional fees 21,840
-----------------------------------------------------------------------------
Other 9,922
=============================================================================
Total expenses 519,487
=============================================================================
Less:Expenses paid indirectly (201)
-----------------------------------------------------------------------------
Net expenses 519,286
=============================================================================
Net investment income 582,538
=============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 3,407,527
-----------------------------------------------------------------------------
Foreign currencies (26,867)
-----------------------------------------------------------------------------
Option contracts written 22,074
=============================================================================
3,402,734
=============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (5,729,841)
-----------------------------------------------------------------------------
Foreign currencies 34,247
=============================================================================
(5,695,594)
=============================================================================
Net gain (loss) from investment securities, foreign currencies
and option contracts (2,292,860)
=============================================================================
Net increase (decrease) in net assets resulting from operations $(1,710,322)
_____________________________________________________________________________
=============================================================================
|
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
FS-71
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
----------- -----------
OPERATIONS:
Net investment income $ 582,538 $ 534,482
----------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and option contracts 3,402,734 1,996,896
----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (5,695,594) 7,366,001
============================================================================
Net increase (decrease) in net assets resulting
from operations (1,710,322) 9,897,379
============================================================================
Distributions to shareholders from net investment
income (500,978) (618,958)
----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (1,969,536) --
----------------------------------------------------------------------------
Share transactions - net 13,944,792 2,360,217
============================================================================
Net increase in net assets 9,763,956 11,638,638
============================================================================
NET ASSETS:
Beginning of year 39,772,266 28,133,628
============================================================================
End of year $49,536,222 $39,772,266
____________________________________________________________________________
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $36,003,702 $22,058,910
----------------------------------------------------------------------------
Undistributed net investment income 496,709 478,129
----------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and option
contracts 3,463,156 1,966,978
----------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 9,572,655 15,268,249
============================================================================
$49,536,222 $39,772,266
____________________________________________________________________________
============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Global Utilities Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
achieve a high total return.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
AIM V.I. GLOBAL UTILITIES FUND
FS-72
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$62,980 and undistributed net realized gains increased by $62,980 as a result
of book/tax differences due to foreign currency transactions and other
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal
to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset
and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option
written. The current market value of a written option is the mean between
the last bid and asked prices on that day. If a written call option expires
on the stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or a loss if the closing
purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $111,856 of which AIM retained $50,000 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,353
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $201 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $201.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
AIM V.I. GLOBAL UTILITIES FUND
FS-73
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $33,018,234 and $21,613,130, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $11,542,429 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (2,002,882) ========================================================================== Net unrealized appreciation of investment securities $ 9,539,547 __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $40,746,949.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000
are summarized as follows:
CALL OPTION
CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------
Beginning of year -- $ --
--------------------------------------
Written 98 24,205
--------------------------------------
Closed (98) (24,205)
======================================
End of year -- $ --
______________________________________
======================================
|
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and
1999 were as follows:
2000 1999
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
Sold 794,317 $18,939,179 482,016 $ 8,991,351
------------------------------------------------------------------------
Issued as reinvestment of
dividends 115,824 2,470,514 28,722 618,958
------------------------------------------------------------------------
Reacquired (313,018) (7,464,901) (386,649) (7,250,092)
========================================================================
597,123 $13,944,792 124,089 $ 2,360,217
________________________________________________________________________
========================================================================
|
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
----------------------------------------------
2000(a) 1999(a) 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning
of period $ 22.80 $ 17.36 $ 15.26 $ 12.55 $ 11.64
--------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.29 0.32 0.35 0.32 0.40
--------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (0.80) 5.49 2.15 2.40 0.99
================================================================================
Total from investment
operations (0.51) 5.81 2.50 2.72 1.39
================================================================================
Less distributions:
Dividends from net
investment income (0.23) (0.37) (0.28) -- (0.41)
--------------------------------------------------------------------------------
Distributions from net
realized gains (0.90) -- (0.12) (0.01) (0.07)
================================================================================
Total distributions (1.13) (0.37) (0.40) (0.01) (0.48)
================================================================================
Net asset value, end of
period $ 21.16 $ 22.80 $ 17.36 $ 15.26 $ 12.55
________________________________________________________________________________
================================================================================
Total return (2.28)% 33.56% 16.49% 21.63% 12.07%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $49,536 $39,772 $28,134 $22,079 $13,576
________________________________________________________________________________
================================================================================
Ratio of expenses to average
net assets 1.10%(b) 1.14% 1.11% 1.28% 1.40%(c)
________________________________________________________________________________
================================================================================
Ratio of net investment
income to average net
assets 1.23%(b) 1.72% 2.46% 2.81% 3.56%
________________________________________________________________________________
================================================================================
Portfolio turnover rate 50% 45% 32% 28% 47%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $47,278,796.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.55%.
AIM V.I. GLOBAL UTILITIES FUND
FS-74
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Government Securities Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Government Securities Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. GOVERNMENT SECURITIES FUND
FS-75
SCHEDULE OF INVESTMENTS
December 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
U.S. GOVERNMENT AGENCY SECURITIES - 63.31%
CONSUMER FINANCE - 0.34%
Asian Development Bank (Multi-National), Yankee Deb.,
8.00%, 04/30/01 $ 200,000 $ 201,020
-------------------------------------------------------------------------------
Financial Assistance Corp., Bonds, 9.38%, 07/21/03 75,000 81,655
===============================================================================
Total Consumer Finance (Cost $281,040) 282,675
===============================================================================
FEDERAL HOME LOAN BANK - 9.75%
Debentures,
7.25%, 05/13/05 2,900,000 3,064,256
-------------------------------------------------------------------------------
8.00%, 05/24/05 1,860,000 1,905,496
-------------------------------------------------------------------------------
8.10%, 05/24/05 2,720,000 2,790,230
-------------------------------------------------------------------------------
Medium term notes,
8.17%, 12/16/04 400,000 434,084
===============================================================================
8,194,066
===============================================================================
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC") - 14.75%
Pass through certificates,
6.00%, 11/01/08 to 09/01/13 923,076 920,358
-------------------------------------------------------------------------------
6.50%, 12/01/08 to 08/01/28 3,646,930 3,624,198
-------------------------------------------------------------------------------
7.00%, 11/01/10 to 01/01/26 821,219 831,780
-------------------------------------------------------------------------------
10.50%, 08/01/19 82,377 89,455
-------------------------------------------------------------------------------
8.50%, 09/01/20 to 12/01/26 1,635,142 1,699,115
-------------------------------------------------------------------------------
8.00%, 11/01/29 to 02/01/30 5,100,992 5,226,884
===============================================================================
12,391,790
===============================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") - 27.31%
Debentures,
7.55%, 04/22/02 400,000 409,144
-------------------------------------------------------------------------------
7.13%, 02/15/05 2,700,000 2,836,161
-------------------------------------------------------------------------------
7.25%, 01/15/10 TO 05/15/30 2,400,000 2,679,262
-------------------------------------------------------------------------------
6.63%, 11/15/10 800,000 839,176
-------------------------------------------------------------------------------
Medium term notes,
6.69%, 08/07/01 500,000 502,110
-------------------------------------------------------------------------------
7.38%, 03/28/05 300,000 317,367
-------------------------------------------------------------------------------
Pass through certificates,
7.00%, 03/01/04 to 01/01/28(a) 10,156,803 10,227,042
-------------------------------------------------------------------------------
7.50%, 11/01/09 to 07/01/27 1,414,903 1,444,539
-------------------------------------------------------------------------------
6.50%, 10/01/10 to 09/01/27 1,337,086 1,344,581
-------------------------------------------------------------------------------
8.50%, 09/01/24 to 02/01/25 819,872 851,126
-------------------------------------------------------------------------------
8.00%, 02/01/30 914,560 936,564
-------------------------------------------------------------------------------
STRIPS,(b)
7.37%, 10/09/19 1,800,000 551,862
===============================================================================
22,938,934
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") -
9.33%
Pass through certificates,
9.50%, 08/15/03 to 09/15/16 $ 33,043 $ 34,733
---------------------------------------------------------------------------
7.50%, 03/15/08 to 08/15/28 1,718,421 1,753,985
---------------------------------------------------------------------------
9.00%, 09/15/08 to 10/15/16 71,746 74,889
---------------------------------------------------------------------------
11.00%, 10/15/15 24,884 27,248
---------------------------------------------------------------------------
10.50%, 09/15/17 to 11/15/19 18,013 19,708
---------------------------------------------------------------------------
10.00%, 06/15/19 491,513 525,147
---------------------------------------------------------------------------
6.50%, 12/15/23 334,452 334,870
---------------------------------------------------------------------------
8.00%, 07/15/24 to 07/15/26 2,095,915 2,161,505
---------------------------------------------------------------------------
7.00%, 04/15/28 to 06/15/28 2,876,822 2,901,995
===============================================================================
7,834,080
===============================================================================
PRIVATE EXPORT FUNDING COMPANY - 1.65%
Debentures,
7.30%, 01/31/02 300,000 304,698
---------------------------------------------------------------------------
7.65%, 05/15/06 1,000,000 1,085,450
===========================================================================
1,390,148
===========================================================================
STUDENT LOAN MARKETING ASSOCIATION - 0.18%
Debentures,
6.50%, 08/01/02 150,000 151,684
===========================================================================
Total U.S. Government Agency Securities
(Cost $52,286,423) 53,183,377
===========================================================================
U.S. TREASURY SECURITIES - 24.43%
U.S. TREASURY NOTES - 16.12%
6.75%, 05/15/05(c) 3,000,000 3,195,750
---------------------------------------------------------------------------
7.88%, 11/15/07 1,150,000 1,199,691
---------------------------------------------------------------------------
6.50%, 02/15/10 5,000,000 5,472,850
---------------------------------------------------------------------------
5.75%, 08/15/10(c) 3,500,000 3,668,980
===========================================================================
13,537,271
===========================================================================
U.S. TREASURY BONDS - 7.08%
9.25%, 02/15/16 550,000 759,632
---------------------------------------------------------------------------
7.63%, 02/15/25 550,000 696,360
---------------------------------------------------------------------------
6.88%, 08/15/25 500,000 584,665
---------------------------------------------------------------------------
6.25%, 05/15/30 3,500,000 3,907,960
===========================================================================
5,948,617
===========================================================================
U.S. TREASURY STRIPS - 1.23%(B)
5.38%, 05/15/06 750,000 572,183
---------------------------------------------------------------------------
6.80%, 11/15/18 1,250,000 456,963
===========================================================================
1,029,146
===========================================================================
Total U.S. Treasury Securities (Cost $19,874,861) 20,515,034
===========================================================================
|
AIM V.I. GOVERNMENT SECURITIES FUND
FS-76
MARKET
SHARES VALUE
MONEY MARKET FUNDS - 18.52%
STIT Government & Agency Portfolio
(Cost $15,559,215)(d) 15,559,215 $15,559,215
================================================================
TOTAL INVESTMENTS - 106.26%
(Cost $87,720,499) 89,257,626
================================================================
LIABILITIES LESS OTHER ASSETS - (6.26%) (5,255,552)
================================================================
NET ASSETS - 100.00% $84,002,074
================================================================
|
INVESTMENT ABBREVIATIONS:
Deb. -Debenture
STRIPS -Separately Traded Registered Interest and Principal Security
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Security purchased on a forward commitment basis. These securities are
subject to dollar roll transactions. See Note 1 Section B.
(b) STRIPS are traded on a discount basis. In such cases, the interest rate
shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(c) Principal amount has been deposited in escrow with broker as collateral for
reverse repurchase agreements outstanding at 12/31/00.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-77
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $87,720,499) $89,257,626 ------------------------------------------------------------ Receivables for: Investments sold 4,108,958 ------------------------------------------------------------ Fund shares sold 5,322,030 ------------------------------------------------------------ Dividends and interest 816,701 ------------------------------------------------------------ Principal paydowns 2,305 ------------------------------------------------------------ Investment for deferred compensation plan 36,389 ------------------------------------------------------------ Other assets 2,676 ============================================================ Total assets 99,546,685 ============================================================ LIABILITIES: Payables for: Investments purchased 8,110,625 ------------------------------------------------------------ Fund shares reacquired 306,012 ------------------------------------------------------------ Reverse repurchase agreements 6,941,875 ------------------------------------------------------------ Interest expense 4,654 ------------------------------------------------------------ Deferred compensation plan 36,389 ------------------------------------------------------------ Accrued advisory fees 32,300 ------------------------------------------------------------ Accrued administrative services fees 92,837 ------------------------------------------------------------ Accrued operating expenses 19,919 ============================================================ Total liabilities 15,544,611 ============================================================ Net assets applicable to shares outstanding $84,002,074 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 7,524,229 ============================================================ Net asset value $ 11.16 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME: Interest $4,657,517 --------------------------------------------------------------------------- Dividends from affiliated money market funds 363,161 =========================================================================== Total investment income 5,020,678 =========================================================================== EXPENSES: Advisory fees 358,276 --------------------------------------------------------------------------- Administrative services fees 150,192 --------------------------------------------------------------------------- Custodian fees 29,699 --------------------------------------------------------------------------- Trustees' fees 6,747 --------------------------------------------------------------------------- Interest 88,642 --------------------------------------------------------------------------- Other 65,192 =========================================================================== Total expenses 698,748 =========================================================================== Less: Expenses paid indirectly (122) =========================================================================== Net expenses 698,626 =========================================================================== Net investment income 4,322,052 =========================================================================== REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES Net realized gain (loss) from investment securities (921,238) --------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities 3,668,816 --------------------------------------------------------------------------- Net gain from investment securities 2,747,578 =========================================================================== Net increase in net assets resulting from operations $7,069,630 ___________________________________________________________________________ =========================================================================== |
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-78
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
----------- -----------
OPERATIONS:
Net investment income $ 4,322,052 $ 3,628,296
------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (921,238) (1,304,878)
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities 3,668,816 (3,043,863)
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 7,069,630 (720,445)
------------------------------------------------------------------------------
Distributions to shareholders from net investment
income (3,633,258) (2,511,433)
------------------------------------------------------------------------------
Share transactions - net 9,804,480 15,808,419
------------------------------------------------------------------------------
Net increase in net assets 13,240,852 12,576,541
------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 70,761,222 58,184,681
==============================================================================
End of year $84,002,074 $70,761,222
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $80,669,298 $70,864,760
------------------------------------------------------------------------------
Undistributed net investment income 4,287,354 3,602,402
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (2,491,705) (1,574,251)
------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities 1,537,127 (2,131,689)
==============================================================================
$84,002,074 $70,761,222
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Government Securities Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
achieve a high level of current income consistent with reasonable concern for
safety of principal.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Debt obligations that are issued or guaranteed by the
U.S. Treasury are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate, maturity and seasoning
differential. Securities for which market prices are not provided by any of
the above methods are valued based upon quotes furnished by independent
sources and are valued at the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value.
B.Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. The Fund may engage in dollar roll
transactions with respect to mortgage backed securities issued by GNMA, FNMA
and FHLMC. In a dollar roll transaction, the Fund sells a mortgage backed
security held in the Fund to a financial institution such as a bank or
broker-dealer, and simultaneously agrees to repurchase a substantially
similar security (same type, coupon and maturity) from the institution at a
later date at an agreed upon price. The mortgage backed securities that are
repurchased will bear the same interest rate as those sold, but generally
will be collateralized by different pools of mortgages with prepayment
histories. During the period between the sale and repurchase, the Fund will
not be entitled to receive interest and principal
AIM V.I. GOVERNMENT SECURITIES FUND
FS-79
payments on securities sold. Proceeds of the sale will be invested in short-
term instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the
Fund exceeding the yield on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement. In
the event the buyer of securities in a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale
of the securities may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the Fund's obligation
to repurchase the securities.
Realized gains or losses on sales are computed on the basis of specific
identification of the securities sold. Interest income is recorded on the
accrual basis from settlement date. Dividend income is recorded on the ex-
dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$3,842, undistributed net realized gains were increased by $3,784 and paid in
capital was increased by $58 as a result of differing book/tax treatment of
principal paydown gains/(losses). Net assets of the Fund were unaffected by
the reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
The Fund has a capital loss carryforward of $2,472,134 which may be carried
forward to offset future taxable gains, if any, which expires in varying
increments, if not previously utilized, in the year 2008.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.50% on
the first $200 million of the Fund's average daily net assets, plus 0.45% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $150,192 of which AIM retained $50,000 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,383
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $122 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $122.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BORROWINGS
Reverse repurchase agreements involve the sale of securities held by the Fund,
with an agreement that the Fund will repurchase such securities at an agreed
upon price and date. The Fund will use the proceeds of a reverse repurchase
agreement (which are considered to be borrowings under the 1940 Act) to
purchase other permitted securities either maturing, or under an agreement to
resell, at a date simultaneous with or prior to the expiration of the reverse
repurchase agreement. The agreements are collateralized by the underlying
securities and are carried at the amount at which the securities will
subsequently be repurchased as specified in the agreements.
The maximum amount outstanding during the year ended December 31, 2000 was
$6,941,875 while borrowings averaged $1,626,430 per day with a weighted
average interest rate of 5.41%.
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $65,093,706 and $57,456,190, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $1,650,066 ------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (112,939) ========================================================================= Net unrealized appreciation of investment securities $1,537,127 _________________________________________________________________________ ========================================================================= |
Cost of investments for tax purposes is $87,720,499.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-80
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and 1999
were as follows:
2000 1999
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold 2,420,711 $ 26,835,386 3,277,124 $ 36,037,021
------------------------------------------------------------------------------
Issued as reinvestment of
dividends 327,911 3,633,258 235,153 2,511,433
------------------------------------------------------------------------------
Issued in connection with
acquisitions* -- -- 465,003 5,110,012
------------------------------------------------------------------------------
Reacquired (1,884,206) (20,664,164) (2,523,037) (27,850,047)
==============================================================================
864,416 $ 9,804,480 1,454,243 $ 15,808,419
______________________________________________________________________________
==============================================================================
|
* As of the close of business on October 15, 1999, the Fund acquired all the net assets GT Global Variable U.S. Government Income Fund (Variable U.S. Government Income Fund) pursuant to a plan of reorganization approved by Variable U.S. Government Income Fund's shareholders on August 25, 1999. The acquisition was accomplished by a tax-free exchange of 465,003 shares of the Fund for 482,118 shares of Variable U.S. Government Income Fund outstanding as of the close of business on October, 15, 1999. Variable U.S. Government Income Fund's net assets at that date were $5,110,012, including ($270,877) of unrealized depreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $65,275,738.
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
-----------------------------------------------
2000(a) 1999(a) 1998(a) 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of
period $ 10.63 $ 11.18 $ 10.67 $ 9.87 $ 10.17
-------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.66 0.63 0.63 0.59 0.58
-------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) 0.41 (0.78) 0.20 0.22 (0.35)
===============================================================================
Total from investment
operations 1.07 (0.15) 0.83 0.81 0.23
===============================================================================
Less dividends from net
investment income (0.54) (0.40) (0.32) (0.01) (0.53)
===============================================================================
Net asset value, end of
period $ 11.16 $ 10.63 $ 11.18 $ 10.67 $ 9.87
_______________________________________________________________________________
===============================================================================
Total return 10.12% (1.32)% 7.73% 8.16% 2.29%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $84,002 $70,761 $58,185 $33,800 $24,527
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average
net assets (including
interest expense): 0.97%(b) 0.90% 0.76% 0.87% 0.91%
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average
net assets (excluding
interest expense): 0.85%(b) 0.80% 0.76% 0.87% 0.91%
_______________________________________________________________________________
===============================================================================
Ratio of net investment
income to average net assets 6.03%(b) 5.75% 5.70% 5.85% 5.80%
_______________________________________________________________________________
===============================================================================
Ratio of interest expense to
average net assets 0.12%(b) 0.10% -- -- --
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 87% 41% 78% 66% 32%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $71,655,187.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-81
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Growth Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Growth Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. GROWTH FUND
FS-82
SCHEDULE OF INVESTMENTS
December 31, 2000
SHARES MARKET VALUE
DOMESTIC COMMON STOCKS - 86.21%
BEVERAGES (NON-ALCOHOLIC) - 2.03%
PepsiCo, Inc. 360,000 $ 17,842,500
========================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.55%
AT&T Corp - Liberty Media Corp. - Class A(a) 359,000 4,868,937
========================================================================
COMMUNICATIONS EQUIPMENT - 4.54%
Comverse Technology, Inc.(a) 199,600 21,681,550
------------------------------------------------------------------------
Corning Inc. 345,000 18,220,312
========================================================================
39,901,862
========================================================================
COMPUTERS (HARDWARE) - 1.42%
Palm, Inc.(a) 201,000 5,690,812
------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 244,000 6,801,500
========================================================================
12,492,312
========================================================================
COMPUTERS (NETWORKING) - 5.84%
Cisco Systems, Inc.(a) 602,100 23,030,325
------------------------------------------------------------------------
Emulex Corp.(a) 99,500 7,953,781
------------------------------------------------------------------------
Extreme Networks, Inc.(a) 171,000 6,690,375
------------------------------------------------------------------------
Juniper Networks, Inc.(a) 108,200 13,639,962
========================================================================
51,314,443
========================================================================
COMPUTERS (PERIPHERALS) - 5.38%
Brocade Communications Systems, Inc.(a) 188,000 17,260,750
------------------------------------------------------------------------
EMC Corp.(a) 370,000 24,605,000
------------------------------------------------------------------------
QLogic Corp.(a) 70,100 5,397,700
========================================================================
47,263,450
========================================================================
COMPUTERS (SOFTWARE & SERVICES) - 10.53%
Adobe Systems Inc. 67,400 3,921,837
------------------------------------------------------------------------
Ariba, Inc.(a) 66,300 3,563,625
------------------------------------------------------------------------
BEA Systems, Inc.(a) 160,000 10,770,000
------------------------------------------------------------------------
i2 Technologies, Inc.(a) 87,000 4,730,625
------------------------------------------------------------------------
Intuit Inc.(a) 93,000 3,667,687
------------------------------------------------------------------------
Mercury Interactive Corp.(a) 132,000 11,913,000
------------------------------------------------------------------------
Oracle Corp.(a) 810,000 23,540,625
------------------------------------------------------------------------
PeopleSoft, Inc.(a) 121,000 4,499,687
------------------------------------------------------------------------
Siebel Systems, Inc.(a) 133,000 8,994,125
------------------------------------------------------------------------
VERITAS Software Corp.(a) 194,500 17,018,750
========================================================================
92,619,961
========================================================================
CONSUMER FINANCE - 2.10%
Capital One Financial Corp. 160,000 10,530,000
------------------------------------------------------------------------
MBNA Corp. 214,500 7,923,094
========================================================================
18,453,094
========================================================================
|
SHARES MARKET VALUE
ELECTRICAL EQUIPMENT - 3.75%
General Electric Co. 524,000 $ 25,119,250
---------------------------------------------------------------------
Sanmina Corp.(a) 103,000 7,892,375
=====================================================================
33,011,625
=====================================================================
ELECTRONICS (INSTRUMENTATION) - 1.51%
Agilent Technologies, Inc.(a) 242,000 13,249,500
=====================================================================
ELECTRONICS (SEMICONDUCTORS) - 2.43%
Analog Devices, Inc.(a) 83,700 4,284,394
---------------------------------------------------------------------
Applied Micro Circuits Corp.(a) 102,000 7,654,781
---------------------------------------------------------------------
Linear Technology Corp. 90,800 4,199,500
---------------------------------------------------------------------
TranSwitch Corp.(a) 133,200 5,211,450
=====================================================================
21,350,125
=====================================================================
FINANCIAL (DIVERSIFIED) - 8.45%
American Express Co. 469,600 25,798,650
---------------------------------------------------------------------
Citigroup Inc. 593,800 30,320,913
---------------------------------------------------------------------
Fannie Mae 105,000 9,108,750
---------------------------------------------------------------------
Freddie Mac 131,600 9,063,950
=====================================================================
74,292,263
=====================================================================
HEALTH CARE (DIVERSIFIED) - 1.24%
IVAX Corp.(a) 284,600 10,900,180
=====================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.20%
Forest Laboratories, Inc.(a) 54,900 7,294,838
---------------------------------------------------------------------
Genentech, Inc.(a) 148,000 12,062,000
=====================================================================
19,356,838
=====================================================================
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 5.90%
Allergan, Inc. 107,500 10,407,344
---------------------------------------------------------------------
Merck & Co., Inc. 230,000 21,533,750
---------------------------------------------------------------------
Pfizer Inc. 434,300 19,977,800
=====================================================================
51,918,894
=====================================================================
HEALTH CARE (HOSPITAL MANAGEMENT) - 2.19%
HCA-Healthcare Co. (The) 228,000 10,034,280
---------------------------------------------------------------------
Tenet Healthcare Corp.(a) 207,000 9,198,563
=====================================================================
19,232,843
=====================================================================
HEALTH CARE (MANAGED CARE) - 2.45%
CIGNA Corp. 75,000 9,922,500
---------------------------------------------------------------------
UnitedHealth Group Inc. 190,000 11,661,250
=====================================================================
21,583,750
=====================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.97%
Applera Corp.-Applied Biosystems Group 91,000 8,559,688
=====================================================================
|
AIM V.I. GROWTH FUND
FS-83
MARKET
SHARES VALUE
HEALTH CARE (SPECIALIZED SERVICES) - 1.47%
Alza Corp.(a) 266,500 $ 11,326,250
-----------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 11,100 1,576,200
=============================================================================
12,902,450
=============================================================================
INSURANCE (LIFE/HEALTH) - 0.55%
AFLAC, Inc. 67,000 4,836,563
=============================================================================
INVESTMENT BANKING/BROKERAGE - 2.33%
Merrill Lynch & Co., Inc. 300,300 20,476,706
=============================================================================
LEISURE TIME (PRODUCTS) - 0.60%
Harley-Davidson, Inc. 131,800 5,239,050
=============================================================================
MANUFACTURING (DIVERSIFIED) - 1.28%
United Technologies Corp. 143,000 11,243,375
=============================================================================
NATURAL GAS - 4.03%
Dynegy Inc. - Class A 324,000 18,164,250
-----------------------------------------------------------------------------
Enron Corp. 130,000 10,806,250
-----------------------------------------------------------------------------
Williams Cos., Inc. (The) 161,100 6,433,931
=============================================================================
35,404,431
=============================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 1.12%
Baker Hughes Inc. 237,900 9,887,719
=============================================================================
POWER PRODUCERS (INDEPENDENT) - 4.20%
AES Corp. (The)(a) 322,000 17,830,750
-----------------------------------------------------------------------------
Calpine Corp.(a) 423,000 19,061,438
=============================================================================
36,892,188
=============================================================================
RETAIL (DEPARTMENT STORES) - 0.86%
Kohl's Corp.(a) 124,000 7,564,000
=============================================================================
RETAIL (FOOD CHAINS) - 1.42%
Safeway Inc.(a) 200,000 12,500,000
=============================================================================
RETAIL (SPECIALTY) - 0.78%
Bed Bath & Beyond Inc.(a) 306,900 6,866,888
=============================================================================
SERVICES (ADVERTISING/MARKETING) - 0.50%
TMP Worldwide, Inc.(a) 80,200 4,411,000
=============================================================================
SERVICES (DATA PROCESSING) - 1.53%
DST Systems, Inc.(a) 60,900 4,080,300
-----------------------------------------------------------------------------
First Data Corp. 177,500 9,352,031
=============================================================================
13,432,331
=============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 2.06%
Openwave Systems Inc.(a) 205,000 9,827,188
-----------------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 141,000 8,248,500
=============================================================================
18,075,688
=============================================================================
Total Domestic Common Stocks
(Cost $717,227,808) 757,944,654
=============================================================================
|
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 9.61%
BERMUDA - 3.08%
Tyco International Ltd.
(Manufacturing - Diversified) 488,500 $ 27,111,750
=============================================================================
CANADA - 1.05%
Celestica Inc. (Electronics - Semiconductors)(a) 170,000 9,222,500
=============================================================================
FRANCE - 0.18%
Alcatel S.A. - ADR (Communications Equipment) 27,500 1,538,281
=============================================================================
HONG KONG - 1.18%
China Mobile Ltd.
(Telecommunications - Cellular/Wireless)(a) 1,900,800 10,381,692
=============================================================================
ISRAEL - 2.81%
Check Point Software Technologies Ltd.
(Computers - Software & Services)(a) 138,500 18,498,406
------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd. - ADR (Health
Care - Drugs - Generic & Other) 84,700 6,204,275
=============================================================================
24,702,681
=============================================================================
SINGAPORE - 0.50%
Flextronics International Ltd.
(Manufacturing - Specialized)(a) 155,000 4,417,500
=============================================================================
UNITED KINGDOM - 0.81%
Amdocs Ltd.
(Telecommunications - Cellular/Wireless)(a) 107,000 7,088,750
=============================================================================
Total Foreign Stocks & Other Equity Interests
(Cost $78,539,380) 84,463,154
=============================================================================
MONEY MARKET FUNDS - 5.39%
STIC Liquid Assets Portfolio(b) 23,720,685 23,720,685
-----------------------------------------------------------------------------
STIC Prime Portfolio(b) 23,720,685 23,720,685
=============================================================================
Total Money Market Funds (Cost $47,441,370) 47,441,370
=============================================================================
TOTAL INVESTMENTS - 101.21%
(Cost $843,208,558) 889,849,178
=============================================================================
LIABILITIES LESS OTHER ASSETS - (1.21%) (10,666,872)
=============================================================================
NET ASSETS - 100.00% $879,182,306
_____________________________________________________________________________
=============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
FS-84
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $843,208,558) $889,849,178 -------------------------------------------------------------- Receivables for: Investments sold 9,880,915 -------------------------------------------------------------- Fund shares sold 806,933 -------------------------------------------------------------- Dividends 601,716 -------------------------------------------------------------- Investment for deferred compensation plan 41,272 -------------------------------------------------------------- Other assets 34,735 ============================================================== Total assets 901,214,749 ============================================================== LIABILITIES: Payables for: Investments purchased 20,283,906 -------------------------------------------------------------- Fund shares reacquired 194,949 -------------------------------------------------------------- Deferred compensation plan 41,272 -------------------------------------------------------------- Accrued advisory fees 446,096 -------------------------------------------------------------- Accrued administrative services fees 1,033,668 -------------------------------------------------------------- Accrued operating expenses 32,552 ============================================================== Total liabilities 22,032,443 ============================================================== Net assets applicable to shares outstanding $879,182,306 ______________________________________________________________ ============================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 35,429,528 ============================================================== Net asset value $ 24.81 ______________________________________________________________ ============================================================== |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $43,150) $ 1,924,976
----------------------------------------------------------------------------
Dividends from affiliated money market funds 6,462,888
----------------------------------------------------------------------------
Interest 129,890
============================================================================
Total investment income 8,517,754
============================================================================
EXPENSES:
Advisory fees 5,604,879
----------------------------------------------------------------------------
Administrative services fees 1,616,037
----------------------------------------------------------------------------
Custodian fees 115,157
----------------------------------------------------------------------------
Trustees' fees 8,818
----------------------------------------------------------------------------
Other 207,315
============================================================================
Total expenses 7,552,206
============================================================================
Less: Expenses paid indirectly (2,100)
============================================================================
Net expenses 7,550,106
============================================================================
Net investment income 967,648
============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES CONTRACTS AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities (21,063,863)
----------------------------------------------------------------------------
Foreign currencies 459,569
----------------------------------------------------------------------------
Futures contracts (1,817,097)
----------------------------------------------------------------------------
Option contracts written 69,331
============================================================================
(22,352,060)
============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (211,454,730)
----------------------------------------------------------------------------
Foreign currencies (359)
----------------------------------------------------------------------------
Futures contracts (714,213)
----------------------------------------------------------------------------
Option contracts written 1,424,785
============================================================================
(210,744,517)
============================================================================
Net gain (loss) from investment securities, foreign
currencies, futures contracts and option contracts (233,096,577)
============================================================================
Net increase (decrease) in net assets resulting from
operations $(232,128,929)
____________________________________________________________________________
============================================================================
|
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
FS-85
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
------------- ------------
OPERATIONS:
Net investment income $ 967,648 $ 184,029
------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies, futures
contracts and option contracts (22,352,060) 26,426,223
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies, futures contracts and
option contracts (210,744,517) 137,276,135
==============================================================================
Net increase (decrease) in net assets resulting
from operations (232,128,929) 163,886,387
==============================================================================
Distributions to shareholders from net investment
income (84,187) (1,318,758)
------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (29,175,800) (23,117,297)
------------------------------------------------------------------------------
Share transactions - net 436,475,542 192,730,597
==============================================================================
Net increase in net assets 175,086,626 332,180,929
==============================================================================
NET ASSETS:
Beginning of year 704,095,680 371,914,751
==============================================================================
End of year $ 879,182,306 $704,095,680
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 858,004,800 $421,529,258
------------------------------------------------------------------------------
Undistributed net investment income 1,384,355 44,231
------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures
contracts and option contracts (26,845,915) 25,138,608
------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies, futures
contracts and option contracts 46,639,066 257,383,583
==============================================================================
$ 879,182,306 $704,095,680
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Growth Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to seek
growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
AIM V.I. GROWTH FUND
FS-86
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was increased and
undistributed net realized gains decreased by $456,663 as a result of
differing book/tax treatment of foreign currency transactions and
distribution reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
The Fund has a capital loss carryforward of $4,002,102 as of December 31,
2000 which may be carried forward to offset future taxable gains, if any,
which expires, if not previously utilized, in the year 2008.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for the portion of the results of operations resulting
from changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Futures Contracts - The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits required
upon entering into futures contracts are satisfied by the segregation of
specific securities as collateral for the account of the broker (the Fund's
agent in acquiring the futures position). During the period the futures
contracts are open, changes in the value of the contracts are recognized as
unrealized gains or losses by "marking to market" on a daily basis to reflect
the market value of the contracts at the end of each day's trading. Variation
margin payments are made or received depending upon whether unrealized gains
or losses are incurred. When the contracts are closed, the Fund recognizes a
realized gain or loss equal to the difference between the proceeds from, or
cost of, the closing transaction and the Fund's basis in the contract. Risks
include the possibility of an illiquid market and that a change in value of
the contracts may not correlate with changes in the value of the securities
being hedged.
H. Covered Call Options - The Fund may write call options, on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting
AIM V.I. GROWTH FUND
FS-87
services and certain administrative services to the Fund and to reimburse AIM
for administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $1,616,037 of which AIM retained $112,857 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $5,817
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $2,100 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $2,100.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $1,766,272,668 and $1,307,567,358, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 90,454,128 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (66,657,321) ========================================================================== Net unrealized appreciation of investment securities $ 23,796,807 __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $866,052,371.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------
Beginning of year 1,546 $ 1,540,128
------------------------------------------------------------------------------
Closed (1,546) (1,540,128)
==============================================================================
End of year -- $ --
______________________________________________________________________________
==============================================================================
|
AIM V.I. GROWTH FUND
FS-88
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and 1999 were as follows:
2000 1999
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold 15,512,849 $504,462,673 8,907,542 $247,736,478
------------------------------------------------------------------------------
Issued as reinvestment of
dividends 1,115,941 29,259,987 820,552 24,436,055
------------------------------------------------------------------------------
Reacquired (3,030,650) (97,247,118) (2,893,968) (79,441,936)
==============================================================================
13,598,140 $436,475,542 6,834,126 $192,730,597
______________________________________________________________________________
==============================================================================
|
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
---------------------------------------------------
2000 1999(a) 1998 1997 1996
-------- -------- -------- -------- --------
Net asset value, beginning
of period $ 32.25 $ 24.80 $ 19.83 $ 16.25 $ 14.44
--------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.03 0.01 0.08 0.08 0.07
--------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (6.60) 8.63 6.57 4.27 2.52
================================================================================
Total from investment
operations (6.57) 8.64 6.65 4.35 2.59
================================================================================
Less distributions:
Dividends from net
investment income 0.00 (0.06) (0.09) (0.09) (0.06)
--------------------------------------------------------------------------------
Distributions from net
realized gains (0.87) (1.13) (1.59) (0.68) (0.72)
================================================================================
Total distributions (0.87) (1.19) (1.68) (0.77) (0.78)
================================================================================
Net asset value, end of
period $ 24.81 $ 32.25 $ 24.80 $ 19.83 $ 16.25
________________________________________________________________________________
================================================================================
Total return (20.49)% 35.24% 34.12% 26.87% 18.09%
________________________________________________________________________________
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $879,182 $704,096 $371,915 $258,852 $178,638
________________________________________________________________________________
================================================================================
Ratio of expenses to
average net assets 0.83%(b) 0.73% 0.72% 0.73% 0.78%
________________________________________________________________________________
================================================================================
Ratio of net investment
income to average net
assets 0.11%(b) 0.04% 0.41% 0.54% 0.79%
________________________________________________________________________________
================================================================================
Portfolio turnover rate 162% 101% 133% 132% 143%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $913,313,151.
AIM V.I. GROWTH FUND
FS-89
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Growth and Income Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Growth and Income Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. GROWTH AND INCOME FUND
FS-90
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS - 85.57%
BANKS (MONEY CENTER) - 5.19%
J.P. Morgan Chase & Co. 2,869,200 $ 130,369,275
=============================================================================
BIOTECHNOLOGY - 1.14%
Amgen Inc.(a) 450,000 28,771,875
=============================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.90%
AT&T Corp. - Liberty Media Corp. - Class A(a) 900,000 12,206,250
-----------------------------------------------------------------------------
Comcast Corp. - Class A(a) 250,000 10,437,500
=============================================================================
22,643,750
=============================================================================
COMMUNICATIONS EQUIPMENT - 4.66%
Comverse Technology, Inc.(a) 300,000 32,587,500
-----------------------------------------------------------------------------
Corning Inc. 900,000 47,531,250
-----------------------------------------------------------------------------
JDS Uniphase Corp.(a) 584,700 24,374,681
-----------------------------------------------------------------------------
Redback Networks Inc.(a) 310,000 12,710,000
=============================================================================
117,203,431
=============================================================================
COMPUTERS (HARDWARE) - 1.29%
Compaq Computer Corp. 600,000 9,030,000
-----------------------------------------------------------------------------
Sun Microsystems, Inc.(a) 836,000 23,303,500
=============================================================================
32,333,500
=============================================================================
COMPUTERS (NETWORKING) - 4.61%
Cisco Systems, Inc.(a) 2,125,000 81,281,250
-----------------------------------------------------------------------------
Juniper Networks, Inc.(a) 275,000 34,667,187
=============================================================================
115,948,437
=============================================================================
COMPUTERS (PERIPHERALS) - 1.59%
EMC Corp.(a) 600,000 39,900,000
=============================================================================
COMPUTERS (SOFTWARE & SERVICES) - 5.65%
America Online, Inc.(a) 325,000 11,310,000
-----------------------------------------------------------------------------
Ariba, Inc.(a) 250,000 13,437,500
-----------------------------------------------------------------------------
Microsoft Corp.(a) 450,000 19,518,750
-----------------------------------------------------------------------------
Oracle Corp.(a) 1,850,000 53,765,625
-----------------------------------------------------------------------------
VERITAS Software Corp.(a) 475,000 41,562,500
-----------------------------------------------------------------------------
Vitria Technology, Inc.(a) 325,000 2,518,750
=============================================================================
142,113,125
=============================================================================
ELECTRIC COMPANIES - 1.37%
Edison International 800,000 12,500,000
-----------------------------------------------------------------------------
PG&E Corp. 1,100,000 22,000,000
=============================================================================
34,500,000
=============================================================================
ELECTRICAL EQUIPMENT - 4.39%
General Electric Co. 2,300,000 110,256,250
=============================================================================
|
MARKET
SHARES VALUE
ELECTRONICS (SEMICONDUCTORS) - 2.56%
Analog Devices, Inc.(a) 450,000 $ 23,034,375
-------------------------------------------------------------------------------
Linear Technology Corp. 215,000 9,943,750
-------------------------------------------------------------------------------
PMC-Sierra, Inc.(a) 125,000 9,828,125
-------------------------------------------------------------------------------
SDL, Inc.(a) 50,000 7,409,375
-------------------------------------------------------------------------------
Texas Instruments Inc. 300,000 14,212,500
===============================================================================
64,428,125
===============================================================================
ENTERTAINMENT - 2.08%
Time Warner Inc. 1,000,000 52,240,000
===============================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.49%
Applied Materials, Inc.(a) 325,000 12,410,937
===============================================================================
FINANCIAL (DIVERSIFIED) - 6.46%
American Express Co. 1,375,000 75,539,062
-------------------------------------------------------------------------------
Citigroup Inc. 1,700,000 86,806,250
===============================================================================
162,345,312
===============================================================================
FOODS - 0.27%
Quaker Oats Co. (The) 69,200 6,738,350
===============================================================================
HEALTH CARE (DIVERSIFIED) - 6.30%
American Home Products Corp. 700,000 44,485,000
-------------------------------------------------------------------------------
Pfizer Inc. 2,475,000 113,850,000
===============================================================================
158,335,000
===============================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.25%
Genentech, Inc.(a) 386,000 31,459,000
===============================================================================
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 3.93%
Allergan, Inc. 375,000 36,304,687
-------------------------------------------------------------------------------
Pharmacia Corp. 750,000 45,750,000
-------------------------------------------------------------------------------
Pharmacia Corp. - $2.60 Conv. Pfd. ACES 325,000 16,839,063
===============================================================================
98,893,750
===============================================================================
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.93%
Health Management Associates, Inc. - Class A(a) 1,123,400 23,310,550
===============================================================================
HEALTH CARE (MANAGED CARE) - 1.46%
UnitedHealth Group Inc. 600,000 36,825,000
===============================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.28%
Applera Corp. - Applied Biosystems Group 150,000 14,109,375
-------------------------------------------------------------------------------
Medtronic, Inc. 300,000 18,112,500
===============================================================================
32,221,875
===============================================================================
INSURANCE (MULTI-LINE) - 3.63%
American International Group, Inc. 925,000 91,170,313
===============================================================================
INSURANCE BROKERS - 1.16%
Marsh & McLennan Cos., Inc. 250,000 29,250,000
===============================================================================
|
AIM V.I. GROWTH AND INCOME FUND
FS-91
MARKET
SHARES VALUE
INVESTMENT BANKING/BROKERAGE - 7.29%
Goldman Sachs Group, Inc. (The) 304,000 $ 32,509,000
-----------------------------------------------------------------------
Merrill Lynch & Co., Inc. 600,000 40,912,500
-----------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 1,225,000 97,081,250
-----------------------------------------------------------------------
Schwab (Charles) Corp. (The) 450,000 12,768,750
=======================================================================
183,271,500
=======================================================================
INVESTMENT MANAGEMENT - 0.71%
Stilwell Financial, Inc. 450,000 17,746,875
=======================================================================
MANUFACTURING (DIVERSIFIED) - 0.56%
Honeywell International Inc. 300,000 14,193,750
=======================================================================
NATURAL GAS - 1.92%
Dynegy Inc. - Class A 600,000 33,637,500
-----------------------------------------------------------------------
Enron Corp. 175,000 14,546,875
=======================================================================
48,184,375
=======================================================================
OIL (INTERNATIONAL INTEGRATED) - 1.85%
Exxon Mobil Corp. 535,000 46,511,563
=======================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 3.12%
R&B Falcon Corp.(a) 900,000 20,643,750
-----------------------------------------------------------------------
Schlumberger Ltd. 550,000 43,965,625
-----------------------------------------------------------------------
Transocean Sedco Forex Inc. 300,000 13,800,000
=======================================================================
78,409,375
=======================================================================
POWER PRODUCERS (INDEPENDENT) - 0.67%
Calpine Corp.(a) 375,000 16,898,438
=======================================================================
RETAIL (BUILDING SUPPLIES) - 0.54%
Home Depot, Inc. (The) 300,000 13,706,250
=======================================================================
RETAIL (DEPARTMENT STORES) - 0.85%
Kohl's Corp.(a) 350,000 21,350,000
=======================================================================
RETAIL (DRUG STORES) - 0.75%
Walgreen Co. 450,000 18,815,625
=======================================================================
RETAIL (GENERAL MERCHANDISE) - 3.14%
Target Corp. 2,450,000 79,012,500
=======================================================================
RETAIL (SPECIALTY - APPAREL) - 0.53%
Gap, Inc. (The) 525,000 13,387,500
=======================================================================
SERVICES (DATA PROCESSING) - 0.48%
Ceridian Corp.(a) 600,000 11,962,500
=======================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.57%
Openwave Systems Inc.(a) 300,000 14,381,250
=======================================================================
Total Domestic Common Stocks & Other Equity
Interests (Cost $1,792,137,733) 2,151,499,356
=======================================================================
|
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 8.92%
BERMUDA - 5.19%
Tyco International Ltd. (Manufacturing -
Diversified) 2,350,000 $ 130,425,000
===============================================================================
CANADA - 3.45%
BioChem Pharma, Inc. (Biotechnology)(a) 138,400 4,428,800
-------------------------------------------------------------------------------
Celestica Inc. (Electronics - Semiconductors)(a) 925,000 50,181,250
-------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 1,000,000 32,062,500
===============================================================================
86,672,550
===============================================================================
UNITED KINGDOM - 0.28%
Shire Pharmaceuticals Group PLC - ADR
(Health Care - Drugs - Generic & Other)(a) 155,700 7,171,931
===============================================================================
Total Foreign Stocks & Other Equity Interests (Cost
$184,472,750) 224,269,481
===============================================================================
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS & NOTES - 1.88%
COMPUTERS (HARDWARE) - 0.50%
Candescent Technologies Corp., Sr. Conv. Unsec.
Gtd. Sub. Deb., 8.00%, 05/01/03 (Acquired
04/17/98-08/31/00; Cost $14,094,365)(b)(c) $17,000,000 12,410,000
===============================================================================
COMPUTERS (SOFTWARE & SERVICES) - 1.38%
VERITAS Software Corp., Conv. Unsec. Notes, 5.25%,
11/01/04 3,750,000 34,701,563
===============================================================================
Total Convertible Bonds & Notes (Cost $19,369,184) 47,111,563
===============================================================================
MONEY MARKET FUNDS - 2.92%
STIC Liquid Assets Portfolio(d) 36,715,695 36,715,695
-------------------------------------------------------------------------------
STIC Prime Portfolio(d) 36,715,695 36,715,695
===============================================================================
Total Money Market Funds (Cost $73,431,390) 73,431,390
===============================================================================
TOTAL INVESTMENTS - 99.29%
(COST $2,069,411,057) 2,496,311,790
===============================================================================
OTHER ASSETS LESS LIABILITIES - 0.71% 17,950,231
===============================================================================
NET ASSETS - 100.00% $2,514,262,021
===============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt ACES - Automatically Convertible Securities Conv. - Convertible Deb. - Debentures Gtd. - Guaranteed Pfd. - Preferred Sr. - Senior Sub. - Subordinated |
Unsec. - Unsecured
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 12/31/00
represented 0.50% of the Fund's net assets.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND
FS-92
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $2,069,411,057) $2,496,311,790 ------------------------------------------------------------------ Receivables for: Investments sold 27,665,800 ------------------------------------------------------------------ Fund shares sold 1,908,080 ------------------------------------------------------------------ Dividends and interest 1,477,491 ------------------------------------------------------------------ Investment for deferred compensation plan 50,628 ------------------------------------------------------------------ Other assets 86,386 ================================================================== Total assets 2,527,500,175 ================================================================== LIABILITIES: Payables for: Investments purchased 8,794,233 ------------------------------------------------------------------ Fund shares reacquired 1,481,147 ------------------------------------------------------------------ Deferred compensation plan 50,628 ------------------------------------------------------------------ Accrued advisory fees 1,265,461 ------------------------------------------------------------------ Accrued administrative services fees 1,458,088 ------------------------------------------------------------------ Accrued operating expenses 188,597 ================================================================== Total liabilities 13,238,154 ================================================================== Net assets applicable to shares outstanding $2,514,262,021 __________________________________________________________________ ================================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 95,998,107 ================================================================== Net asset value $ 26.19 __________________________________________________________________ ================================================================== |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $77,123) $ 13,954,627
------------------------------------------------------------------------------
Dividends from affiliated money market funds 5,448,306
------------------------------------------------------------------------------
Interest 4,172,802
==============================================================================
Total investment income 23,575,735
==============================================================================
EXPENSES:
Advisory fees 16,262,897
------------------------------------------------------------------------------
Administrative services fees 5,367,488
------------------------------------------------------------------------------
Custodian fees 229,114
------------------------------------------------------------------------------
Trustees' fees 13,593
------------------------------------------------------------------------------
Other 730,434
==============================================================================
Total expenses 22,603,526
==============================================================================
Less: Expenses paid indirectly (4,206)
==============================================================================
Net expenses 22,599,320
==============================================================================
Net investment income 976,415
==============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS
Net realized gain (loss) from:
Investment securities (55,195,964)
------------------------------------------------------------------------------
Foreign currencies (39,882)
------------------------------------------------------------------------------
Option contracts written 1,435,100
==============================================================================
(53,800,746)
==============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (374,579,685)
------------------------------------------------------------------------------
Foreign currencies (2,787)
==============================================================================
(374,582,472)
==============================================================================
Net gain (loss) from investment securities, foreign currencies
and option contracts (428,383,218)
==============================================================================
Net increase (decrease) in net assets resulting from
operations $(427,406,803)
______________________________________________________________________________
==============================================================================
|
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND
FS-93
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
-------------- --------------
OPERATIONS:
Net investment income $ 976,415 $ 3,782,645
----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and option
contracts (53,800,746) 71,650,427
----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies and option contracts (374,582,472) 487,767,671
============================================================================
Net increase (decrease) in net assets
resulting from operations (427,406,803) 563,200,743
============================================================================
Distributions to shareholders from net
investment income (3,471,426) (11,988,578)
----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains (74,797,641) (8,277,648)
----------------------------------------------------------------------------
Share transactions - net 576,673,911 638,270,694
============================================================================
Net increase in net assets 70,998,041 1,181,205,211
============================================================================
NET ASSETS:
Beginning of year 2,443,263,980 1,262,058,769
============================================================================
End of year $2,514,262,021 $2,443,263,980
____________________________________________________________________________
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $2,148,697,394 $1,574,186,117
----------------------------------------------------------------------------
Undistributed net investment income 860,530 3,411,046
----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies
and option contracts (62,189,938) 66,361,018
----------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 426,894,035 799,305,799
============================================================================
$2,514,262,021 $2,443,263,980
____________________________________________________________________________
============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Growth and Income Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is is growth
of capital with a secondary objective of current income.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are valued
according to the following policy. A security listed or traded on an exchange
(except convertible bonds) is valued at its last sales price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales on a particular day, the security is
valued at the closing bid price on that day. Each security reported on the
NASDAQ National Market System is valued at the last sales price as of the
close of the customary trading session on the valuation date or absent a last
sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the above
methods are valued based upon quotes furnished by independent sources and are
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Trust's officers in a manner specifically authorized
by the Board of Trustees. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and option
contracts
AIM V.I. GROWTH AND INCOME FUND
FS-94
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$55,505, undistributed net realized gains increased by $47,431, and paid in
capital increased by $8,074 as a result of differing book/tax treatment of
foreign currency transactions, merger transactions and other
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $10,413,052 as of December 31, 2000 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2008.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for the portion of the results of operations resulting
from changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
G. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently "marked-to-
market" to reflect the current market value of the option written. The
current market value of a written option is the mean between the last bid and
asked prices on that day. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or a loss if the closing purchase transaction
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised, the
Fund realizes a gain or a loss from the sale of the underlying security and
the proceeds of the sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Put Options - The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, the
Fund pays an option premium. The option's underlying instrument may be a
security or a futures contract. Put options may be used by the Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or a
portion of the Fund's resulting losses. At the same time, because the maximum
the Fund has at risk is the cost of the option, purchasing put options does
not eliminate the potential for the Fund to profit from an increase in the
value of the securities hedged.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting
AIM V.I. GROWTH AND INCOME FUND
FS-95
services and certain administrative services to the Fund and to reimburse AIM
for administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $5,367,488 of which AIM retained $169,439 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $8,815
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $4,206 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $4,206.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000
are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------
Beginning of year -- $ --
------------------------------------------------------------------------------
Written 9,250 4,730,666
------------------------------------------------------------------------------
Closed (3,869) (1,980,916)
------------------------------------------------------------------------------
Exercised (2,131) (749,192)
------------------------------------------------------------------------------
Expired (3,250) (2,000,558)
==============================================================================
End of year -- $ --
______________________________________________________________________________
==============================================================================
|
NOTE 7 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $2,458,752,504 and $1,932,355,261, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 584,998,287 ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (169,323,935) ============================================================================== Net unrealized appreciation of investment securities $ 415,674,352 ______________________________________________________________________________ ============================================================================== |
Cost of investments for tax purposes is $2,080,637,438.
AIM V.I. GROWTH AND INCOME FUND
FS-96
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and 1999
were as follows:
2000 1999
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold 17,898,904 $561,469,804 27,157,175 $712,881,530
------------------------------------------------------------------------------
Issued as reinvestment of
dividends 2,833,782 78,269,067 704,177 20,266,226
------------------------------------------------------------------------------
Issued in connection with
acquisition* 786,467 26,024,265 -- --
------------------------------------------------------------------------------
Reacquired (2,859,510) (89,089,225) (3,653,912) (94,877,062)
==============================================================================
18,659,643 $576,673,911 24,207,440 $638,270,694
______________________________________________________________________________
==============================================================================
|
* As of the close of business on September 15, 2000, the Fund acquired all the net assets of AIM V.I. Global Growth and Income Fund pursuant to a plan of reorganization approved by the Fund's shareholders on May 31, 2000. The acquisition was accomplished by a tax-free exchange of 786,467 shares of the Fund for 2,294,201 shares of AIM V.I. Global Growth and Income Fund outstanding as of the close of business on September 15, 2000. AIM V.I. Global Growth and Income Fund's net assets at that date were $26,024,265 including $2,170,708 of unrealized appreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $2,932,661,113.
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997 1996
---------- ---------- ---------- -------- --------
Net asset value, beginning of period $ 31.59 $ 23.75 $ 18.87 $ 15.03 $ 12.68
=====================================================================================================================
Income from investment operations:
Net investment income 0.01 0.06 0.26 0.13 0.16
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (4.56) 8.05 4.95 3.74 2.36
=====================================================================================================================
Total from investment operations (4.55) 8.11 5.21 3.87 2.52
=====================================================================================================================
Less distributions:
Dividends from net investment income (0.04) (0.16) (0.09) (0.01) (0.14)
---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.81) (0.11) (0.24) (0.02) (0.03)
=====================================================================================================================
Total distributions (0.85) (0.27) (0.33) (0.03) (0.17)
=====================================================================================================================
Net asset value, end of period $ 26.19 $ 31.59 $ 23.75 $ 18.87 $ 15.03
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return (14.56)% 34.25% 27.68% 25.72% 19.95%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,514,262 $2,443,264 $1,262,059 $639,113 $209,332
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets 0.84%(b) 0.77% 0.65% 0.69% 0.78%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of net investment income to average
net assets 0.04%(b) 0.22% 1.34% 1.15% 2.05%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 75% 93% 140% 135% 148%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $2,688,675,129
AIM V.I. GROWTH AND INCOME FUND
FS-97
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. High Yield Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. High Yield Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period May 1, 1998 (commencement of operations) through December 31, 1998 in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. HIGH YIELD FUND
FS-98
SCHEDULE OF INVESTMENTS
December 31, 2000
PRINCIPAL MARKET
AMOUNT VALUE
BONDS & NOTES - 86.03%
AEROSPACE/DEFENSE - 0.95%
Precision Partners, Inc., Sr. Unsec. Sub. Notes,
12.00%, 03/15/09 $ 500,000 $ 247,500
==============================================================================
AIR FREIGHT - 0.73%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 185,000 191,475
==============================================================================
AIRLINES - 0.77%
Dunlop Standard Aerospace Holdings PLC (United
Kingdom), Sr. Unsec. Sub. Yankee Notes,
11.88%, 05/15/09 200,000 200,500
==============================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 8.88%
Adelphia Communications Corp., Sr. Unsec. Notes,
10.88%, 10/01/10 165,000 158,400
------------------------------------------------------------------------------
Adelphia Communications Corp. - Series B, Sr. Unsec.
Notes, 9.88%, 03/01/07 500,000 467,500
------------------------------------------------------------------------------
Charter Communications Holdings, LLC/Charter
Communications Holding Capital Corp., Sr. Unsec. Disc.
Notes,
9.92%, 04/01/11(a) 150,000 88,875
------------------------------------------------------------------------------
10.25%, 01/15/10 400,000 393,000
------------------------------------------------------------------------------
Diamond Cable Communications PLC (United Kingdom),
Sr. Disc. Notes, 13.25%, 09/30/04 100,000 93,000
------------------------------------------------------------------------------
Sr. Disc. Yankee Notes, 10.75%, 02/15/07(a) 255,000 172,125
------------------------------------------------------------------------------
EchoStar Broadband Corp., Sr. Unsec. Notes, 10.38%,
10/01/07 (Acquired 11/27/00-11/30/00;
Cost $89,825)(b) 95,000 94,050
------------------------------------------------------------------------------
Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes,
10.25%, 11/01/07(a) 250,000 193,125
------------------------------------------------------------------------------
Insight Midwest LP/Insight Capital Inc., Sr. Unsec.
Notes, 10.50%, 11/01/10(c) 150,000 155,250
------------------------------------------------------------------------------
Knology Holdings, Inc., Sr. Unsub. Disc. Notes, 11.88%,
10/15/07(a) 250,000 50,625
------------------------------------------------------------------------------
United Pan-Europe Communications N.V. (Netherlands) -
Series B,
Sr. Unsec. Yankee Notes, 11.25%, 02/01/10 65,000 42,575
------------------------------------------------------------------------------
Sr. Unsec. Yankee Notes, 11.50%, 02/01/10 150,000 98,250
------------------------------------------------------------------------------
Sr. Unsec. Disc. Yankee Notes, 13.75%, 02/01/10(a) 1,000,000 315,000
==============================================================================
2,321,775
==============================================================================
BUILDING MATERIALS - 1.33%
Blount Inc., Sr. Unsec. Gtd. Sub. Notes, 13.00%,
08/01/09 190,000 148,200
------------------------------------------------------------------------------
Dayton Superior Corp., Sr. Unsec. Gtd. Sub. Notes,
13.00%, 06/15/09 220,000 199,100
==============================================================================
347,300
==============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
COMPUTERS (NETWORKING) - 2.18%
Convergent Communications - Series B, Sr. Unsec. Notes,
13.00%, 04/01/08 $ 210,000 $ 84,525
------------------------------------------------------------------------------
Exodus Communications, Inc., Sr. Unsec. Notes, 11.25%,
07/01/08 550,000 486,750
==============================================================================
571,275
==============================================================================
COMPUTERS (PERIPHERALS) - 1.69%
Equinix, Inc., Sr. Unsec. Notes, 13.00%, 12/01/07 630,000 442,575
==============================================================================
COMPUTERS (SOFTWARE & SERVICES) - 1.55%
Globix Corp., Sr. Unsec. Notes, 12.50%, 02/01/10 580,000 233,450
------------------------------------------------------------------------------
GT Group Telecom Inc. (Canada), Sr. Unsec. Disc. Yankee
Notes, 13.25%, 02/01/10(a) 500,000 172,500
==============================================================================
405,950
==============================================================================
ELECTRONICS (COMPONENT DISTRIBUTORS) - 1.00%
Cherokee International LCC - Series B, Sr. Unsec. Sub.
Notes, 10.50%, 05/01/09 300,000 262,500
==============================================================================
ENGINEERING & CONSTRUCTION - 0.71%
Washington Group International, Inc., Sr. Unsec. Gtd.
Notes, 11.00%, 07/01/10(c) 250,000 186,875
==============================================================================
ENTERTAINMENT - 0.55%
Callahan Nordrhein Westfalen (Germany), Sr. Unsec.
Yankee Notes, 14.00%, 07/15/10 (Acquired 06/29/00-
08/11/00; Cost $159,750)(b) 160,000 144,800
==============================================================================
FINANCIAL (DIVERSIFIED) - 2.38%
Madison River Capital LLC/Madison River Finance Corp.,
Sr. Unsec. Notes, 13.25%, 03/01/10 300,000 196,500
------------------------------------------------------------------------------
ONO Finance PLC (United Kingdom), Sr. Unsec. Gtd. Sub.
Euro Notes, 13.00%, 05/01/09 550,000 426,250
==============================================================================
622,750
==============================================================================
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 4.89%
Hollywood Casino Corp., Sr. Sec. Gtd. Notes,
11.25%, 05/01/07 200,000 206,500
------------------------------------------------------------------------------
Isle of Capri Casinos, Inc., Unsec. Gtd. Sub. Notes,
8.75%, 04/15/09 225,000 200,250
------------------------------------------------------------------------------
MGM Grand, Inc., Sr. Unsec. Gtd. Sub. Notes,
9.75%, 06/01/07 250,000 263,125
------------------------------------------------------------------------------
Park Place Entertainment Corp., Sr. Unsec. Sub. Notes,
8.88%, 09/15/08(c) 300,000 304,500
------------------------------------------------------------------------------
Resort at Summerlin LP - Series B, Sr. Sub. Notes,
13.00%, 12/15/07(d) 608,000 63,840
------------------------------------------------------------------------------
Venetian Casino Resort LLC, Sec. Gtd. Mortgage Notes,
12.25%, 11/15/04 240,000 240,000
==============================================================================
1,278,215
==============================================================================
|
AIM V.I. HIGH YIELD FUND
FS-99
PRINCIPAL MARKET
AMOUNT VALUE
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.96%
Warner Chilcott, Inc., Sr. Unsec. Gtd. Sub. Notes,
12.63%, 02/15/08(c) $ 500,000 $ 512,500
===============================================================================
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.81%
HCA-Healthcare Co. (The), Notes, 8.75%, 09/01/10 200,000 211,500
===============================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.07%
DJ Orthopedics, LLC, Sr. Unsec. Gtd. Sub. Notes, 12.63%,
06/15/09 300,000 280,500
===============================================================================
HOMEBUILDING - 0.93%
K. Hovanian Enterprises Inc., Sr. Unsec. Gtd. Notes,
10.50%, 10/01/07(c) 150,000 138,750
-------------------------------------------------------------------------------
Lennar Corp. - Series B, Sr. Unsec. Gtd. Notes,
9.95%, 05/01/10 100,000 103,250
===============================================================================
242,000
===============================================================================
HOUSEHOLD FURNISHING & APPLIANCES - 1.04%
Falcon Products, Inc. - Series B, Sr. Gtd. Sub. Notes,
11.38%, 06/15/09 150,000 138,000
-------------------------------------------------------------------------------
Winsloew Furniture, Inc. - Series B, Sr. Unsec. Gtd.
Sub. Notes, 12.75%, 08/15/07 150,000 134,250
===============================================================================
272,250
===============================================================================
LEISURE TIME (PRODUCTS) - 0.57%
Marvel Enterprises, Inc., Sr. Unsec. Gtd. Notes, 12.00%,
06/15/09 350,000 147,875
===============================================================================
MACHINERY (DIVERSIFIED) - 0.54%
Actuant Corp., Sr. Unsec. Gtd. Sub. Bonds, 13.00%,
05/01/09 150,000 140,250
===============================================================================
MANUFACTURING (SPECIALIZED) - 3.65%
Brand Scaffold Services, Inc., Sr. Unsec. Notes, 10.25%,
02/15/08 135,000 122,850
-------------------------------------------------------------------------------
Flextronics International Ltd. (Singapore), Sr. Sub
Yankee Notes, 9.88%, 07/01/10 140,000 137,900
-------------------------------------------------------------------------------
Knowles Electronics Inc., Sr. Unsec. Gtd. Sub. Notes,
13.13%, 10/15/09 140,000 130,900
-------------------------------------------------------------------------------
MMI Products, Inc. - Series B, Sr. Unsec. Sub. Notes,
11.25%, 04/15/07 275,000 269,500
-------------------------------------------------------------------------------
Omega Cabinets Ltd., Sr. Sub. Notes, 10.50%, 06/15/07 100,000 91,500
-------------------------------------------------------------------------------
Tekni-Plex, Inc. - Series B, Sr. Unsec. Gtd. Sub. Notes,
12.75%, 06/15/10 250,000 201,250
===============================================================================
953,900
===============================================================================
METALS MINING - 0.94%
Bulong Operations PTV Ltd. (Australia), Sr. Sec. Yankee
Notes, 12.50%, 12/15/08(d) 700,000 246,750
-------------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS (DRILLING & EQUIPMENT) - 0.88%
Grant Prideco, Inc., Sr. Notes, 9.63%, 12/01/07
(Acquired 11/29/00; Cost $69,565)(b) $ 70,000 $ 72,625
-------------------------------------------------------------------------------
R & B Falcon Corp. - Series B, Sr. Unsec. Notes, 6.95%,
04/15/08 170,000 157,250
===============================================================================
229,875
===============================================================================
OIL & GAS (EXPLORATION & PRODUCTION) - 5.10%
Abraxas Petroleum Corp. - Series B, Sr. Sec. Gtd. Notes,
12.88%, 03/15/03 250,000 256,250
-------------------------------------------------------------------------------
Canadian Forest Oil Ltd. (Canada), Sr. Unsec. Gtd.
Yankee Sub. Notes, 8.75%, 09/15/07 250,000 245,000
-------------------------------------------------------------------------------
Chesapeake Energy Corp. - Series B, Sr. Unsec. Gtd. Sub.
Notes, 9.63%, 05/01/05 300,000 310,500
-------------------------------------------------------------------------------
Comstock Resources, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.25%, 05/01/07 250,000 261,875
-------------------------------------------------------------------------------
Pioneer Natural Resources Co., Sr. Unsec. Gtd. Notes,
9.63%, 04/01/10 135,000 144,112
-------------------------------------------------------------------------------
Triton Energy Ltd. (Cayman Islands), Sr. Unsec. Yankee
Notes, 8.88%, 10/01/07 115,000 116,725
===============================================================================
1,334,462
===============================================================================
OIL & GAS (REFINING & MARKETING) - 1.27%
Frontier Oil Corp., Sr. Unsec. Sub. Notes,
11.75%, 11/15/09 250,000 248,750
-------------------------------------------------------------------------------
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes,
11.13%, 07/01/06 110,000 83,050
===============================================================================
331,800
===============================================================================
PHOTOGRAPHY/IMAGING - 0.47%
Polaroid Corp., Sr. Unsec. Notes, 11.50%, 02/15/06 210,000 122,850
===============================================================================
POWER PRODUCERS (INDEPENDENT) - 1.95%
AES Corp. (The), Sr. Unsec. Notes,
9.38%, 09/15/10 150,000 155,250
-------------------------------------------------------------------------------
9.50%, 06/01/09 150,000 156,000
-------------------------------------------------------------------------------
Calpine Corp., Sr. Unsec. Notes, 8.63%, 08/15/10 200,000 197,946
===============================================================================
509,196
===============================================================================
RAILROADS - 2.56%
Kansas City Southern Railway, Sr. Notes, 9.50%,
10/01/08(c) 300,000 309,000
-------------------------------------------------------------------------------
Railamerica Transportation Corp., Sr. Unsec. Gtd. Sub.
Notes, 12.88%, 08/15/10 175,000 158,375
-------------------------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr. Yankee Gtd. Disc. Notes,
11.75%, 06/15/09(a) 275,000 202,812
===============================================================================
670,187
===============================================================================
REAL ESTATE INVESTMENT TRUSTS - 0.91%
Host Marriott LP, Sr. Notes, 9.25%, 10/01/07 (Acquired
09/29/00; Cost $172,797)(b) 175,000 174,563
-------------------------------------------------------------------------------
Pinnacle Holdings Inc., Sr. Unsec. Disc. Notes, 10.00%,
03/15/08(a) 115,000 63,825
===============================================================================
238,388
===============================================================================
|
AIM V.I. HIGH YIELD FUND
FS-100
PRINCIPAL MARKET
AMOUNT VALUE
RETAIL (GENERAL MERCHANDISE) - 0.91%
Pantry, Inc. (The), Sr. Unsec. Gtd. Sub. Notes,
10.25%, 10/15/07 $ 150,000 $ 141,000
-------------------------------------------------------------------------------
Travelcenters of America Inc., Sr. Gtd. Sub. Notes,
12.75%, 05/01/09 (Acquired 11/09/00; Cost
$96,296)(b)(e) 100,000 97,500
===============================================================================
238,500
===============================================================================
RETAIL (SPECIALTY) - 0.27%
CSK Auto Inc. - Series A, Sr. Gtd. Sub. Deb,
11.00%, 11/01/06 140,000 69,300
===============================================================================
RETAIL (SPECIALTY - APPAREL) - 0.51%
Big 5 Corp. - Series B, Sr. Unsec. Notes,
10.88%, 11/15/07 150,000 133,500
===============================================================================
SERVICES (COMMERCIAL & CONSUMER) - 0.62%
Avis Group Holdings, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/01/09 150,000 162,375
===============================================================================
SERVICES (EMPLOYMENT) - 0.76%
MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.38%, 01/15/08 225,000 199,125
===============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 10.04%
AirGate PCS, Inc., Sr. Disc. Sub. Notes,
13.50%, 10/01/09(a)(e) 250,000 145,000
-------------------------------------------------------------------------------
Alamosa PCS Holdings, Inc., Sr. Unsec. Gtd. Disc. Notes,
12.88%, 02/15/10(a) 550,000 266,750
-------------------------------------------------------------------------------
Crown Castle International Corp.,
Sr. Unsec. Disc. Notes, 10.63%, 11/15/07(a) 200,000 161,000
-------------------------------------------------------------------------------
Sr. Unsec. Notes, 10.75%, 08/01/11 200,000 208,500
-------------------------------------------------------------------------------
Horizon PCS, Inc., Sr. Disc. Notes,
14.00%, 10/01/10(a)(c)(e) 500,000 207,500
-------------------------------------------------------------------------------
IPCS, Inc., Sr. Disc. Notes, 14.00%, 07/15/10(a)(c)(e) 100,000 40,500
-------------------------------------------------------------------------------
KMC Telecom Holdings, Inc., Sr. Unsec. Notes, 13.50%,
05/15/09 1,000,000 295,000
-------------------------------------------------------------------------------
Nextel International, Inc., Sr. Notes,
12.75%, 08/01/10(c) 250,000 206,250
-------------------------------------------------------------------------------
Spectrasite Holdings, Inc.,
Sr. Unsec. Disc. Notes, 11.25%, 11/15/09(a) 270,000 141,750
-------------------------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.00%, 07/15/08(a) 400,000 242,000
-------------------------------------------------------------------------------
Sr. Notes, 12.50%, 04/15/10(c) 275,000 274,313
-------------------------------------------------------------------------------
Telecorp PCS, Inc., Sr. Unsec. Gtd. Sub. Notes, 10.63%,
07/15/10 300,000 306,000
-------------------------------------------------------------------------------
UbiquiTel Operating Co., Sr. Unsec. Gtd. Disc. Sub.
Notes, 14.00%, 04/15/10(a) 300,000 132,000
===============================================================================
2,626,563
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 8.01%
360networks Inc. (Canada), Sr. Unsec. Sub. Yankee
Notes, 12.00%, 08/01/09 $ 500,000 $ 382,500
-----------------------------------------------------------------------------
Destia Communications, Inc., Sr. Unsec. Notes, 13.50%,
07/15/07 650,000 230,750
-----------------------------------------------------------------------------
Primus Telecommunications Group, Inc., Sr. Unsec.
Notes, 12.75%, 10/15/09 1,000,000 285,000
-----------------------------------------------------------------------------
ProNet Inc., Sr. Sub. Notes, 11.88%, 06/15/05 350,000 89,250
-----------------------------------------------------------------------------
Tele1 Europe B.V. (Netherlands), Sr. Unsec. Yankee
Notes, 13.00%, 05/15/09(e) 1,000,000 905,000
-----------------------------------------------------------------------------
Versatel Telecom International N.V. (Netherlands),
Sr. Unsec. Yankee Notes, 13.25%, 05/15/08 200,000 127,000
-----------------------------------------------------------------------------
Sr. Yankee Notes, 13.25%, 05/15/08 100,000 63,500
-----------------------------------------------------------------------------
Viatel, Inc., Sr. Unsec. Notes, 11.50%, 03/15/09 34,000 10,710
=============================================================================
2,093,710
=============================================================================
TELEPHONE - 10.64%
ICG Services, Inc., Sr. Unsec. Disc. Notes,
10.00%, 02/15/08(a)(d) 600,000 33,000
-----------------------------------------------------------------------------
Impsat Fiber Networks Inc., Sr. Unsec. Notes,
13.75%, 02/15/05 275,000 180,125
-----------------------------------------------------------------------------
Intermedia Communications Inc. - Series B, Sr. Disc.
Notes, 11.25%, 07/15/07(a) 375,000 226,875
-----------------------------------------------------------------------------
Jazztel PLC (United Kingdom), Sr. Unsec. Yankee Notes,
14.00%, 04/01/09 500,000 327,500
-----------------------------------------------------------------------------
NTELOS Inc., Sr. Unsec. Notes, 13.00%, 08/15/10 300,000 211,500
-----------------------------------------------------------------------------
NTL Communications Corp. - Series B, Sr. Unsec. Notes,
12.38%, 10/01/08(a) 750,000 423,750
-----------------------------------------------------------------------------
NTL Inc. - Series B, Sr. Notes, 11.50%, 02/01/06(a) 150,000 131,250
-----------------------------------------------------------------------------
PF.Net Communications, Inc., Sr. Unsec. Notes, 13.75%,
05/15/10 300,000 165,000
-----------------------------------------------------------------------------
PTC International Finance II S.A. (Luxembourg), Sr.
Unsec. Gtd. Yankee Sub. Notes, 11.25%, 12/01/09 600,000 573,000
-----------------------------------------------------------------------------
XO Communications, Inc.,
Sr. Unsec. Notes, 10.75%, 11/15/08 500,000 415,000
-----------------------------------------------------------------------------
Sr. Unsec. Disc. Notes, 12.25%, 06/01/09(a) 190,000 95,950
=============================================================================
2,782,950
=============================================================================
TRUCKERS - 0.76%
North American Van Lines Inc., Sr. Sub. Notes, 13.38%,
12/01/09(c) 250,000 198,750
=============================================================================
WASTE MANAGEMENT - 1.25%
Allied Waste North America Inc. - Series B, Sr. Unsec.
Gtd. Sub. Notes, 10.00%, 08/01/09 345,000 326,025
=============================================================================
Total Bonds & Notes (Cost $29,124,091) 22,498,571
=============================================================================
|
AIM V.I. HIGH YIELD FUND
FS-101
MARKET
SHARES VALUE
STOCKS & OTHER EQUITY INTERESTS - 0.81%
COMPUTERS (SOFTWARE & SERVICES) - 0.01%
FirstWorld Communications Inc. - Class B(f) 2,765 $ 1,815
===============================================================================
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc.(f) 60 1
===============================================================================
SERVICES (COMPUTER SYSTEMS) - 0.00%
Convergent Communications, Inc.(f) 1,350 802
===============================================================================
SHIPPING - 0.00%
Millenium Seacarriers(f) 100 125
===============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.47%
AirGate PCS, Inc.(f) 365 12,957
-------------------------------------------------------------------------------
Crown Castle International Corp.(f) 70 1,894
-------------------------------------------------------------------------------
Crown Castle International Corp. - $3.13 Conv. Pfd. 2,000 89,468
-------------------------------------------------------------------------------
World Access, Inc. - Series D, Conv. Pfd.
(Acquired 03/03/00; Cost $97,271)(b)(f) 100 18,025
===============================================================================
122,344
===============================================================================
TELECOMMUNICATIONS (LONG DISTANCE) - 0.33%
Tele1 Europe B.V. - ADR (Netherlands)(f) 11,448 52,947
-------------------------------------------------------------------------------
Versatel Telecom International N.V. - ADR
(Netherlands)(f) 3,868 33,361
===============================================================================
86,308
===============================================================================
Total Stocks & Other Equity Interests (Cost $484,489) 211,395
===============================================================================
WARRANTS - 0.94%
BUILDING MATERIALS - 0.02%
Dayton Superior - Wts, expiring 06/15/09(c)(g) 220 4,510
===============================================================================
COMPUTERS (PERIPHERALS) - 0.25%
Equinix, Inc. - Wts., expiring 12/01/07(c)(g) 630 66,307
===============================================================================
COMPUTERS (SOFTWARE & SERVICES) - 0.08%
GT Group Telecom Inc. (Canada) - Wts., expiring
02/01/10(c)(g) 500 22,000
===============================================================================
FINANCIAL (DIVERSIFIED) - 0.13%
ONO Finance PLC (United Kingdom) - Wts., expiring
05/31/09(g) 550 33,000
===============================================================================
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.00%
Resort At Summerlin LP - Wts., expiring 12/15/07(g) 467 5
===============================================================================
HOUSEHOLD FURNISHING & APPLIANCES - 0.01%
Winsloew Furniture, Inc. - Wts., expiring 08/15/07(c)(g) 150 1,519
===============================================================================
RAILROADS - 0.01%
Railamerica Transportation Corp. - Wts., expiring
08/15/10(b)(g) 175 1,794
===============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.02%
Ubiquitel Operating Co. - Wts., expiring 04/15/10(b)(g) 300 6,075
-------------------------------------------------------------------------------
|
MARKET
SHARES VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 0.00%
Long Distance International, Inc. - Wts., expiring
04/13/08(g) 140 $ 1
=========================================================================
TELEPHONE - 0.42%
Jazztel PLC (United Kingdom) - Wts., expiring
04/01/09(c)(g)(h) 2,250 92,469
-------------------------------------------------------------------------
NTELOS Inc. - Wts., expiring 08/15/10(c)(g) 300 2,250
-------------------------------------------------------------------------
PF.Net Communications, Inc. - Wts., expiring
05/15/10(c)(g) 300 15,000
=========================================================================
109,719
=========================================================================
Total Warrants (Cost $52,406) 244,930
=========================================================================
MONEY MARKET FUNDS - 9.48%
STIC Liquid Assets Portfolio(i) 1,239,441 1,239,441
-------------------------------------------------------------------------
STIC Prime Portfolio(i) 1,239,441 1,239,441
=========================================================================
Total Money Market Funds (Cost $2,478,882) 2,478,882
=========================================================================
TOTAL INVESTMENTS - 97.26%
(Cost $32,139,868) 25,433,778
=========================================================================
OTHER ASSETS LESS LIABILITIES - 2.74% 717,449
=========================================================================
NET ASSETS - 100.00% $26,151,227
=========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Wts. - Warrants
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The aggregate market value of these securities at
12/31/00 was $609,432, which represented 2.33% of the Fund's net assets.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(d) Defaulted security. Currently, the issuer is partially in default with
respect to interest payments.
(e) Consists of more than one class of securities traded together as a unit.
In addition to the security listed, each unit includes common or preferred
shares of the issuer.
(f) Non-income producing security.
(g) Acquired as part of a unit with or in exchange for other securities.
(h) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(i) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
FS-102
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $32,139,868) $25,433,778 ------------------------------------------------------------ Receivables for: Fund shares sold 79,064 ------------------------------------------------------------ Dividends and interest 699,566 ------------------------------------------------------------ Investment for deferred compensation plan 14,810 ------------------------------------------------------------ Other assets 490 ============================================================ Total assets 26,227,708 ============================================================ LIABILITIES: Payables for: Fund shares reacquired 1,375 ------------------------------------------------------------ Deferred compensation plan 14,810 ------------------------------------------------------------ Accrued advisory fees 13,086 ------------------------------------------------------------ Accrued administrative services fees 34,240 ------------------------------------------------------------ Accrued operating expenses 12,970 ------------------------------------------------------------ Total liabilities 76,481 ============================================================ Net assets applicable to shares outstanding $26,151,227 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 4,117,454 ============================================================ Net asset value $ 6.35 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME: Dividends $ 1,563 ----------------------------------------------------------------------------- Dividends from affiliated money market funds 127,227 ----------------------------------------------------------------------------- Interest 3,339,231 ============================================================================= Total investment income 3,468,021 ============================================================================= EXPENSES: Advisory fees 172,669 ----------------------------------------------------------------------------- Administrative services fees 93,298 ----------------------------------------------------------------------------- Custodian fees 17,773 ----------------------------------------------------------------------------- Trustees' fees 5,995 ----------------------------------------------------------------------------- Professional fees 23,563 ----------------------------------------------------------------------------- Other 15,062 ============================================================================= Total expenses 328,360 ============================================================================= Less: Fees waived (16,986) ----------------------------------------------------------------------------- Expenses paid indirectly (3,521) ============================================================================= Net expenses 307,853 ============================================================================= Net investment income 3,160,168 ============================================================================= REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES: Net realized gain (loss) from investment securities (2,368,962) ----------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities (6,676,412) ----------------------------------------------------------------------------- Net gain (loss) from investment securities (9,045,374) ============================================================================= Net increase (decrease) in net assets resulting from operations $(5,885,206) _____________________________________________________________________________ ============================================================================= |
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
FS-103
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
----------- -----------
OPERATIONS:
Net investment income $ 3,160,168 $ 1,834,622
------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (2,368,962) (517,194)
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (6,676,412) 296,072
==============================================================================
Net increase (decrease) in net assets resulting
from operations (5,885,206) 1,613,500
==============================================================================
Distributions to shareholders from net investment
income (3,302,036) (1,900,359)
------------------------------------------------------------------------------
Share transactions - net 10,070,283 17,588,744
==============================================================================
Net increase in net assets 883,041 17,301,885
==============================================================================
NET ASSETS:
Beginning of year 25,268,186 7,966,301
==============================================================================
End of year $26,151,227 $25,268,186
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $36,258,159 $26,250,824
------------------------------------------------------------------------------
Undistributed net investment income (141,556) (62,636)
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (3,259,286) (890,324)
------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (6,706,090) (29,678)
==============================================================================
$26,151,227 $25,268,186
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. High Yield Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
achieve a high level of current income. Debt securities of less than
investment grade are considered "high-risk" securities (commonly referred to
as junk bonds). These bonds may involve special risks in addition to the risks
associated with investment in higher rated debt securities. High yield bonds
may be more susceptible to real or perceived adverse economic conditions than
higher grade bonds. Also, the secondary market in which high yield bonds are
traded may be less liquid than the market for higher grade bonds.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on
an exchange (except convertible bonds) is valued at its last sales price
as of the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of
prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in
the case of equity securities and in the case of debt obligations, the
mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are
AIM V.I. HIGH YIELD FUND
FS-104
valued at fair value as determined in good faith by or under the supervision
of the Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and option contracts
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the
customary trading session of the NYSE which would not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under
the supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was increased by
$62,948 and paid-in capital decreased by $62,948 as a result of excess
distributions for federal income tax purposes. Net assets of the Fund were
unaffected by the reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $2,803,331 as of December 31, 2000 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2008.
E. Bond Premiums - It has been the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes. In November 2000, a
revised AICPA Audit and Accounting Guide, Audits of Investment Companies,
was issued and is effective for fiscal years beginning after December 15,
2000. The revised Guide will require the Fund to amortize premium and
discount on all fixed-income securities by the cumulative amount of
amortization that would have been recognized had amortization been in
effect from the purchase date of each holding. Adopting this accounting
principle will not effect the Fund's net asset value, but will change the
classification of certain amounts between interest income and realized and
unrealized gain/loss in the Statement of Operations. The Fund expects that
the impact of the adoption of this principle will not be material to the
financial statements.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.625%
on the first $200 million of the Fund's average daily net assets, plus 0.55%
on the next $300 million of the Fund's average daily net assets, plus 0.50% on
the next $500 million of the Fund's average daily net assets, plus 0.45% on
the Fund's average daily net assets in excess of $1 billion. During the year
ended December 31, 2000, AIM waived fees of $16,986.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $93,298 of which AIM retained $50,137 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,331
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $3,521 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $3,521.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $26,222,632 and $17,914,450, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 584,693 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (7,290,783) ========================================================================== Net unrealized appreciation (depreciation) of investment securities $(6,706,090) __________________________________________________________________________ ========================================================================== |
Investments have the same cost for tax and financial statement purposes.
AIM V.I. HIGH YIELD FUND
FS-105
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and 1999
were as follows:
2000 1999
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
Sold 1,470,878 $12,585,955 2,064,369 $19,155,692
--------------------------------------------------------------------------
Issued as reinvestment of
dividends 521,649 3,302,036 211,621 1,900,359
--------------------------------------------------------------------------
Reacquired (675,118) (5,817,708) (377,620) (3,467,307)
==========================================================================
1,317,409 $10,070,283 1,898,370 $17,588,744
__________________________________________________________________________
==========================================================================
|
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
MAY 1, 1998
YEAR ENDED (DATE OPERATIONS
DECEMBER 31, COMMENCED) TO
------------------- DECEMBER 31,
2000 1999(a) 1998
------- ------- ----------------
Net asset value, beginning of period $ 9.02 $ 8.84 $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.91 1.03 0.39
--------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.64) (0.10) (1.15)
================================================================================
Total from investment operations (1.73) 0.93 (0.76)
================================================================================
Less distributions from net investment
income (0.94) (0.75) (0.40)
================================================================================
Net asset value, end of period $ 6.35 $ 9.02 $ 8.84
________________________________________________________________________________
================================================================================
Total return(b) (19.14)% 10.52% (7.61)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,151 $25,268 $7,966
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.13%(c) 1.14% 1.13%(d)
--------------------------------------------------------------------------------
Without fee waivers 1.19%(c) 1.42% 2.50%(d)
________________________________________________________________________________
================================================================================
Ratio of net investment income to average
net assets 11.44%(c) 11.07% 9.75%(d)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 72% 127% 39%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Total return is not annualized for periods less than one year.
(c) Ratios are based on average daily net assets of $27,626,986.
(d) Annualized.
AIM V.I. HIGH YIELD FUND
FS-106
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. International Equity Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. International Equity Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. INTERNATIONAL EQUITY FUND
FS-107
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 91.34%
AUSTRALIA - 0.99%
AMP Ltd. (Insurance - Life/Health) 162,800 $ 1,831,492
-------------------------------------------------------------------------------
Brambles Industries Ltd. (Air Freight) 73,300 1,712,779
-------------------------------------------------------------------------------
Cable & Wireless Optus Ltd. (Telephone)(a) 381,000 788,526
===============================================================================
4,332,797
===============================================================================
BRAZIL - 1.60%
Brasil Telecom Participacoes S.A. - ADR (Telephone) 13,970 824,230
-------------------------------------------------------------------------------
Companhia de Bebidas das Americas - ADR (Beverages -
Alcoholic) 108,400 2,791,300
-------------------------------------------------------------------------------
Companhia Paulista de Forca e Luz (Electric Companies) 2 42
-------------------------------------------------------------------------------
Embratel Participacoes S.A. - ADR (Telephone) 60,600 950,662
-------------------------------------------------------------------------------
Paulista de Forca e Luz (Electric Companies) 1 49
-------------------------------------------------------------------------------
Petroleo Brasileiro S.A. - Petrobras-Pfd. (Oil &
Gas - Exploration & Production) 103,239 2,423,729
-------------------------------------------------------------------------------
Tele Centro Oeste Celular Participacoes S.A. - ADR
(Telecommunication - Cellular/Wireless) 1 10
===============================================================================
6,990,022
===============================================================================
CANADA - 8.60%
360networks Inc. (Telecommunications - Long
Distance)(a) 196,200 2,501,550
-------------------------------------------------------------------------------
Biovail Corp. (Health Care - Drugs - Generic
& Other)(a) 82,100 3,188,764
-------------------------------------------------------------------------------
Bombardier Inc. - Class B (Aerospace/Defense) 497,700 7,680,658
-------------------------------------------------------------------------------
C-MAC Industries, Inc. (Electronics - Component
Distributors)(a) 113,600 5,073,795
-------------------------------------------------------------------------------
Celestica Inc. (Electronics - Semiconductors)(a) 123,900 6,690,154
-------------------------------------------------------------------------------
Cognos, Inc. (Computers - Software & Services)(a) 63,300 1,190,831
-------------------------------------------------------------------------------
Loblaw Co. Ltd. (Retail - Specialty) 68,800 2,316,112
-------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 143,168 4,590,324
-------------------------------------------------------------------------------
Rogers Communications, Inc. - Class B
(Telecommunications - Cellular/Wireless) 117,700 1,985,074
-------------------------------------------------------------------------------
Shaw Communications Inc. - Class B
(Broadcasting - Television, Radio & Cable) 102,700 2,396,174
===============================================================================
37,613,436
===============================================================================
DENMARK - 2.62%
Novo Nordisk A.S. - Class B (Health Care -
Drugs - Generic & Other) 32,675 5,862,481
-------------------------------------------------------------------------------
Vestas Wind Systems A.S.
(Manufacturing - Specialized) 103,100 5,581,849
===============================================================================
11,444,330
===============================================================================
|
MARKET
SHARES VALUE
FINLAND - 2.04%
Nokia Oyj (Communications Equipment) 200,200 $ 8,929,896
=============================================================================
FRANCE - 19.84%
Alcatel S.A. (Communications Equipment) 113,600 6,453,903
-----------------------------------------------------------------------------
Altran Technologies S.A. (Services - Commercial
& Consumer) 36,113 8,172,771
-----------------------------------------------------------------------------
Assurances Generales de France
(Insurance - Multi-Line) 88,300 6,135,941
-----------------------------------------------------------------------------
Aventis S.A. (Chemicals - Diversified) 110,200 9,675,689
-----------------------------------------------------------------------------
BNP Paribas (Banks - Major Regional) 81,300 7,138,236
-----------------------------------------------------------------------------
Havas Advertising S.A. (Services -
Advertising/Marketing) 234,500 3,391,191
-----------------------------------------------------------------------------
M6 Metropole Television (Broadcasting - Television,
Radio & Cable) 22,100 829,083
-----------------------------------------------------------------------------
Pinault - Printemps - Redoute S.A. (Retail - General
Merchandise) 28,600 6,147,528
-----------------------------------------------------------------------------
PSA Peugeot Citroen (Automobiles) 19,500 4,436,870
-----------------------------------------------------------------------------
Publicis Groupe (Services -
Advertising/Marketing) 146,700 4,957,933
-----------------------------------------------------------------------------
Renault S.A. (Automobiles) 46,300 2,413,030
-----------------------------------------------------------------------------
Sanofi-Synthelabo S.A. (Health Care - Drugs -
Generic & Other) 74,600 4,973,772
-----------------------------------------------------------------------------
Schneider Electric S.A. (Housewares) 31,000 2,261,890
-----------------------------------------------------------------------------
Societe Generale - Class A (Banks -
Major Regional) 104,900 6,521,120
-----------------------------------------------------------------------------
Societe Television Francaise 1 (Broadcasting -
Television, Radio & Cable) 79,750 4,306,131
-----------------------------------------------------------------------------
TotalFinaElf S.A. (Oil - International Integrated) 60,225 8,958,199
=============================================================================
86,773,287
=============================================================================
GERMANY - 4.65%
ADVA A.G. Optical Networking (Communications
Equipment)(a) 13,400 773,871
-----------------------------------------------------------------------------
Altana A.G. (Health Care - Drugs - Generic & Other) 54,300 8,571,489
-----------------------------------------------------------------------------
MLP A.G. - Pfd. (Services - Commercial & Consumer) 39,100 4,277,514
-----------------------------------------------------------------------------
Porsche A.G. - Pfd. (Automobiles) 2,065 6,728,810
=============================================================================
20,351,684
=============================================================================
HONG KONG - 3.45%
China Mobile Ltd. (Telecommunications -
Cellular/Wireless)(a) 1,171,000 6,395,708
-----------------------------------------------------------------------------
Dao Heng Bank Group Ltd. (Banks - Regional) 512,000 2,921,138
-----------------------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail - Food Chains) 461,900 5,759,167
=============================================================================
15,076,013
=============================================================================
|
AIM V.I. INTERNATIONAL EQUITY FUND
FS-108
MARKET
SHARES VALUE
INDIA - 0.31%
Infosys Technologies Ltd. (Computers - Software &
Services)(b) 11,200 $ 1,368,941
==============================================================================
IRELAND - 0.99%
Bank of Ireland (Banks - Major Regional) 432,000 4,332,551
==============================================================================
ISRAEL - 0.57%
Teva Pharmaceutical Industries Ltd. - ADR (Health
Care - Drugs - Generic & Other) 34,100 2,497,825
==============================================================================
ITALY - 3.02%
Bulgari S.p.A. (Consumer - Jewelry, Novelties
& Gifts) 195,000 2,398,803
------------------------------------------------------------------------------
Gruppo Editoriale L'Espresso (Publishing) 24,200 209,525
------------------------------------------------------------------------------
Riunione Adriatica di Sicurta S.p.A (Insurance
Brokers) 679,000 10,590,784
==============================================================================
13,199,112
==============================================================================
JAPAN - 11.22%
Advantest Corp. (Electronics - Instrumentation) 22,500 2,105,562
------------------------------------------------------------------------------
Crayfish Co. Ltd. - ADR (Computers - Software
& Services)(a) 9,800 85,750
------------------------------------------------------------------------------
Hirose Electric Co. Ltd. (Electronics - Component
Distributors) 18,800 1,808,641
------------------------------------------------------------------------------
Hoya Corp. (Manufacturing - Specialized) 36,000 2,644,744
------------------------------------------------------------------------------
Matsushita Communication Industrial Co., Ltd.
(Telephone) 27,000 3,388,578
------------------------------------------------------------------------------
Murata Manufacturing Co., Ltd. (Electronics -
Component Distributors) 18,000 2,109,498
------------------------------------------------------------------------------
NEC Corp. (Computers - Hardware) 187,000 3,418,139
------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications - Long Distance) 340 2,447,263
------------------------------------------------------------------------------
NTT Data Corp. (Computers - Software & Services) 268 1,781,354
------------------------------------------------------------------------------
NTT DoCoMo, Inc. (Telecommunications -
Cellular/Wireless) 120 2,067,518
------------------------------------------------------------------------------
Ricoh Co., Ltd. (Office Equipment & Supplies) 156,000 2,878,783
------------------------------------------------------------------------------
Rohm Co. Ltd. (Electronics - Component Distributors) 8,200 1,556,236
------------------------------------------------------------------------------
Sanix Inc. (Services - Commercial & Consumer) 30,450 1,179,758
------------------------------------------------------------------------------
Sanyo Electric Co., Ltd. (Electronics - Component
Distributors) 912,000 7,577,401
------------------------------------------------------------------------------
Sharp Corp. (Electrical Equipment) 124,000 1,494,420
------------------------------------------------------------------------------
Sony Corp. (Electrical Equipment) 45,200 3,122,967
------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. (Health Care -
Drugs - Generic & Other) 85,000 5,025,363
------------------------------------------------------------------------------
Tokyo Electron Ltd. (Electronics - Semiconductors) 36,000 1,977,261
------------------------------------------------------------------------------
Trend Micro Inc. (Computers - Software & Services)(a) 33,400 2,415,760
==============================================================================
49,084,996
==============================================================================
|
MARKET
SHARES VALUE
MEXICO - 2.90%
Coca-Cola Femsa S.A. - ADR (Beverages -
Non-Alcoholic) 105,200 $ 2,353,850
---------------------------------------------------------------------------
Fomento Economico Mexicano, S.A. de C.V. - ADR
(Beverages - Alcoholic) 51,109 1,526,881
---------------------------------------------------------------------------
Grupo Modelo S.A. de C.V. - Series C (Beverages -
Alcoholic) 564,000 1,496,021
---------------------------------------------------------------------------
Grupo Televisa S.A. - GDR (Entertainment)(a) 71,360 3,206,740
---------------------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de C.V. - Class A
(Paper & Forest Products) 226,000 625,329
---------------------------------------------------------------------------
Telefonos de Mexico S.A. de C.V. - Class L - ADR
(Telephone) 35,036 1,580,999
---------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V. - Series C
(Retail - General Merchandise)(a) 1,014,000 1,866,937
===========================================================================
12,656,757
===========================================================================
NETHERLANDS - 3.55%
Koninklijke (Royal) Philips Electronics N.V.
(Electrical Equipment) 86,299 3,162,145
---------------------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 122,500 6,165,802
---------------------------------------------------------------------------
VNU N.V. (Publishing) 126,400 6,213,731
===========================================================================
15,541,678
===========================================================================
NORWAY - 0.58%
Tomra Systems A.S.A. (Manufacturing - Specialized) 131,700 2,551,256
===========================================================================
SINGAPORE - 1.12%
Datacraft Asia Ltd. (Communications Equipment) 253,360 1,195,859
---------------------------------------------------------------------------
DBS Group Holdings Ltd. (Banks - Money Center) 181,979 2,059,347
---------------------------------------------------------------------------
Keppel Corp. Ltd. (Engineering & Construction) 479,000 934,769
---------------------------------------------------------------------------
Singapore Press Holdings Ltd. (Publishing -
Newspapers) 47,562 702,995
---------------------------------------------------------------------------
United Overseas Bank Ltd. (Banks - Major Regional) 1 8
===========================================================================
4,892,978
===========================================================================
SOUTH KOREA - 0.84%
Korea Telecom Corp. - ADR (Telephone) 57,330 1,777,230
---------------------------------------------------------------------------
Pohang Iron & Steel Co. Ltd. - ADR (Iron & Steel) 46,515 723,890
---------------------------------------------------------------------------
Samsung Electronics N.V. (Electronics - Component
Distributors) 9,500 1,186,561
===========================================================================
3,687,681
===========================================================================
SPAIN - 1.00%
Telefonica S.A. (Telephone)(a) 263,043 4,347,385
===========================================================================
SWEDEN - 0.29%
Assa Abloy A.B. - Class B (Metal Fabricators) 65,000 1,271,604
===========================================================================
|
AIM V.I. INTERNATIONAL EQUITY FUND
FS-109
MARKET
SHARES VALUE
SWITZERLAND - 5.91%
Compagnie Financiere Richemont A.G. - Units
(Tobacco)(c) 2,595 $ 6,941,885
------------------------------------------------------------------------------
Julius Baer Holding A.G. - Class B (Banks - Major
Regional) 465 2,545,233
------------------------------------------------------------------------------
Kudelski S.A. (Electronics - Component
Distributors)(a) 700 777,538
------------------------------------------------------------------------------
Nestle S.A. (Foods) 2,300 5,365,011
------------------------------------------------------------------------------
Serono S.A. - Class B (Health Care - Drugs - Generic
& Other) 6,180 5,949,275
------------------------------------------------------------------------------
Swatch Group A.G. (The) - Class B (Consumer -
Jewelry, Novelties & Gifts) 3,400 4,248,689
==============================================================================
25,827,631
==============================================================================
TAIWAN - 0.55%
Far Eastern Textile Ltd. - GDR (Textiles - Apparel) 29,483 206,381
------------------------------------------------------------------------------
Far Eastern Textile Ltd. - GDR (Textiles - Apparel)
(Acquired 11/12/99-11/15/99; Cost $230,565)(d) 17,709 123,963
------------------------------------------------------------------------------
GT Taiwan Fund (Investment Management)(a)(b)(e) 15,291 62,082
------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd. -
ADR (Electronics - Semiconductors)(a) 115,760 1,996,860
==============================================================================
2,389,286
==============================================================================
THAILAND - 0.00%
Siam Commercial Bank Public Co. Ltd. (Banks -
Major Regional)(a) 32,800 14,737
==============================================================================
UNITED KINGDOM - 14.70%
ARM Holdings PLC (Electronics -
Semiconductors)(a) 632,900 4,788,659
------------------------------------------------------------------------------
BP Amoco PLC (Oil - International Integrated) 734,400 5,930,001
------------------------------------------------------------------------------
Capita Group PLC (Services - Commercial & Consumer) 630,000 4,710,195
------------------------------------------------------------------------------
CMG PLC (Computers - Software & Services) 123,900 1,727,772
------------------------------------------------------------------------------
Logica PLC (Computers - Software & Services) 90,100 2,357,714
------------------------------------------------------------------------------
Marconi PLC (Communications Equipment) 553,240 5,947,998
------------------------------------------------------------------------------
Matalan PLC (Retail - Discounters) 213,100 2,230,539
------------------------------------------------------------------------------
Next PLC (Retail - General Merchandise) 202,600 2,438,730
------------------------------------------------------------------------------
Pace Micro Technology PLC (Communications Equipment) 209,000 1,421,956
------------------------------------------------------------------------------
Royal Bank of Scotland Group PLC (The) (Banks - Major
Regional) 331,700 7,846,578
------------------------------------------------------------------------------
Shell Transport & Trading Co. PLC (Oil -
International Integrated) 723,100 5,936,070
------------------------------------------------------------------------------
Spirent PLC (Communications Equipment) 822,600 7,503,206
------------------------------------------------------------------------------
Vodafone AirTouch PLC - ADR (Telecommunications -
Cellular/Wireless) 1,750 62,672
------------------------------------------------------------------------------
Vodafone Group PLC (Telecommunications -
Cellular/Wireless) 1,763,155 6,472,474
------------------------------------------------------------------------------
WPP Group PLC (Services - Advertising/Marketing) 376,400 4,907,886
==============================================================================
64,282,450
==============================================================================
Total Foreign Stocks & Other Equity Interests
(Cost $344,680,848) 399,458,333
==============================================================================
|
MARKET
SHARES VALUE
MONEY MARKET FUNDS - 12.91%
STIC Liquid Assets Portfolio(f) 28,230,486 $ 28,230,486
-----------------------------------------------------------------
STIC Prime Portfolio(f) 28,230,486 28,230,486
=================================================================
Total Money Market Funds
(Cost $56,460,972) 56,460,972
=================================================================
TOTAL INVESTMENTS - 104.25%
(Cost $401,141,820) 455,919,305
=================================================================
LIABILITIES LESS OTHER ASSETS - (4.25%) (18,583,053)
=================================================================
NET ASSETS - 100.00% $437,336,252
_________________________________________________________________
=================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
Pfd. - Preferred
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Security fair valued in accordance with the procedures established by the
Board of Trustees.
(c) Consists of more than one class of securities traded together as a unit.
In addition to the security listed, each unit includes common or preferred
shares of the issuer.
(d) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The market value of this security at 12/31/00
represented 0.03%
of the Fund's net assets.
(e) The security is managed by an affiliate of the advisor. The security is in
the process of being liquidated to its shareholders at a price of $16.25 a
share.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
FS-110
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $401,141,820) $455,919,305 -------------------------------------------------------------- Foreign currencies, at value (cost $432,453) 438,272 -------------------------------------------------------------- Receivables for: Fund shares sold 257,289 -------------------------------------------------------------- Dividends 901,120 -------------------------------------------------------------- Investment for deferred compensation plan 39,427 -------------------------------------------------------------- Other assets 14,954 ============================================================== Total assets 457,570,367 ============================================================== LIABILITIES: Payables for: Fund shares reacquired 19,365,496 -------------------------------------------------------------- Deferred compensation plan 39,427 -------------------------------------------------------------- Accrued advisory fees 260,486 -------------------------------------------------------------- Accrued administrative services fees 504,693 -------------------------------------------------------------- Accrued operating expenses 64,013 ============================================================== Total liabilities 20,234,115 ============================================================== Net assets applicable to shares outstanding $437,336,252 ============================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 21,737,067 ============================================================== Net asset value $ 20.12 ______________________________________________________________ ============================================================== |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $372,881) $ 6,159,963
------------------------------------------------------------------------------
Dividends from affiliated money market funds 2,396,887
------------------------------------------------------------------------------
Interest 44,828
==============================================================================
Total investment income 8,601,678
==============================================================================
EXPENSES:
Advisory fees 3,372,955
------------------------------------------------------------------------------
Administrative services fees 795,897
------------------------------------------------------------------------------
Custodian fees 384,900
------------------------------------------------------------------------------
Trustees' fees 7,107
------------------------------------------------------------------------------
Other 171,830
==============================================================================
Total expenses 4,732,689
==============================================================================
Less: Expenses paid indirectly (739)
==============================================================================
Net expenses 4,731,950
==============================================================================
Net investment income 3,869,728
==============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities (3,124,437)
------------------------------------------------------------------------------
Foreign currencies (2,461,382)
==============================================================================
(5,585,819)
==============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (132,113,764)
------------------------------------------------------------------------------
Foreign currencies 76,329
==============================================================================
(132,037,435)
==============================================================================
Net gain (loss) from investment securities and foreign
currencies (137,623,254)
==============================================================================
Net increase (decrease) in net assets resulting from
operations $(133,753,526)
______________________________________________________________________________
==============================================================================
|
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
FS-111
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income $ 3,869,728 $ 1,052,906
------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities and foreign currencies (5,585,819) 28,410,687
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (132,037,435) 127,549,239
==============================================================================
Net increase (decrease) in net assets resulting
from operations (133,753,526) 157,012,832
==============================================================================
Distributions to shareholders from net investment
income (1,118,337) (2,918,487)
------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (28,627,379) (12,247,382)
------------------------------------------------------------------------------
Share transactions - net 146,775,943 71,898,276
==============================================================================
Net increase (decrease) in net assets (16,723,299) 213,745,239
==============================================================================
NET ASSETS:
Beginning of year 454,059,551 240,314,312
==============================================================================
End of year $437,336,252 $454,059,551
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $393,269,659 $256,736,054
------------------------------------------------------------------------------
Undistributed net investment income (loss) 1,149,800 (84,098)
------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign currencies (11,846,727) 10,606,640
------------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 54,763,520 186,800,955
==============================================================================
$437,336,252 $454,059,551
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. International Equity Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
provide long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts
AIM V.I. INTERNATIONAL EQUITY FUND
FS-112
generally will be valued 15 minutes after the close of the customary trading
session of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$1,517,493, undistributed net realized gains increased by $11,759,831 and
paid in capital decreased by $10,242,338 as a result of differing book/tax
treatment of foreign currency transactions, passive foreign investment
companies, capital losses and other reclassifications. Net assets of the Fund
were unaffected by the reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
The Fund has a capital loss carryforward of $6,458,675 as of December 31,
2000 which may be carried forward to offset future taxable gains, if any,
which expires in varying increments, if not previously utilized, through the
year 2007.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.75% of
the first $250 million of the Fund's average daily net assets, plus 0.70% of
the Fund's average daily net assets in excess of $250 million. Pursuant to a
master administrative services agreement with AIM, the Fund has agreed to pay
AIM a fee for costs incurred in providing accounting services and certain
administrative services to the Fund and to reimburse AIM for administrative
services paid to insurance companies that have agreed to provide
administrative services to the Fund. For the year ended December 31, 2000, the
Fund paid AIM $795,897 of which AIM retained $92,799 for such services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $5,098
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $739 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $739.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $474,319,512 and $368,029,679, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 77,678,229 --------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (26,041,366) =========================================================================== Net unrealized appreciation of investment securities $ 51,636,863 ___________________________________________________________________________ =========================================================================== |
Cost of investments for tax purposes is $404,282,442.
AIM V.I. INTERNATIONAL EQUITY FUND
FS-113
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and
1999 were as follows:
2000 1999
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- -------------
Sold 31,116,291 $ 774,633,497 6,613,497 $ 145,638,150
------------------------------------------------------------------------------
Issued as reinvestment
of dividends 1,451,718 29,745,716 582,183 15,165,869
------------------------------------------------------------------------------
Issued in connection
with acquisitions* -- -- 2,243,929 49,699,501
------------------------------------------------------------------------------
Reacquired (26,334,375) (657,603,270) (6,185,749) (138,605,244)
==============================================================================
6,233,634 $ 146,775,943 3,253,860 $ 71,898,276
______________________________________________________________________________
==============================================================================
|
* As of the close of business on October 22, 1999, the Fund acquired all the net assets of the following funds: GT Global Variable International Fund, GT Global Variable Europe Fund, GT Global Variable Natural Resources Fund, GT Global Variable Infrastructure Fund, GT Global Variable New Pacific Fund, GT Global Variable Latin America Fund and GT Global Variable Emerging Markets Fund, collectively (the "Variable Funds"), pursuant to a plan of reorganization approved by the Variable Funds shareholders on August 25, 1999. The acquisitions were accomplished by a tax-free exchange of 2,243,929 shares of the Fund for the respective shares of each of the Variable Funds outstanding as of the close of business October 22, 1999 (see following table) and by combining the net assets of the Fund as of that date with those of the respective Variable Funds outlined in the following table:
NET ASSETS APPRECIATION/
SHARES IMMEDIATELY (DEPRECIATION)
VARIABLE FUNDS: EXCHANGED BEFORE ACQUISITIONS INCLUDED
--------------------------------- ----------------------------------------
GT Global Variable International
Fund 398,165 $ 4,159,686 $ 591,925
-------------------------------------------------------------------------------
GT Global Variable Europe Fund 2,101,240 16,722,795 1,876,631
-------------------------------------------------------------------------------
GT Global Variable Natural
Resources Fund 426,574 5,000,655 167,642
-------------------------------------------------------------------------------
GT Global Variable Infrastructure
Fund 253,110 3,837,109 609,331
-------------------------------------------------------------------------------
GT Global Variable New Pacific
Fund 857,885 7,747,489 1,306,187
-------------------------------------------------------------------------------
GT Global Variable Latin America
Fund 731,544 7,915,791 (1,572,891)
===============================================================================
GT Global Variable Emerging
Markets Fund 544,479 4,315,976 117,775
_______________________________________________________________________________
===============================================================================
|
The net assets of the Fund immediately before the acquisitions were $285,111,544.
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
---------------------------------------------------
2000 1999(a) 1998 1997 1996
-------- -------- -------- -------- --------
Net asset value, beginning
of period $ 29.29 $ 19.62 $ 17.13 $ 16.36 $ 13.66
--------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.18 0.08 0.15 0.10 0.07
--------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (7.88) 10.59 2.50 1.03 2.67
================================================================================
Total from investment
operations (7.70) 10.67 2.65 1.13 2.74
================================================================================
Less distributions:
Dividends from net
investment income (0.06) (0.19) (0.16) (0.08) (0.04)
--------------------------------------------------------------------------------
Distributions from net
realized gains (1.41) (0.81) -- (0.28) --
================================================================================
Total distributions (1.47) (1.00) (0.16) (0.36) (0.04)
================================================================================
Net asset value, end of
period $ 20.12 $ 29.29 $ 19.62 $ 17.13 $ 16.36
________________________________________________________________________________
================================================================================
Total return (26.40)% 55.04% 15.49% 6.94% 20.05%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $437,336 $454,060 $240,314 $211,023 $165,738
________________________________________________________________________________
================================================================================
Ratio of expenses to
average net assets 1.02%(b) 0.97% 0.91% 0.93% 0.96%
________________________________________________________________________________
================================================================================
Ratio of net investment
income to average net
assets 0.83%(b) 0.38% 0.80% 0.68% 0.78%
________________________________________________________________________________
================================================================================
Portfolio turnover rate 88% 97% 76% 57% 59%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $463,993,620.
AIM V.I. INTERNATIONAL EQUITY FUND
FS-114
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Money Market Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Money Market Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. MONEY MARKET FUND
FS-115
SCHEDULE OF INVESTMENTS
December 31, 2000
PAR
(000) VALUE
COMMERCIAL PAPER--56.45%(a)
ASSET-BACKED SECURITIES - COMMERCIAL LOANS/LEASES - 4.05%
Fleet Funding Corp.
6.60%, 01/11/01 $ 3,000 $ 2,994,500
==============================================================================
ASSET-BACKED SECURITIES - FULLY BACKED - 16.81%
Aquinas Funding LLC
6.62%, 01/26/01 3,500 3,483,910
------------------------------------------------------------------------------
Blue Ridge Asset Funding Corp.
6.65%, 01/16/01 2,500 2,493,073
------------------------------------------------------------------------------
Forrestal Funding Master Trust
6.51%, 03/16/01 3,000 2,959,855
------------------------------------------------------------------------------
Three Rivers Funding Corp.
6.54%, 02/05/01 3,500 3,477,746
==============================================================================
12,414,584
==============================================================================
ASSET-BACKED SECURITIES - MULTI PURPOSE - 15.41%
Edison Asset Securitization, LLC
6.50%, 02/28/01 3,000 2,968,583
------------------------------------------------------------------------------
Falcon Asset Securitization Corp.
6.32%, 03/29/01 3,500 3,446,544
------------------------------------------------------------------------------
Monte Rosa Capital Corp.
6.55%, 02/01/01 3,000 2,983,079
------------------------------------------------------------------------------
Preferred Receivables Funding Corp.
6.52%, 02/23/01 2,000 1,980,802
==============================================================================
11,379,008
==============================================================================
ASSET-BACKED SECURITIES - TRADE RECEIVABLES - 2.70%
Asset Securitization Cooperative Corp.
6.62%, 01/10/01 2,000 1,996,690
==============================================================================
BANKS (MAJOR REGIONAL) - 4.06%
Corporate Asset Funding Co.
6.60%, 01/04/01 3,000 2,998,350
==============================================================================
|
PAR
(000) VALUE
FINANCIAL (DIVERSIFIED) - 9.38%
Deutsche Bank Financial Inc.
6.54%, 01/11/01 $ 3,000 $2,994,550
------------------------------------------------------------------------------
General Electric Capital Corp.
6.42%, 03/14/01 2,000 1,974,320
------------------------------------------------------------------------------
UBS Finance Delaware Inc.
6.20%, 05/08/01 2,000 1,956,256
==============================================================================
6,925,126
==============================================================================
INVESTMENTS (BANKING/BROKERAGE) - 4.04%
Salomon Smith Barney Holdings, Inc.
6.47%, 02/05/01 3,000 2,981,129
==============================================================================
Total Commercial Paper (Cost $41,689,387) 41,689,387
==============================================================================
SHORT-TERM OBLIGATIONS - 1.35%
FINANCIAL (DIVERSIFIED) - 1.35%
General Motors Acceptance Corp., Floating Rate
Notes, Daily VRD Series,(b)(c)
6.85%, 04/30/01 1,000 1,000,327
==============================================================================
Total Short-Term Obligations (Cost $1,000,327) 1,000,327
==============================================================================
MASTER NOTE AGREEMENTS - 9.34%(d)
Merrill Lynch Mortgage Capital, Inc.
6.94%, 08/20/01(e) 3,500 3,500,000
------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.
6.85%, 03/01/01(f) 3,400 3,400,000
==============================================================================
Total Master Note Agreements (Cost $6,900,000) 6,900,000
==============================================================================
Total Investments (excluding repurchase agreements) (Cost
$49,589,714) 49,589,714
==============================================================================
|
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-116
REPURCHASE AGREEMENTS - 31.79%(g) Bear Stearns & Co., Inc. 6.25%(h) 3,000 3,000,000 ---------------------------------------------------------------------- Dean Witter Reynolds, Inc. 6.45%, 01/02/01(i) 2,483 2,482,839 ---------------------------------------------------------------------- Paribas Corporation 6.45%, 01/02/01(j) 18,000 18,000,000 ====================================================================== Total Repurchase Agreements (Cost $23,482,839) 23,482,839 ====================================================================== TOTAL INVESTMENTS - 98.93% (COST $73,072,553) 73,072,553(k) ====================================================================== OTHER ASSETS LESS LIABILITIES - 1.07% 791,158 ====================================================================== NET ASSETS - 100.00% $73,863,711 ====================================================================== |
Investment Abbreviations:
VRD - Variable Rate Demand
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Some commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) The coupon rate shown on floating rate notes represents the rate at period
end.
(c) Demand security; payable upon demand by the fund with usually no more than
seven calender days notice. Interest rates are redetermined daily. Rates
shown are rates in effect on 12/31/00.
(d) The investments in master note agreements are through participation in
joint accounts with other mutual funds, private accounts, and certain non-
registered investment companies managed by the investment advisor or its
affiliates.
(e) The portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon one business day notice to the issuer.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on 12/31/00.
(f) The portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon three business days notice to the issuer.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on 12/31/00.
(g) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(h) Joint open repurchase agreement entered into 10/05/98. Either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $354,433,000 U.S. Government
obligations, 0% to 8.60% due 01/02/01 to 06/11/18 with an aggregate market
value at 12/31/00 of $358,448,039.
(i) Joint repurchase agreement entered into 12/29/00 with a maturing value of
$1,000,716,667. Collateralized by $1,052,992,000 U.S. Government and
Treasury obligations, 0% to 8.19% due 01/04/01 to 05/15/30 with an
aggregate market value at 12/31/00 of $1,020,000,476.
(j) Joint repurchase agreement entered into 12/29/00 with a maturing value of
$150,107,500. Collateralized by $194,775,383 U.S. Government and Treasury
obligations, 0% to 11.75% due 01/02/01 to 07/15/43 with an aggregate market
value at 12/31/00 of $153,000,330.
(k) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-117
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, excluding repurchase agreements, at value (amortized cost) $49,589,714 ------------------------------------------------------------------------------ Repurchase agreements 23,482,839 ------------------------------------------------------------------------------ Receivables for: Fund shares sold 965,881 ------------------------------------------------------------------------------ Interest 64,245 ------------------------------------------------------------------------------ Investment for deferred compensation plan 37,057 ------------------------------------------------------------------------------ Other assets 1,396 ============================================================================== Total assets 74,141,132 ============================================================================== LIABILITIES: Payables for: Fund shares reacquired 89,776 ------------------------------------------------------------------------------ Deferred compensation plan 37,057 ------------------------------------------------------------------------------ Accrued advisory fees 23,991 ------------------------------------------------------------------------------ Accrued administrative services fees 101,869 ------------------------------------------------------------------------------ Accrued operating expenses 24,728 ============================================================================== Total liabilities 277,421 ============================================================================== Net assets applicable to shares outstanding $73,863,711 ______________________________________________________________________________ ============================================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 73,863,654 ============================================================================== Net asset value $ 1.00 ______________________________________________________________________________ ============================================================================== |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME: Interest $4,825,158 ------------------------------------------------------------ EXPENSES: Advisory fees 303,297 ------------------------------------------------------------ Administrative services fees 137,982 ------------------------------------------------------------ Custodian fees 24,141 ------------------------------------------------------------ Trustees' fees 5,140 ------------------------------------------------------------ Other 66,682 ============================================================ Total expenses 537,242 ============================================================ Net investment income 4,287,916 ============================================================ Increase in net assets resulting from operations $4,287,916 ____________________________________________________________ ============================================================ |
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-118
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
------------ -----------
OPERATIONS:
Net investment income $ 4,287,916 $ 3,640,927
=============================================================================
Distributions to shareholders from net investment
income (4,287,916) (3,640,927)
-----------------------------------------------------------------------------
Share transactions - net (21,288,458) 31,061,846
=============================================================================
Net increase (decrease) in net assets (21,288,458) 31,061,846
=============================================================================
NET ASSETS:
Beginning of year 95,152,169 64,090,323
=============================================================================
End of year $ 73,863,711 $95,152,169
_____________________________________________________________________________
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 73,863,654 $95,152,112
-----------------------------------------------------------------------------
Undistributed net realized gain from investment
securities 57 57
=============================================================================
$ 73,863,711 $95,152,169
_____________________________________________________________________________
=============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Money Market Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to seek
to provide as high a level of current income as is consistent with the
preservation of capital and liquidity.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - The Fund's securities are valued on the basis of
amortized cost which approximates market value as permitted under Rule 2a-7
of the 1940 Act. This method values a security at its cost on the date of
purchase and thereafter, assumes a constant amortization to maturity of any
discount or premiums.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of premiums and discounts on
investments, is recorded on the accrual basis from settlement date.
C. Distributions - It is the policy of the Fund to declare and pay daily
dividends from net investment income. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on ex-
dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.40% on
the first $200 million of the Fund's average daily net assets, plus 0.35% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $137,982 of which AIM retained $50,000 for accounting
services provided.
AIM V.I. MONEY MARKET FUND
FS-119
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,391
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 4 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 5 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and
1999 were as follows:
2000 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
Sold 97,361,086 $ 97,361,086 113,630,564 $ 113,630,564
---------------------------------------------------------------------------------
Issued as reinvestment
of dividends 4,287,916 4,287,916 3,640,927 3,640,927
---------------------------------------------------------------------------------
Issued in connection
with acquisitions* -- -- 29,800,869 29,800,869
---------------------------------------------------------------------------------
Reacquired (122,937,460) (122,937,460) (116,010,514) (116,010,514)
=================================================================================
(21,288,458) $ (21,288,458) 31,061,846 $ 31,061,846
_________________________________________________________________________________
=================================================================================
|
* As of the close of business on October 15, 1999, the Fund acquired all the net assets GT Global Variable Money Market Fund ("Variable Money Market Fund") pursuant to a plan of reorganization approved by Variable Money Market Fund's shareholders on August 25, 1999. The acquisition was accomplished by a tax-free exchange of 29,800,869 shares of the Fund for 29,800,869 shares of Variable Money Market Fund outstanding as of the close of business on October 15, 1999. Variable Money Market Fund net assets at that date of $29,800,869 were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $80,730,864.
NOTE 6 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
----------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===============================================================================
Income from investment
operations:
Net investment income 0.06 0.05 0.05 0.05 0.05
===============================================================================
Less distributions from net
investment income (0.06) (0.05) (0.05) (0.05) (0.05)
===============================================================================
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
_______________________________________________________________________________
===============================================================================
Total return 5.83% 4.66% 5.06% 5.14% 4.97%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $73,864 $95,152 $64,090 $58,635 $63,529
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average
net assets 0.71%(a) 0.60% 0.58% 0.59% 0.55%
_______________________________________________________________________________
===============================================================================
Ratio of net investment income
to average net assets 5.66%(a) 4.59% 4.94% 5.01% 4.84%
_______________________________________________________________________________
===============================================================================
|
(a) Ratios are based on average daily net assets of $75,824,258.
AIM V.I. MONEY MARKET FUND
FS-120
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Telecommunications and Technology Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for each of the three years in the period ended December 31, 1998 were audited by other auditors whose report dated February 19, 1999, expressed an unqualified opinion thereon.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Telecommunications and Technology Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for each of the two years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. TELECOMMUNICATIONS & TECHNOLOGY FUND
FS-121
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 85.30%
BIOTECHNOLOGY - 8.75%
Amgen Inc.(a) 10,500 $ 671,344
---------------------------------------------------------------
Applera Corp. - Celera Genomics Group(a) 3,000 107,812
---------------------------------------------------------------
Celgene Corp.(a) 4,000 130,000
---------------------------------------------------------------
Cephalon, Inc.(a) 12,200 772,412
---------------------------------------------------------------
Ciphergen Biosystems, Inc.(a) 3,300 43,725
---------------------------------------------------------------
Genzyme Corp.(a) 3,300 296,794
---------------------------------------------------------------
Human Genome Sciences, Inc.(a) 8,200 568,362
---------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 8,600 1,630,237
---------------------------------------------------------------
Incyte Genomics, Inc.(a) 34,200 850,725
---------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(a) 16,000 990,000
===============================================================
6,061,411
===============================================================
COMMUNICATIONS EQUIPMENT - 10.26%
CIENA Corp.(a) 9,000 732,375
---------------------------------------------------------------
Comverse Technology, Inc.(a) 4,200 456,225
---------------------------------------------------------------
Corning Inc. 57,000 3,010,312
---------------------------------------------------------------
Finisar Corp.(a) 45,000 1,305,000
---------------------------------------------------------------
JDS Uniphase Corp.(a) 38,600 1,609,138
===============================================================
7,113,050
===============================================================
COMPUTERS (HARDWARE) - 2.76%
Handspring, Inc.(a) 15,600 607,425
---------------------------------------------------------------
Palm, Inc.(a) 46,100 1,305,206
===============================================================
1,912,631
===============================================================
COMPUTERS (NETWORKING) - 14.43%
Cisco Systems, Inc.(a) 65,900 2,520,675
---------------------------------------------------------------
Emulex Corp.(a) 43,200 3,453,300
---------------------------------------------------------------
Juniper Networks, Inc.(a) 26,100 3,290,231
---------------------------------------------------------------
VeriSign, Inc.(a) 9,900 734,456
===============================================================
9,998,662
===============================================================
COMPUTERS (PERIPHERALS) - 13.54%
Brocade Communications Systems, Inc.(a) 50,800 4,664,075
---------------------------------------------------------------
EMC Corp.(a) 40,000 2,660,000
---------------------------------------------------------------
Network Appliance, Inc.(a) 32,100 2,061,923
===============================================================
9,385,998
===============================================================
COMPUTERS (SOFTWARE & SERVICES) - 14.78%
Ariba, Inc.(a) 9,900 532,125
---------------------------------------------------------------
BEA Systems, Inc.(a) 52,600 3,540,638
---------------------------------------------------------------
i2 Technologies, Inc.(a) 8,400 456,750
---------------------------------------------------------------
Oracle Corp.(a) 32,000 930,000
---------------------------------------------------------------
Siebel Systems, Inc.(a) 33,000 2,231,625
---------------------------------------------------------------
VERITAS Software Corp.(a) 23,200 2,030,000
---------------------------------------------------------------
WatchGuard Technologies, Inc.(a) 16,500 521,813
===============================================================
10,242,951
===============================================================
|
MARKET
SHARES VALUE
ELECTRONICS (INSTRUMENTATION) - 1.60%
Alpha Industries, Inc.(a) 14,700 $ 543,900
-------------------------------------------------------------------------------
Waters Corp.(a) 6,800 567,800
===============================================================================
1,111,700
===============================================================================
ELECTRONICS (SEMICONDUCTORS) - 13.29%
Applied Micro Circuits Corp.(a) 65,900 4,945,589
-------------------------------------------------------------------------------
SDL, Inc.(a) 17,000 2,519,188
-------------------------------------------------------------------------------
TranSwitch Corp.(a) 5,500 215,188
-------------------------------------------------------------------------------
Triquint Semiconductor, Inc.(a) 35,000 1,529,063
===============================================================================
9,209,028
===============================================================================
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.21%
Genentech, Inc.(a) 7,000 570,500
-------------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 11,600 962,075
===============================================================================
1,532,575
===============================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.26%
Applera Corp.-Applied Biosystems Group 9,300 874,781
===============================================================================
SERVICES (DATA PROCESSING) - 0.46%
Paychex, Inc. 6,600 320,925
===============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.96%
Openwave Systems Inc.(a) 16,500 790,969
-------------------------------------------------------------------------------
Powerwave Technologies, Inc.(a) 9,700 567,450
===============================================================================
1,358,419
===============================================================================
Total Domestic Common Stocks
(Cost $59,894,856) 59,122,131
===============================================================================
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 9.50%
CANADA - 0.56%
Nortel Networks Corp. (Communications Equipment) 12,033 387,036
===============================================================================
FINLAND - 1.00%
Nokia Oyj - ADR (Communications Equipment) 16,000 696,000
===============================================================================
HONG KONG - 1.37%
China Mobile Ltd. (Telecommunications -
Cellular/Wireless)(a) 174,000 950,344
===============================================================================
ISRAEL - 1.73%
Check Point Software Technologies Ltd. (Computers -
Software & Services)(a) 9,000 1,202,062
===============================================================================
JAPAN - 3.15%
Nippon Telegraph & Telephone Corp. (Telecommunications -
Long Distance) 97 698,190
-------------------------------------------------------------------------------
NTT DoCoMo, Inc. (Telecommunications -
Cellular/Wireless) 70 1,206,052
-------------------------------------------------------------------------------
Sony Corp. (Electrical Equipment) 4,000 276,369
===============================================================================
2,180,611
===============================================================================
SPAIN - 0.77%
Telefonica S.A. (Telephone)(a) 32,251 533,021
===============================================================================
|
AIM V.I. TELECOMMUNICATIONS & TECHNOLOGY FUND
FS-122
MARKET
SHARES VALUE
UNITED KINGDOM - 0.92%
Vodafone Group PLC (Telecommunications -
Cellular/Wireless) 173,764 $ 637,881
===========================================================================
Total Foreign Stocks & Other Equity Interests (Cost
$5,294,388) 6,586,955
===========================================================================
MONEY MARKET FUNDS - 4.67%
STIC Liquid Assets Portfolio(b) 1,617,737 1,617,737
---------------------------------------------------------------------------
STIC Prime Portfolio(b) 1,617,737 1,617,737
===========================================================================
Total Money Market Funds (Cost $3,235,474) 3,235,474
===========================================================================
TOTAL INVESTMENTS - 99.47%
(COST $68,424,718) 68,944,560
===========================================================================
OTHER ASSETS LESS LIABILITIES - 0.53% 365,509
===========================================================================
NET ASSETS - 100.00% $69,310,069
===========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. TELECOMMUNICATIONS & TECHNOLOGY FUND
FS-123
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $68,424,718) $68,944,560 ------------------------------------------------------------ Foreign currencies, at value (cost $1,849) 1,803 ------------------------------------------------------------ Receivables for: Investments sold 696,839 ------------------------------------------------------------ Fund shares sold 98,612 ------------------------------------------------------------ Dividends 32,682 ------------------------------------------------------------ Investment for deferred compensation plan 7,095 ------------------------------------------------------------ Other assets 2,567 ============================================================ Total assets 69,784,158 ============================================================ LIABILITIES: Payables for: Investments purchased 296,346 ------------------------------------------------------------ Fund shares reacquired 43,459 ------------------------------------------------------------ Deferred compensation plan 7,095 ------------------------------------------------------------ Accrued advisory fees 59,579 ------------------------------------------------------------ Accrued administrative services fees 39,516 ------------------------------------------------------------ Accrued operating expenses 28,094 ============================================================ Total liabilities 474,089 ============================================================ Net assets applicable to shares outstanding $69,310,069 ____________________________________________________________ ============================================================ SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 3,739,712 ============================================================ Net asset value $ 18.53 ____________________________________________________________ ============================================================ |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $7,804) $ 1,850,218
------------------------------------------------------------------------------
Dividends from affiliated money market funds 249,899
------------------------------------------------------------------------------
Interest 1,555
==============================================================================
Total investment income 2,101,672
==============================================================================
EXPENSES:
Advisory fees 1,024,453
------------------------------------------------------------------------------
Administrative services fees 194,159
------------------------------------------------------------------------------
Custodian fees 51,399
------------------------------------------------------------------------------
Trustees' fees 5,546
------------------------------------------------------------------------------
Other 67,964
==============================================================================
Total expenses 1,343,521
==============================================================================
Less: Expenses paid indirectly (672)
==============================================================================
Net expenses 1,342,849
==============================================================================
Net investment income 758,823
==============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities 11,310,520
------------------------------------------------------------------------------
Foreign currencies (6,257)
==============================================================================
11,304,263
==============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (52,361,813)
------------------------------------------------------------------------------
Foreign currencies (734)
==============================================================================
(52,362,547)
==============================================================================
Net gain (loss) from investment securities and foreign
currencies (41,058,284)
==============================================================================
Net increase (decrease) in net assets resulting from operations $(40,299,461)
______________________________________________________________________________
==============================================================================
|
See Notes to Financial Statements.
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
FS-124
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
------------ ------------
OPERATIONS:
Net investment income (loss) $ 758,823 $ (468,914)
-----------------------------------------------------------------------------
Net realized gain from investment securities and
foreign currencies 11,304,263 21,064,128
-----------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (52,362,547) 36,865,952
=============================================================================
Net increase (decrease) in net assets resulting
from operations (40,299,461) 57,461,166
=============================================================================
Distributions to shareholders from net realized
gains (11,671,573) (15,618,065)
-----------------------------------------------------------------------------
Share transactions - net 12,853,339 (2,874,672)
=============================================================================
Net increase (decrease) in net assets (39,117,695) 38,968,429
=============================================================================
NET ASSETS:
Beginning of year 108,427,764 69,459,335
=============================================================================
End of year $ 69,310,069 $108,427,764
_____________________________________________________________________________
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 56,936,139 $ 44,082,800
-----------------------------------------------------------------------------
Undistributed net investment income 751,243 --
-----------------------------------------------------------------------------
Undistributed net realized gain from investment
securities and foreign currencies 11,103,561 11,463,291
-----------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 519,126 52,881,673
=============================================================================
$ 69,310,069 $108,427,764
_____________________________________________________________________________
=============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Telecommunications and Technology Fund (the "Fund") is a series
portfolio of AIM Variable Insurance Funds (the "Trust"). The Trust is a
Delaware business trust registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end series management investment
company consisting of sixteen separate portfolios. At a meeting held on
February 3, 2000, the Board of Directors of AIM Variable Insurance Funds, Inc.
approved an Agreement and Plan of Reorganization which was approved by
shareholders of the Fund on April 10, 2000. Effective May 1, 2000, pursuant to
an Agreement and Plan of Reorganization, AIM Variable Insurance Funds, Inc.
was reorganized from a Maryland Corporation to a Delaware business trust.
Matters affecting each portfolio will be voted on exclusively by the
shareholders of such portfolio. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Currently, shares of the Fund
are sold only to insurance company separate accounts to fund the benefits of
variable annuity contracts and variable life insurance policies. The Fund's
investment objective is long-term growth of capital.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the
New York Stock Exchange ("NYSE").
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
FS-125
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$7,580 and undistributed net realized gains increased by $7,580 as a result
of differing book/tax treatment of foreign currency transactions. Net assets
of the Fund were unaffected by the reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for the portion of the results of operations resulting
from changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.00% of
the Fund's average daily net assets.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $194,159 of which AIM retained $50,000 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $4,423
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $672 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $672.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $132,034,144 and $126,632,957, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,735,021 -------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,761,465) ========================================================================== Net unrealized appreciation (depreciation) of investment securities $ (26,444) __________________________________________________________________________ ========================================================================== |
Cost of investments for tax purposes is $68,971,004.
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
FS-126
NOTE 7 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and 1999
were as follows:
2000 1999
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
Sold 1,092,078 $ 34,096,743 6,650,710 $ 148,837,352
-------------------------------------------------------------------------------
Issued as reinvestment of
dividends 433,888 11,671,573 763,720 15,618,065
-------------------------------------------------------------------------------
Reacquired (1,076,274) (32,914,977) (7,487,234) (167,330,089)
===============================================================================
449,692 $ 12,853,339 (72,804) $ (2,874,672)
_______________________________________________________________________________
===============================================================================
|
NOTE 8 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
--------------------------------------------------
2000 1999 1998 1997 1996
------- -------- ------- ------- -------
Net asset value, beginning
of period $ 32.96 $ 20.66 $ 18.40 $ 18.14 $ 16.87
================================================================================
Income from investment
operations:
Net investment income
(loss) 0.20 (0.14) (0.01) (0.02) (0.05)
--------------------------------------------------------------------------------
Net gains (losses) on
securities (both realized
and unrealized) (11.05) 18.46 3.99 2.59 3.31
================================================================================
Total from investment
operations (10.85) 18.32 3.98 2.57 3.26
================================================================================
Less distributions:
Dividends from net
investment income -- -- -- -- (0.02)
--------------------------------------------------------------------------------
Distributions from net
realized gains (3.58) (6.02) (1.72) (2.31) (1.97)
================================================================================
Total distributions (3.58) (6.02) (1.72) (2.31) (1.99)
================================================================================
Net asset value, end of
period $ 18.53 $ 32.96 $ 20.66 $ 18.40 $ 18.14
________________________________________________________________________________
================================================================================
Total return (36.29)% 106.52% 22.11% 14.56% 19.34%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $69,310 $108,428 $69,459 $68,186 $63,258
________________________________________________________________________________
================================================================================
Ratio of expenses to
average net assets
With fee waivers 1.31%(a) 1.27% 1.17% 1.11% 1.12%
================================================================================
Without fee waivers 1.31%(a) 1.27% 1.18% 1.16% 1.17%
________________________________________________________________________________
================================================================================
Ratio of net investment
income (loss) to average
net assets 0.74%(a) (0.62)% (0.04)% (0.10)% (0.26)%
________________________________________________________________________________
================================================================================
Ratio of interest expense
to average net assets -- 0.01% 0.01% -- --
________________________________________________________________________________
================================================================================
Portfolio turnover rate 131% 124% 73% 91% 77%
________________________________________________________________________________
================================================================================
|
(a) Ratios are based on average daily net assets of 102,445,227.
AIM V.I. TELECOMMUNICATIONS AND TECHNOLOGY FUND
FS-127
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees AIM Variable Insurance Funds
We have audited the accompanying statement of assets and liabilities of AIM V.I. Value Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2000, the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM V.I. Value Fund, as of December 31, 2000, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 1, 2001
|
AIM V.I. VALUE FUND
FS-128
SCHEDULE OF INVESTMENTS
December 31, 2000
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 79.98%
BANKS (MAJOR REGIONAL) - 0.55%
Bank of New York Co., Inc. (The) 275,000 $ 15,176,562
===================================================================
BANKS (MONEY CENTER) - 1.87%
J.P. Morgan Chase & Co. 1,127,000 51,208,062
===================================================================
BROADCASTING (TELEVISION, RADIO & CABLE) - 10.55%
Comcast Corp. - Class A(a)(b) 4,150,000 173,262,500
-------------------------------------------------------------------
Cox Communications, Inc. - Class A(a) 2,500,000 116,406,250
===================================================================
289,668,750
===================================================================
COMPUTERS (HARDWARE) - 2.64%
Apple Computer, Inc.(a) 1,900,000 28,262,500
-------------------------------------------------------------------
Compaq Computer Corp. 2,125,000 31,981,250
-------------------------------------------------------------------
Sun Microsystems, Inc.(a) 440,000 12,265,000
===================================================================
72,508,750
===================================================================
COMPUTERS (NETWORKING) - 1.84%
Cisco Systems, Inc.(a) 1,321,600 50,551,200
===================================================================
COMPUTERS (PERIPHERALS) - 1.00%
EMC Corp.(a) 414,700 27,577,550
===================================================================
COMPUTERS (SOFTWARE & SERVICES) - 2.37%
America Online, Inc.(a) 490,000 17,052,000
-------------------------------------------------------------------
At Home Corp. - Series A(a) 480,400 2,657,212
-------------------------------------------------------------------
Microsoft Corp.(a) 235,000 10,193,125
-------------------------------------------------------------------
Oracle Corp.(a) 1,212,600 35,241,187
===================================================================
65,143,524
===================================================================
ELECTRICAL EQUIPMENT - 0.20%
Solectron Corp.(a) 165,000 5,593,500
===================================================================
ELECTRONICS (SEMICONDUCTORS) - 2.16%
Analog Devices, Inc.(a) 1,157,400 59,244,412
===================================================================
EQUIPMENT (SEMICONDUCTOR) - 0.88%
Applied Materials, Inc.(a) 220,000 8,401,250
-------------------------------------------------------------------
Teradyne, Inc.(a) 420,000 15,645,000
===================================================================
24,046,250
===================================================================
FINANCIAL (DIVERSIFIED) - 5.89%
American Express Co. 1,071,500 58,865,531
-------------------------------------------------------------------
Citigroup Inc. 1,547,100 78,998,794
-------------------------------------------------------------------
Freddie Mac 300,000 20,662,500
-------------------------------------------------------------------
J.P. Morgan & Co., Inc. 20,000 3,310,000
===================================================================
161,836,825
===================================================================
HEALTH CARE (DIVERSIFIED) - 2.25%
Johnson & Johnson 587,000 61,671,688
===================================================================
|
MARKET
SHARES VALUE
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 4.68%
Pfizer Inc. 2,248,300 $103,421,800
-----------------------------------------------------------------------------
Schering-Plough Corp. 440,900 25,021,075
=============================================================================
128,442,875
=============================================================================
HEALTH CARE (MANAGED CARE) - 1.23%
UnitedHealth Group Inc. 550,000 33,756,250
=============================================================================
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.28%
Baxter International, Inc. 165,000 14,571,563
-----------------------------------------------------------------------------
Guidant Corp.(a) 383,900 20,706,606
=============================================================================
35,278,169
=============================================================================
HOUSEHOLD PRODUCTS (NON-DURABLES) - 1.28%
Kimberly-Clark Corp. 496,100 35,069,309
=============================================================================
INSURANCE (MULTI-LINE) - 4.69%
American International Group, Inc. 1,116,400 110,035,175
-----------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 267,400 18,885,125
=============================================================================
128,920,300
=============================================================================
INVESTMENT BANKING/BROKERAGE - 4.69%
Merrill Lynch & Co., Inc. 320,000 21,820,000
-----------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co. 1,348,700 106,884,475
=============================================================================
128,704,475
=============================================================================
MANUFACTURING (DIVERSIFIED) - 2.47%
Honeywell International Inc. 1,433,400 67,817,738
=============================================================================
NATURAL GAS -.52%
Williams Cos., Inc. (The) 1,047,200 41,822,550
=============================================================================
OIL & GAS (DRILLING & EQUIPMENT) - 2.17%
R&B Falcon Corp.(a) 418,300 9,594,756
-----------------------------------------------------------------------------
Schlumberger Ltd. 399,600 31,943,025
-----------------------------------------------------------------------------
Transocean Sedco Forex Inc. 394,000 18,124,000
=============================================================================
59,661,781
=============================================================================
OIL (INTERNATIONAL INTEGRATED) - 1.76%
Chevron Corp. 175,000 14,776,563
-----------------------------------------------------------------------------
Exxon Mobil Corp. 385,800 33,540,488
=============================================================================
48,317,051
=============================================================================
RETAIL (COMPUTERS & ELECTRONICS) - 0.90%
Best Buy Co., Inc.(a) 832,100 24,598,956
=============================================================================
RETAIL (DRUG STORES) - 2.70%
Walgreen Co. 1,774,500 74,196,281
=============================================================================
RETAIL (FOOD CHAINS) - 3.27%
Kroger Co. (The)(a) 924,400 25,016,575
-----------------------------------------------------------------------------
Safeway Inc.(a) 1,036,900 64,806,250
=============================================================================
89,822,825
=============================================================================
|
AIM V.I. VALUE FUND
FS-129
MARKET
SHARES VALUE
RETAIL (GENERAL MERCHANDISE) - 4.00%
Costco Wholesale Corp.(a) 760,000 $ 30,352,500
-------------------------------------------------------------------------------
Target Corp. 2,465,000 79,496,250
===============================================================================
109,848,750
===============================================================================
RETAIL (SPECIALTY-APPAREL) - 0.49%
Gap, Inc. (The) 525,000 13,387,500
===============================================================================
SERVICES (ADVERTISING/MARKETING) - 3.10%
Omnicom Group Inc. 1,026,200 85,046,325
===============================================================================
SERVICES (DATA PROCESSING) - 4.71%
Automatic Data Processing, Inc. 518,200 32,808,538
-------------------------------------------------------------------------------
First Data Corp. 1,832,900 96,570,919
===============================================================================
129,379,457
===============================================================================
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 2.84%
Nextel Communications, Inc. - Class A(a) 3,155,600 78,101,100
===============================================================================
Total Domestic Common Stocks
(Cost $2,053,737,076) 2,196,398,765
===============================================================================
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 10.17%
BERMUDA - 4.80%
Tyco International Ltd. (Manufacturing -
Diversified) 2,376,000 131,868,000
===============================================================================
CANADA - 2.28%
Celestica Inc. (Electronics - Semiconductors)(a) 837,800 45,450,650
-------------------------------------------------------------------------------
Nortel Networks Corp. (Communications Equipment) 537,300 17,227,181
===============================================================================
62,677,831
===============================================================================
FINLAND - 1.11%
Nokia Oyj - ADR (Communications Equipment) 700,000 30,450,000
===============================================================================
FRANCE - 0.45%
Alcatel S.A. - ADR (Communications Equipment) 220,400 12,328,625
===============================================================================
UNITED KINGDOM - 1.53%
Amdocs Ltd. (Telecommunications -
Cellular/Wireless)(a) 13,400 887,750
-------------------------------------------------------------------------------
BP Amoco PLC - ADR (Oil - International Integrated) 857,400 41,048,025
===============================================================================
41,935,775
===============================================================================
Total Foreign Stocks & Other Equity Interests (Cost
$221,824,343) 279,260,231
===============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
U.S. TREASURY BILLS - 0.23%
5.77%, 03/22/01 (Cost $6,422,267)(d)(e) $ 6,500,000 $ 6,423,294
==========================================================================
SHARES
MONEY MARKET FUNDS - 11.07%
STIC Liquid Assets Portfolio(f) 152,009,934 152,009,934
--------------------------------------------------------------------------
STIC Prime Portfolio(f) 152,009,934 152,009,934
==========================================================================
Total Money Market Funds (Cost $304,019,868) 304,019,868
==========================================================================
TOTAL INVESTMENTS - 101.45%
(Cost $2,586,003,554) 2,786,102,158
==========================================================================
LIABILITIES LESS OTHER ASSETS - (1.45%) (39,941,577)
==========================================================================
NET ASSETS - 100.00% $2,746,160,581
__________________________________________________________________________
==========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer.
The Fund has not owned enough of the outstanding voting securities of the
issuer to have control (as defined in the Investment Company Act of 1940)
of that issuer. The market value as of 12/31/00 was $173,262,500, which
represented 6.31% of the Fund's net assets.
(c) A portion of this security is subject to call options written. See Note 8.
(d) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 7.
(e) The interest rate shown represents the rate of discount paid or received
at the time of purchase by the Fund.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. VALUE FUND
FS-130
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2000
ASSETS: Investments, at market value (cost $2,586,003,554) $2,786,102,158 ------------------------------------------------------------------ Receivables for: Investments sold 1,959,206 ------------------------------------------------------------------ Fund shares sold 1,178,637 ------------------------------------------------------------------ Dividends 2,458,443 ------------------------------------------------------------------ Investment for deferred compensation plan 52,121 ------------------------------------------------------------------ Other assets 68,343 ================================================================== Total assets 2,791,818,908 ================================================================== LIABILITIES: Payables for: Investments purchased 32,933,914 ------------------------------------------------------------------ Fund shares reacquired 1,516,824 ------------------------------------------------------------------ Foreign currency contracts closed 125,701 ------------------------------------------------------------------ Foreign currency contracts outstanding 3,275,712 ------------------------------------------------------------------ Options written (premiums received $7,644,639) 2,689,981 ------------------------------------------------------------------ Deferred compensation plan 52,121 ------------------------------------------------------------------ Variation margin 1,147,614 ------------------------------------------------------------------ Accrued advisory fees 1,340,633 ------------------------------------------------------------------ Accrued administrative services fees 2,459,958 ------------------------------------------------------------------ Accrued operating expenses 115,869 ================================================================== Total liabilities 45,658,327 ================================================================== Net assets applicable to shares outstanding $2,746,160,581 __________________________________________________________________ ================================================================== SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE: Outstanding 100,588,942 ================================================================== Net asset value $ 27.30 __________________________________________________________________ ================================================================== |
STATEMENT OF OPERATIONS
For the year ended December 31, 2000
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $135,244) $ 10,060,477
------------------------------------------------------------------------------
Dividends from affiliated money market funds 16,146,563
------------------------------------------------------------------------------
Interest 33,510
==============================================================================
Total investment income 26,240,550
==============================================================================
EXPENSES:
Advisory fees 16,526,917
------------------------------------------------------------------------------
Administrative services fees 5,547,173
------------------------------------------------------------------------------
Custodian fees 225,179
------------------------------------------------------------------------------
Transfer agent fees 38,953
------------------------------------------------------------------------------
Trustees' fees 10,556
------------------------------------------------------------------------------
Other 571,809
==============================================================================
Total expenses 22,920,587
==============================================================================
Less: Expenses paid indirectly (5,712)
==============================================================================
Net expenses 22,914,875
==============================================================================
Net investment income 3,325,675
==============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FOREIGN CURRENCY CONTRACTS,
FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 9,012,704
------------------------------------------------------------------------------
Foreign currency contracts 24,909,086
------------------------------------------------------------------------------
Futures contracts (830,433)
==============================================================================
33,091,357
==============================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (486,185,487)
------------------------------------------------------------------------------
Foreign currencies (87)
------------------------------------------------------------------------------
Foreign currency contracts (8,954,850)
------------------------------------------------------------------------------
Futures contracts (1,168,028)
------------------------------------------------------------------------------
Option contracts written 4,954,658
==============================================================================
(491,353,794)
==============================================================================
Net gain (loss) from investment securities, foreign
currencies, foreign currency contracts, futures contracts and
option contracts (458,262,437)
==============================================================================
Net increase (decrease) in net assets resulting from
operations $(454,936,762)
______________________________________________________________________________
==============================================================================
|
See Notes to Financial Statements.
AIM V.I. VALUE FUND
FS-131
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2000 and 1999
2000 1999
-------------- --------------
OPERATIONS:
Net investment income $ 3,325,675 $ 3,440,737
------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, foreign currency
contracts, futures contracts and option
contracts 33,091,357 111,811,218
------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities,
foreign currencies, foreign currency
contracts, futures contracts and option
contracts (491,353,794) 360,547,238
==============================================================================
Net increase (decrease) in net assets
resulting from operations (454,936,762) 475,799,193
==============================================================================
Distributions to shareholders from net
investment income (3,445,134) (6,235,364)
------------------------------------------------------------------------------
Distributions to shareholders from net
realized gains (120,019,734) (32,606,763)
------------------------------------------------------------------------------
Share transactions - net 941,195,640 725,025,960
==============================================================================
Net increase in net assets 362,794,010 1,161,983,026
==============================================================================
NET ASSETS:
Beginning of year 2,383,366,571 1,221,383,545
==============================================================================
End of year $2,746,160,581 $2,383,366,571
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $2,521,723,981 $1,579,989,967
------------------------------------------------------------------------------
Undistributed net investment income 3,258,277 3,383,602
------------------------------------------------------------------------------
Undistributed net realized gain from
investment securities, foreign currencies,
foreign currency contracts, futures
contracts and option contracts 20,569,224 108,030,109
------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies, foreign
currency contracts, futures contracts and
option contracts 200,609,099 691,962,893
==============================================================================
$2,746,160,581 $2,383,366,571
______________________________________________________________________________
==============================================================================
|
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Value Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of
sixteen separate portfolios. At a meeting held on February 3, 2000, the Board
of Directors of AIM Variable Insurance Funds, Inc. approved an Agreement and
Plan of Reorganization which was approved by shareholders of the Fund on April
10, 2000. Effective May 1, 2000, pursuant to an Agreement and Plan of
Reorganization, AIM Variable Insurance Funds, Inc. was reorganized from a
Maryland Corporation to a Delaware business trust. Matters affecting each
portfolio will be voted on exclusively by the shareholders of such portfolio.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the Fund. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies. The Fund's investment objective is to
achieve long-term growth of capital. Income is a secondary objective.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of the
significant accounting policies followed by the Fund in the preparation of its
financial statements.
A. Security Valuations - Securities, including restricted securities, are
valued according to the following policy. A security listed or traded on an
exchange (except convertible bonds) is valued at its last sales price as of
the close of the customary trading session on the exchange where the
security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price as of the close of the customary trading session on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of
AIM V.I. VALUE FUND
FS-132
determining net asset value per share, futures and option contracts generally
will be valued 15 minutes after the close of the customary trading session of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On December 31, 2000, undistributed net investment income was decreased by
$5,866, undistributed net realized gains decreased by $532,508, and paid-in
capital increased by $538,374 as a result of book/tax differences and other
reclassifications. Net assets of the Fund were unaffected by the
reclassification discussed above.
C. Distributions - Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for the portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
Outstanding foreign currency contracts at December 31, 2000 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT -------------------------------------- APPRECIATION
DATE CURRENCY RECEIVE VALUE (DEPRECIATION)
---------- -----------------------------------------------
02/28/01 CAD 70,800,000 $46,165,349 $47,252,818 $(1,087,469)
02/28/01 EUR 21,450,000 18,305,266 20,195,840 (1,890,574)
03/02/01 EUR 9,600,000 8,741,720 9,039,389 (297,669)
------------------------------ -----------
$73,212,335 $76,488,047 $(3,275,712)
=========== =========== ===========
|
G. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal
to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset
and an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option
written. The current market value of a written option is the mean between
the last bid and asked prices on that day. If a written call option expires
on the stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or a loss if the closing
purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Futures Contracts - The Fund may purchase or sell futures contracts as a
hedge against changes in market conditions. Initial margin deposits
required upon entering into futures contracts are satisfied by the
segregation of specific securities as collateral for the account of the
broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in value of the
contracts may not correlate with changes in the value of the securities
being hedged.
AIM V.I. VALUE FUND
FS-133
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services
and certain administrative services to the Fund and to reimburse AIM for
administrative services paid to insurance companies that have agreed to
provide administrative services to the Fund. For the year ended December 31,
2000, the Fund paid AIM $5,547,173 of which AIM retained $167,010 for such
services.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the year ended December 31, 2000, the Fund paid legal fees of $8,877
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 - INDIRECT EXPENSES
For the year ended December 31, 2000, the Fund received reductions in
custodian fees of $5,712 under an expense offset arrangement which resulted in
a reduction of the Fund's total expenses of $5,712.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by
a trustee, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of
credit may borrow on a first come, first served basis. During the year ended
December 31, 2000, the Fund did not borrow under the line of credit agreement.
The funds which are party to the line of credit are charged a commitment fee
of 0.09% on the unused balance of the committed line. The commitment fee is
allocated among the funds based on their respective average net assets for the
period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
2000 was $2,364,882,407 and $1,537,133,471, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of December 31, 2000 is as follows:
Aggregate unrealized appreciation of investment securities $ 396,337,293 ---------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (220,261,782) ============================================================================ Net unrealized appreciation of investment securities $ 176,075,511 ____________________________________________________________________________ ============================================================================ Cost of investments for tax purposes is $2,610,026,647. |
NOTE 7 - FUTURES CONTRACTS
On December 31, 2000, $4,935,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
UNREALIZED
NO. OF MARKET APPRECIATION
CONTRACT CONTRACTS MONTH/COMMITMENT VALUE (DEPRECIATION)
-------- --------- ---------------- ----------- --------------
S&P 500 255 Mar. 01/Buy $85,106,250 $(1,168,028)
====================================================================================
|
NOTE 8 - CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2000 are summarized as follows:
CALL OPTION
CONTRACTS
--------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
------------------
Beginning of year -- $ --
----------------------------------------
Written 10,659 8,360,035
----------------------------------------
Exercised (1,100) (530,479)
----------------------------------------
Expired (900) (184,917)
========================================
End of year 8,659 $7,644,639
________________________________________
========================================
|
AIM V.I. VALUE FUND
FS-134
NOTE 8 - CONTINUED
Open call option contracts written as of December 31, 2000 were as follows:
DECEMBER 31,
CONTRACT STRIKE NUMBER OF PREMIUMS 2000 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
----- ----------------------------------------------------
Guidant Corp. Jan. $50.00 2,600 $2,756,401 $1,283,750 $1,472,651
-----------------------------------------------------------------------------------
Guidant Corp. Jan. 65.00 1,239 1,230,645 23,231 1,207,414
-----------------------------------------------------------------------------------
Merrill Lynch & Co. Jan. 70.00 3,120 2,600,636 809,250 1,791,386
-----------------------------------------------------------------------------------
Nokia Corp. ADR Jan. 42.50 1,700 1,056,957 573,750 483,207
===================================================================================
8,659 $7,644,639 $2,689,981 $4,954,658
___________________________________________________________________________________
===================================================================================
|
NOTE 9 - SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2000 and 1999
were as follows:
2000 1999
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- -------------- ---------- ------------
Sold 34,419,619 $1,119,217,487 30,095,501 $884,324,432
-----------------------------------------------------------------------------
Issued as reinvestment
of dividends 4,458,825 123,464,868 1,227,239 38,842,126
-----------------------------------------------------------------------------
Reacquired (9,435,305) (301,486,715) (6,712,560) (198,140,598)
=============================================================================
29,443,139 $ 941,195,640 24,610,180 $725,025,960
_____________________________________________________________________________
=============================================================================
|
NOTE 10 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
2000(a) 1999(a) 1998 1997 1996
---------- ---------- ---------- -------- --------
Net asset value,
beginning of period $ 33.50 $ 26.25 $ 20.83 $ 17.48 $ 16.11
-----------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.04 0.06 0.09 0.08 0.30
-----------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (4.94) 7.76 6.59 4.05 2.09
===================================================================================
Total from investment
operations (4.90) 7.82 6.68 4.13 2.39
===================================================================================
Less distributions:
Dividends from net
investment income (0.04) (0.09) (0.13) (0.19) (0.10)
-----------------------------------------------------------------------------------
Distributions from net
realized gains (1.26) (0.48) (1.13) (0.59) (0.92)
===================================================================================
Total distributions (1.30) (0.57) (1.26) (0.78) (1.02)
===================================================================================
Net asset value, end of
period $ 27.30 $ 33.50 $ 26.25 $ 20.83 $ 17.48
___________________________________________________________________________________
===================================================================================
Total return (14.68)% 29.90% 32.41% 23.69% 15.02%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $2,746,161 $2,383,367 $1,221,384 $690,841 $369,735
___________________________________________________________________________________
===================================================================================
Ratio of expenses to
average net assets 0.84%(b) 0.76% 0.66% 0.70% 0.73%
___________________________________________________________________________________
===================================================================================
Ratio of net investment
income to average net
assets 0.12%(b) 0.20% 0.68% 1.05% 2.00%
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate 62% 62% 100% 127% 129%
___________________________________________________________________________________
===================================================================================
|
(a) Calculated using average shares outstanding.
(b) Ratios are based on average daily net assets of $2,733,652,844.
AIM V.I. VALUE FUND
FS-135
PART C
OTHER INFORMATION
Item 23. Exhibits
Exhibit
Number Description
a(1) (a) - Agreement and Declaration of Trust of Registrant, dated December 6, 1999.(13)
(b) - Amendment No. 1 to Agreement and Declaration of Trust of Registrant, dated April 26, 2000.(14)
(c) - Amendment No. 2 to Agreement and Declaration of Trust of Registrant, dated September 18, 2000.(14)
(d) - Amendment No. 3 to Agreement and Declaration of Trust of Registrant, dated May 10, 2000.(14)
(e) - Amendment No. 4 to Agreement and Declaration of Trust of Registrant, dated December 13, 2000.(14)
(f) - Amendment No. 5 to Agreement and Declaration of Trust of Registrant, dated March 14, 2001 is hereby filed electronically.
(g) - Amendment No. 6 to Agreement and Declaration of Trust of Registrant, dated May 1, 2001 is hereby filed electronically.
b(1) (a) - By-Laws of Registrant, dated effective December 6, 1999.(13)
(b) - Amendment No. 1 to By-Laws of Registrant adopted June 14, 2000.(14)
c - Instruments Defining Rights of Security Holders - All
rights of security holders are contained in the
Registrant's Agreement and Declaration of Trust.
|
d(1) - (a) Master Investment Advisory Agreement, dated May 1, 2000 between Registrant and A I M Advisors, Inc.(14)
- (b) Amendment No. 1, dated May 1, 2001, to Master Investment Advisory Agreement, dated May 1, 2000, between Registrant and A I M Advisors, Inc. is hereby filed electronically.
(2) - Sub-Advisory Agreement, dated May 1, 2000 between Registrant and H.S. Dent Advisors, Inc.(14)
(3) - (a) Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M
Advisors, Inc.(7)
|
- (b) Amendment No. 1, dated September 28, 1998, to Foreign Country Selection and Mandatory Securities Depository Responsibilities Delegation Agreement between Registrant and A I M Advisors, Inc.(8)
- (c) Amendment No. 2, dated December 14, 1998, to Foreign Country Selection and Mandatory Securities Depository Responsibilities Delegation Agreement between Registrant and A I M Advisors, Inc.(8)
e(1) - (a) Master Distribution Agreement, dated May 1, 2000,
between Registrant and A I M Distributors, Inc. is
hereby filed electronically.
|
- (b) Amendment No. 1, dated May 1, 2001, to Master Distribution Agreement between Registrant and A I M Distributors, Inc. is hereby filed electronically.
f(1) - Retirement Plan of Registrant's Non-Affiliated
Directors, effective March 8, 1994, as restated
September 18, 1995.(4)
(2) - Retirement Plan for Eligible Directors/Trustees
effective as of March 8, 1994, as Restated September
18, 1995 and as Restated March 7, 2000.(14)
|
(3) - Form of Director Deferred Compensation Agreement effective as Amended March 7, 2000.(14)
g(1) - (a) Master Custodian Agreement, dated May 1, 2000,
between Registrant and State Street Bank and Trust
Company is hereby filed electronically.
|
- (b) Amendment, dated May 1, 2000, to Master Custodian Agreement, dated May 1, 2000, between Registrant and State Street Bank and Trust Company is hereby filed electronically.
(2) - Custody Agreement, dated September 19, 2000, between
Registrant and The Bank of New York is hereby filed
electronically.
h(1) - (a) Master Administrative Services Agreement, dated May
1, 2000, between Registrant and A I M Advisors,
Inc.(14)
|
- (b) Amendment No. 1, dated May 1, 2001, to Master Administrative Services Agreement, dated May 1, 2000, between Registrant and A I M Advisors, Inc. is hereby filed electronically.
(2) - Transfer Agency Agreement, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company is
hereby filed electronically.
(3) - Participation Agreement, dated February 25, 1993,
between Registrant, Connecticut General Life Insurance
Company and A I M Distributors, Inc.(4)
(4) - (a) Participation Agreement, dated February 10, 1995,
between Registrant and Citicorp Life Insurance
Company.(4)
|
- (b) Amendment No. 1, dated February 3, 1997, to Participation Agreement dated February 10, 1995, between Registrant and Citicorp Life Insurance Company.(6)
(5) - (a) Participation Agreement, dated February 10, 1995,
between Registrant and First Citicorp Life Insurance
Company.(4)
|
- (b) Amendment No. 1, dated February 3, 1997, to Participation Agreement, dated February 10, 1995, between Registrant and First Citicorp Life Insurance Company.(6)
(6) - (a) Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity
Company.(4)
|
- (a)(i) Side Letter Agreement, dated December 1, 1995, among Registrant and Glenbrook Life and Annuity Company.(5)
- (b) Amendment No. 1, dated November 7, 1997, to Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Company.(7)
- (c) Amendment No. 2, dated September 2, 1997, to Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Company.(6)
- (d) Amendment No. 3, dated January 26, 1998, to Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Company.(7)
- (e) Amendment No. 4, dated May 1, 1998, to Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Company.(7)
- (f) Amendment No. 5, dated January 12, 1999, to the Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Insurance Company.(8)
(7) - Participation Agreement, dated March 4, 1996, between Registrant and IDS Life Insurance Company.(4)
(8) - (a) Participation Agreement, dated October 7, 1996,
between Registrant and IDS Life Insurance Company
(supersedes and replaces Participation Agreement dated
March 4, 1996).(5)
|
- (a)(i) Side Letter Agreement, dated September 27, 1996, between Registrant, IDS Life Insurance Company and IDS Life Insurance Company of New York.(6)
- (b) Amendment 1, dated November 11, 1997, to the Participation Agreement, dated October 7, 1996, between registrant and IDS Life Insurance Company.(8)
(9) - (a) Participation Agreement, dated October 7, 1996,
between Registrant and IDS Life Insurance Company of
New York.(5)
|
- (b) Amendment No. 1, dated November 11, 1997, to the Participation Agreement, dated October 7, 1996 between registrant and IDS Life Insurance Company of New York.(8)
(10) - Participation Agreement, dated April 8, 1996, between
Registrant and Connecticut General Life Insurance
Company.(4)
|
(11) - (a) Participation Agreement, dated September 21, 1996, between Registrant and Pruco Life Insurance Company.(5)
- (b) Amendment No. 1, dated July 1, 1997, to Participation Agreement, dated September 21, 1996, between Registrant and Pruco Life Insurance Company.(6)
- (c) Amendment No. 2, dated August 1, 1998, to Participation Agreement, dated September 21, 1996, between Registrant and Pruco Life Insurance Company.(7)
- (d) Amendment No. 3, dated November 8, 1999, to the Participation Agreement dated September 21, 1996, between Registrant and Pruco Life Insurance Company.(14)
- (e) Amendment No. 4 dated April 10, 2000, to the Participation Agreement dated September 21, 1996, between Registrant and Pruco Life Insurance Company.(14)
(12) - (a) Participation Agreement, dated October 1, 1996,
between Registrant and Allstate Life Insurance Company
of New York.(5)
|
- (a)(i) Side Letter Agreement, dated October 1, 1996, between Registrant and Allstate Life Insurance Company of New York.(7)
- (b) Amendment No. 1, dated November 7, 1997, to Participation Agreement, dated October 1, 1996, between Registrant and Allstate Life Insurance Company of New York.(9)
(13) - (a) Participation Agreement, dated December 18, 1996,
between Registrant and Merrill Lynch Life Insurance
Company.(5)
|
- (a)(i) Side Letter Agreement, dated December 18, 1996, between Registrant and Merrill, Lynch, Pierce, Fenner & Smith, Incorporated.(5)
- (b) Amendment No. 1, dated May 1, 1997, to Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(6)
- (c) Amendment No. 2, dated April 13, 2000, to Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(14)
(14) - (a) Participation Agreement, dated December 18, 1996,
between Registrant and ML Life Insurance Company of New
York.(5)
|
- (b) Amendment No. 1, dated May 1, 1997, to Participation Agreement, dated December 18, 1996, by and between Registrant and ML Life Insurance Company of New York.(6)
- (c) Amendment No. 2, dated April 3, 2000, to Participation Agreement, dated December 18, 1996, by and between Registrant and ML Life Insurance Company of New York.(14)
(15) - (a) Participation Agreement, dated February 14, 1997,
between Registrant and Pruco Life Insurance Company of
New Jersey.(5)
|
- (b) Amendment No. 1, dated November 8, 1999, to the Participation Agreement, dated February 14, 1997, between Registrant and Pruco Life Insurance Company of New Jersey.(14)
- (c) Amendment No. 2, dated April 10, 2000, to the Participation Agreement, dated February 14, 1997, between Registrant and Pruco Life Insurance Company of New Jersey.(14)
(16) - Participation Agreement, dated April 30, 1997, between
Registrant and Prudential Insurance Company of
America.(6)
(17) - Participation Agreement, dated October 30, 1997,
between Registrant and American Centurion Life
Assurance Company.(6)
(18) - (a) Participation Agreement, dated October 30, 1997,
between Registrant and American Enterprise Life
Insurance Company.(6)
|
- (a)(i) Letter Agreement, dated October 30, 1997, between American Enterprise Life Insurance Company and American Centurion Life Assurance Company.(6)
(19) - Participation Agreement, dated November 20, 1997, between Registrant and AIG Life Insurance Company.(6)
(20) - Participation Agreement, dated November 20, 1997,
between Registrant and American International Life
Assurance Company of New York.(6)
(21) - (a) Participation Agreement, dated November 4, 1997,
between Registrant and Nationwide Life Insurance
Company.(6)
|
- (b) Amendment No. 1, dated June 15, 1998, to Participation Agreement, dated November 4, 1997, between Registrant and Nationwide Life Insurance Company.(7)
(22) - (a) Participation Agreement, dated December 3, 1997, between Registrant and Security Life of Denver.(6)
- (b) Amendment No. 1, dated June 23, 1998, to Participation Agreement, dated December 3, 1997, between Registrant and Security Life of Denver.(7)
- (c) Amendment No. 2, dated May 20, 1999, to the Participation Agreement, dated December 3, 1997, between Registrant and Security Life of Denver Insurance Company.(10)
- (d) Amendment No. 3, dated November 1, 1999, to the Participation Agreement, dated December 3, 1997, between Registrant and Security Life of Denver Insurance Company.(12)
- (e) Amendment No. 4, dated March 2, 2000, to the Participation Agreement, dated December 3, 1997, between Registrant and Security Life of Denver Insurance Company.(14)
- (f) Amendment No. 5, dated December 28, 2000, to the Participation Agreement, dated December 3, 1997, between Registrant and Security Life of Denver Insurance Company.(14)
(23) - (a) Participation Agreement, dated December 31, 1997,
between Registrant and Cova Financial Services Life
Insurance Company.(6)
|
- (b) Amendment No. 1, dated April 23, 1999, to the Participation Agreement, dated December 31, 1997, between Registrant and Cova Financial Services Life Insurance Company.(12)
- (c) Amendment No. 2, dated September 1, 2000, to the Participation Agreement, dated December 31, 1997, between Registrant and Cova Financial Services Life Insurance Company.(14)
(24) - (a) Participation Agreement, dated December 31, 1997,
between Registrant and Cova Financial Life Insurance
Company.(6)
|
- (b) Amendment No. 1, dated April 23, 1999, to the Participation Agreement, dated December 31, 1997, between Registrant and Cova Financial Life Insurance Company.(10)
(25) - (a) Participation Agreement, dated February 2, 1998,
between Registrant and The Guardian Insurance & Annuity
Company, Inc.(7)
|
- (b) Amendment No. 1, dated July 1, 1999, to the Participation Agreement, dated February 2, 1998, between Registrant and The Guardian Life Insurance & Annuity Company.(11)
- (c) Amendment No. 2, dated May 1, 2000, to the Participation Agreement, dated February 2, 1998, between Registrant and The Guardian Life Insurance & Annuity Company.(14)
- (d) Amendment No. 3, dated August 1, 2000, to the Participation Agreement, dated February 2, 1998, between Registrant and The Guardian Life Insurance & Annuity Company.(14)
(26) - (a) Participation Agreement, dated February 17, 1998,
between Registrant and Sun Life Assurance Company of
Canada (U.S.).(7)
|
- (b) Amendment No. 1, dated December 11, 1998, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.).(8)
- (c) Amendment No. 2, dated March 15, 1999, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.).(14)
- (d) Amendment No. 3, dated April 17, 2000, to the Participation Agreement, dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.).(14)
(27) - Participation Agreement, dated April 1, 1998, between
Registrant and United Life & Annuity Insurance
Company.(7)
(28) - (a) Participation Agreement, dated April 21, 1998,
between Registrant and Keyport Life Insurance
Company.(7)
|
- (b) Amendment No. 1, dated December 28, 1998, to the Participation Agreement, dated April 21, 1998, between Registrant and Keyport Life Insurance Company.(8)
(29) - (a) Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company.(7)
- (b) Amendment No. 1, dated June 30, 1998, to
Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company.(7)
- (c) Amendment No. 2, dated November 27, 1998, to the
Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company.(8)
|
(30) - Participation Agreement, dated May 1, 1998, between Registrant and Fortis Benefits Insurance Company.(7)
(31) - (a) Participation Agreement, dated June 1, 1998,
between Registrant and American General Life Insurance
Company.(7)
|
- (b) Amendment No. 1, dated January 1, 1999, to the Participation Agreement, dated June 1, 1998, between Registrant and American General Life Insurance Company.(9)
- (c) Amendment No. 2, dated September 29, 1999, to the Participation Agreement, dated June 1, 1998, between Registrant and American General Life Insurance Company.
- (d) Amendment No. 3, dated February 1, 2000, to the Participation Agreement, dated June 1, 1998, between Registrant and American General Life Insurance Company.
(32) - (a) Participation Agreement, dated June 16, 1998,
between Registrant and Lincoln National Life Insurance
Company.(7)
|
- (b) Amendment No. 1, dated November 20, 1998, to the Participation Agreement, dated June 16, 1998, between Registrant and Lincoln National Life Insurance Company.(8)
- (c) Amendment No. 2, dated May 1, 1999, to the Participation Agreement, dated June 16, 1998, between Registrant and Lincoln National Life Insurance Company.
- (d) Amendment No. 3, dated October 14, 1999, to the Participation Agreement, dated June 16, 1998, between Registrant and Lincoln National Life Insurance Company.
- (e) Amendment No. 4, dated May 1, 2000, to the Participation Agreement, dated June 16, 1998, between Registrant and Lincoln National Life Insurance Company.
(33) - Participation Agreement, dated June 30, 1998, between
Registrant and Aetna Life Insurance and Annuity
Company.(7)
(34) - Participation Agreement, dated July 1, 1998, between
Registrant and The Union Central Life Insurance
Company.(8)
|
(35) - Participation Agreement, dated July 1, 1998, between
Registrant and United Investors Life Insurance
Company.(8)
|
(36) - Participation Agreement, dated July 2, 1998, between Registrant and Hartford Life Insurance Company.(7)
(37) - (a) Participation Agreement, dated July 13, 1998,
between Registrant and Keyport Benefit Life Insurance
Company.(7)
|
- (b) Amendment No. 1, dated December 28, 1998 to the Participation Agreement, dated July 13, 1998, between Registrant and Keyport Benefit Life Insurance Company.(8)
(38) - (a) Participation Agreement, dated July 27, 1998,
between Registrant and Allmerica Financial Life
Insurance and Annuity Company.(7)
|
- (b) Amendment No. 1, dated February 11, 2000, to the Participation Agreement dated July 27, 1998 between Registrant and Allmerica Financial Life Insurance and Annuity Company.(13)
- (c) Amendment No. 2, dated April 10, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and Allmerica Financial Life Insurance and Annuity Company.(14)
- (d) Amendment No. 3, dated May 1, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and Allmerica Financial Life Insurance and Annuity Company.(14)
- (e) Amendment No. 4, dated October 4, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and Allmerica Financial Life Insurance and Annuity Company.(14)
(39) - (a) Participation Agreement, dated July 27, 1998,
between Registrant and First Allmerica Financial Life
Insurance Company.(7)
|
- (b) Amendment No. 1, dated February 11, 2000, to the Participation Agreement dated July 27, 1998 between Registrant and First Allmerica Financial Life Insurance Company.(13)
- (c) Amendment No. 2, dated April 10, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(14)
- (d) Amendment No. 3, dated May 1, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(14)
- (e) Amendment No. 4, dated October 4, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(14)
(40) - Participation Agreement, dated October 15, 1998,
between Registrant and Lincoln Life & Annuity Insurance
Company of New York.(9)
|
(41) - (a) Participation Agreement, dated November 23, 1998,
between Registrant and American General Annuity
Insurance Company.(8)
|
- (b) Amendment No. 1, dated July 1, 1999, to the Participation Agreement dated November 23, 1998, between Registrant and American General Annuity Insurance Company.(11)
- (c) Amendment No. 2, dated August 1, 2000, to the Participation Agreement, dated November 23, 1998, between Registrant and American General Annuity Insurance Company.(14)
(42) - Participation Agreement, dated December 1, 1998,
between Registrant and the Prudential Insurance Company
of America.(8)
(43) - Participation Agreement, dated February 1, 1999,
between Registrant and Sage Life Assurance of America,
Inc.(9)
(44) - Participation Agreement, dated April 1, 1999, between
Registrant and Liberty Life Assurance Company of
Boston.(9)
(45) - Participation Agreement, dated April 13, 1999, between
Registrant and Western-Southern Life Insurance Company.
(10)
|
(46) - Participation Agreement, dated May 1, 1999, between Registrant and Columbus Life Insurance Company.(10)
(47) - Participation Agreement, dated April 26, 1999, between
Registrant and First Variable Life Insurance
Company.(10)
(48) - Participation Agreement, dated August 21, 1999, between
Registrant and Life Investors Insurance Company of
America.(11)
(49) - Participation Agreement, dated June 8, 1999, between
Registrant and The Principal Life Insurance
Company.(10)
|
(50) - Participation Agreement, dated June 8, 1999, between Registrant and Principal Life Insurance Company.(11)
(51) - Participation Agreement, dated June 14, 1999, between
Registrant and Security First Life Insurance
Company.(11)
|
(52) - Participation Agreement, dated July 1, 1999, between Registrant and Allstate Life Insurance Company.(11)
(53) - Participation Agreement, dated July 27, 1999, between
Registrant and Allianz Life Insurance Company of North
America.(11)
(54) - Participation Agreement, dated July 27, 1999, between
Registrant and Preferred Life Insurance Company of New
York.(11)
(55) - Participation Agreement, dated August 31, 1999, between
Registrant and John Hancock Mutual Life Insurance
Company.(11)
(56) - Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company
in the City of New York.(11)
|
(57) - Participation Agreement, dated November 1, 1999,
between Registrant and AETNA Insurance Company of
America.(12)
(58) - Participation Agreement, dated January 28, 2000,
between Registrant and Northbrook Life Insurance
Company.(13)
(59) - Participation Agreement, dated March 2, 2000, between
Registrant and GE Life and Annuity Assurance
Company.(14)
(60) - Participation Agreement, dated March 27, 2000, between
Registrant and Reliastar Life Insurance Company of New
York.(14)
|
(61) - Participation Agreement, dated March 27, 2000, between Registrant and Northern Life Insurance Company.(14)
(62) - Participation Agreement, dated March 27, 2000, between Registrant and Reliastar Life Insurance Company.(14)
(63) - Participation Agreement, dated April 10, 2000, between
Registrant and Allmerica Financial Life Insurance
Company.(14)
(64) - Participation Agreement, dated April 14, 2000, between
Registrant and United Investors Life Insurance Company.
(14)
(65) - Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company
of New York.(14)
|
(66) - Participation Agreement, dated August 1, 2000, between Registrant and Kansas City Life Insurance Company.(14)
(67) - Participation Agreement, dated September 25, 2000, between Registrant and Security Life of Denver.(14)
(68) - Accounting Services Agreement, dated March 31, 1993,
between the Registrant and State Street Bank and Trust
Company.(4)
(69) - Agreement and Plan of Reorganization, dated December 7,
1999, between Registrant and AIM Variable Insurance
Funds.(12)
i(1) - (a) Opinion and Consent of Messrs. Freedman, Levy,
Kroll & Simonds regarding the AIM V.I. Capital
Appreciation Fund, the AIM V.I. Diversified Income
Fund, the AIM V.I. Government Securities Fund, the AIM
V.I. Growth Fund, the AIM V.I. International Equity
Fund, the AIM V.I. Money Market Fund and the AIM V.I.
Value Fund.(1)
|
- (b) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding the AIM V.I. Growth and Income Fund and the AIM V.I. Utilities Fund (presently the AIM V.I. Global Utilities Fund).(2)
- (c) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding the AIM V.I. Global Utilities Fund name change.(3)
- (d) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Capital Development Fund and AIM V.I. High Yield Fund.(6)
- (e) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Global Growth and Income Fund and AIM V.I. Telecommunications Fund.(7)
- (f) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Blue Chip Fund.(10)
- (g) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding AIM V.I. Dent Demographic Trends Fund.(11)
- (h) Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds regarding the redomestication of the Registrant.(13)
- (i) Consent of Messrs. Foley & Lardner is hereby filed
electronically.
(2) - Consent of Messrs. Tait, Weller & Baker is hereby filed
electronically.
j - Other Opinions, Appraisals or Rulings and Consents -
None.
k - Financial Statements omitted from Item 22 - None.
l(1) - (a) Agreements Concerning Initial Capitalization of the
AIM V.I. Capital Appreciation Fund, the AIM V.I.
Diversified Income Fund, the AIM V.I. Government
Securities Fund, the AIM V.I. Growth Fund, the AIM V.I.
International Equity Fund, the AIM V.I. Money Market
Fund, and the AIM V.I. Value Fund.(4)
|
- (b) Agreements Concerning Initial Capitalization of the AIM V.I. Growth and Income Fund and the AIM V.I.
Utilities Fund.(4)
- (c) Agreement Concerning Initial Capitalization of the AIM V.I. Aggressive Growth Fund, the AIM V.I. Balanced Fund, the AIM V.I. Capital Development Fund and the AIM V.I. High Yield Fund.(7)
- (d) Agreement Concerning Initial Capitalization of the AIM V.I. Blue Chip Fund.(11)
- (e) Agreement Concerning Initial Capitalization of the AIM V.I. Dent Demographic Trends Fund.(11)
m - Registrant's Plan pursuant to Rule 12b-1 under the 1940
Act - None.
n - Multiple Class Plan (Rule 18f-3) - None.
o Reserved
p(1) - The AIM Management Group Code of Ethics adopted May 1,
1981 and as amended August 17, 1999 relating to A I M
Management Group Inc. and A I M Advisors, Inc.(11)
(2) - Code of Ethics of Registrant effective as of September
23, 2000.(14)
----------
|
(1) Incorporated herein by reference to Pre-Effective Amendment No. 1, filed on April 19, 1993.
(2) Incorporated herein by reference to Post-Effective Amendment No. 4, filed on November 3, 1994.
(3) Incorporated herein by reference to Post-Effective Amendment No. 6, filed on April 26, 1995.
(4) Incorporated herein by reference to Post-Effective Amendment No. 7, filed electronically on April 29, 1996.
(5) Incorporated herein by reference to Post-Effective Amendment No. 8, filed electronically on April 23, 1997.
(6) Incorporated herein by reference to Post-Effective Amendment No. 9, filed electronically on February 13, 1998.
(7) Incorporated herein by reference to Post-Effective Amendment No. 10, filed electronically on October 2, 1998.
(8) Incorporated herein by reference to Post-Effective Amendment No. 11, filed electronically on February 18, 1999.
(9) Incorporated herein by reference to Post-Effective Amendment No. 12, filed electronically on April 29, 1999.
(10) Incorporated herein by reference to Post-Effective Amendment No. 13, filed electronically on July 13, 1999.
(11) Incorporated herein by reference to Post-Effective Amendment No. 14, filed electronically on September 28, 1999.
(12) Incorporated herein by reference to Post-Effective Amendment No. 15, filed electronically on February 16, 2000.
(13) Incorporated herein by reference to Post-Effective Amendment No. 16, filed electronically on February 17, 2000.
(14) Incorporated herein by reference to Post-Effective Amendment No. 18, filed electronically on February 16, 2001.
Item 24. Persons Controlled by or Under Common Control with Registrant
None.
Item 25. Indemnification
The Registrant's Agreement and Declaration of Trust, dated December 6, 1999, provides, among other things (i) that trustees and officers of the Registrant, when acting as such, shall not be personally liable for any act, omission or obligation of the Registrant or any trustee or officer (except for liabilities to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duty); (ii) for the indemnification by the Registrant of the trustees, officers, employees and agents of the Registrant to the fullest extent permitted by the Delaware Business Trust Act and Bylaws and other applicable law; (iii) that shareholders of the Registrant shall not be personally liable for the debts, liabilities, obligations or expenses of the Registrant or any portfolio or class; and (iv) for the indemnification by the Registrant, out of the assets belonging to the applicable portfolio, of shareholders and former shareholders of the Registrant in case they are held personally liable solely by reason of being or having been shareholders of the Registrant or any portfolio or class and not because of their acts or omissions or for some other reason.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue. Insurance coverage is provided under a joint Mutual Fund & Investment Advisory Professional Directors & Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of the Advisor's directors and officers is with the Advisor and its affiliated companies. Reference is also made to the caption "Fund Management--The Advisor" of the Prospectus which comprises Part A of this Registration Statement, and to the discussion under the caption "Management" of the Statement of Additional Information which comprises Part B of this Registration Statement, and to Item 29(b) of this Part C of the Registration Statement.
Item 27. Principal Underwriters
(a) A I M Distributors, Inc. the Registrant's principal underwriter, also acts as a principal underwriter to the following investment companies:
AIM Advisor Funds
AIM Equity Funds
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM International Funds, Inc.
AIM Investment Funds
AIM Investment Securities Funds
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
AIM Tax-Exempt Funds
(b)
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
---------------- -------------------------- --------------------
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President & Director Chairman, President & Trustee
William G. Littlepage Senior Vice President & Director None
James L. Salners Executive Vice President None
Michael C. Vessels Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
B. J. Thompson First Vice President None
Ofelia M. Mayo Vice President, General Counsel Assistant Secretary
& Assistant Secretary
Dawn M. Hawley Vice President & Treasurer None
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Melville B. Cox Vice President & Chief Compliance Officer Vice President
|
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
---------------- -------------------------- --------------------
Glenda Dayton Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Charles H. McLaughlin Vice President None
Ivy B. McLemore Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President &
Secretary
Kamala C. Sachidanandan Vice President None
Christopher T. Simutis Vice President None
Gary K. Wendler Vice President None
Norman W. Woodson Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Luke P. Beausoleil Assistant Vice President None
Shelia R. Brown Assistant Vice President None
Scott E. Burman Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Simon R. Hoyle Assistant Vice President None
Kathryn A. Jordan Capage Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
P. Michelle Grace Assistant Secretary Assistant Secretary
Lisa A. Moss Assistant Secretary Assistant Secretary
|
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046
(c) Not Applicable
Item 28. Location of Accounts and Records
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, will maintain physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Registrant's Custodian and Transfer Agent State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110.
Item 29. Management Services
Not Applicable
Item 30. Undertakings
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the city of Houston, Texas on the 12th day of April, 2001.
REGISTRANT: AIM VARIABLE INSURANCE FUNDS
By: /s/ ROBERT H. GRAHAM -------------------------------------------- Robert H. Graham, President |
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ ROBERT H. GRAHAM Chairman, Trustee & President April 12, 2001
----------------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee April 12, 2001
-----------------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee April 12, 2001
-----------------------------------------
(Owen Daly II)
/s/ ALBERT R. DOWDEN Trustee April 12, 2001
-----------------------------------------
(Albert R. Dowden)
/s/ EDWARD K. DUNN, JR. Trustee April 12, 2001
------------------------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee April 12, 2001
------------------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee April 12, 2001
-----------------------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee April 12, 2001
-----------------------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee April 12, 2001
-----------------------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Trustee April 12, 2001
-----------------------------------------
(Louis S. Sklar)
Vice President &
/s/ DANA R. SUTTON Treasurer (Principal Financial April 12, 2001
----------------------------------------- and Accounting Officer)
(Dana R. Sutton)
|
INDEX TO EXHIBITS
EXHIBIT
NO.
---
a(1)(f) Amendment No. 5 to Agreement and Declaration of Trust of
Registrant, dated March 14, 2001.
a(1)(g) Amendment No. 6 to Agreement and Declaration of Trust of
Registrant, dated May 1, 2001.
d(1)(b) Amendment No. 1, dated May 1, 2001, to Master Investment
Advisory Agreement, dated May 1, 2000, between Registrant and
A I M Advisors, Inc.
e(1)(a) Master Distribution Agreement, dated May 1, 2000, between
Registrant and A I M Distributors, Inc.
e(1)(b) Amendment No. 1, dated May 1, 2001, to Master Distribution
Agreement, dated May 1, 2000, between Registrant and A I M
Distributors, Inc.
g(1)(a) Master Custodian Agreement, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company
g(1)(b) Amendment, dated May 1, 2000, to Master Custodian Agreement,
dated May 1, 2000, between Registrant and State Street Bank
and Trust Company
g(2) Custody Agreement, dated September 19, 2000, between
Registrant and The Bank of New York
h(1)(b) Amendment No. 1, dated May 1, 2001, to Master Administrative
Services Agreement, dated May 1, 2000, between Registrant and
A I M Advisors, Inc.
h(2) Transfer Agency Agreement, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company
i(1)(i) Consent of Messrs. Foley & Lardner
i(2) Consent of Messrs. Tait, Weller & Baker
|
EXHIBIT a(1)(f)
AMENDMENT NO. 5
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 5 to the Agreement and Declaration of Trust of AIM Variable Insurance Funds (this "Amendment") amends, effective as of March 14, 2001, the Agreement and Declaration of Trust of AIM Variable Insurance Funds dated as of December 6, 1999, as amended (the "Agreement").
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Unless defined herein, each capitalized term used in this Amendment shall have the meaning given it in the Agreement.
2. Section 4.3 is hereby amended and restated in its entirety as follows:
"Section 4.3. Action by the Trustees. The Board of Trustees or any committee thereof shall act by majority vote of those present at a meeting duly called (including a meeting by telephonic or other electronic means, unless the 1940 Act requires that a particular action be taken only at a meeting of the Trustees in person) at which a quorum required by the Bylaws is present. Any action that may be taken by the Board of Trustees or any committee thereof by majority vote at a meeting duly called and at which a quorum required by the Bylaws is present, may also be taken by written consent of at least seventy-five percent (75%) of the Trustees or members of the committee, as the case may be, without a meeting, provided that the writing or writings are filed with the minutes of proceedings of the Board or committee. Written consents or waivers of the Trustees may be executed in one or more counterparts. Any written consent or waiver may be provided and delivered to the Trust by any means by which notice may be given to a Trustee. Subject to the requirements of the 1940 Act, the Trustees by Majority Trustee Vote may delegate to any Trustee or Trustees authority to approve particular matters or take particular actions on behalf of the Trust."
3. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
4. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of March 14, 2001.
/s/ ROBERT H. GRAHAM -------------------------------------- Name: Robert H. Graham Title: President |
EXHIBIT a(1)(g)
AMENDMENT NO. 6
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 6 to the Agreement and Declaration of Trust of AIM Variable Insurance Funds (this "Amendment") amends, effective as of May 1, 2001, the Agreement and Declaration of Trust of AIM Variable Insurance Funds dated as of December 6, 1999, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Schedule A of the Agreement is hereby amended and restated to read in full as set forth on Exhibit 1 to this Amendment.
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
3. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of May 1, 2001.
By: /s/ ROBERT H. GRAHAM --------------------------------- Name: Robert H. Graham Title: President |
EXHIBIT 1 TO AMENDMENT NO. 6
DATED AS OF MAY 1, 2001
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
SCHEDULE A
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS THEREOF
PORTFOLIO
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Dent Demographic Trends Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth and Income Fund
AIM V.I. Growth Fund
AIM V.I. High Yield Fund
AIM V.I. International Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Value Fund
EXHIBIT d(1)(b)
AMENDMENT NO. 1
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This amendment dated as of May 1, 2001, amends the Master Investment Advisory Agreement (the "Agreement"), dated May 1, 2000, between AIM Variable Insurance Funds, a Delaware business trust, and A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to change the name of AIM V.I. Telecommunications and Technology Fund to AIM V.I. New Technology Fund;
NOW, THEREFORE, the parties agree as follows:
1. Appendix A and Appendix B to the Agreement are hereby deleted in their entirety and replaced with the following:
"APPENDIX A
FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT ------------ ------------------------------------ AIM V.I. Aggressive Growth Fund May 1, 2000 AIM V.I. Balanced Fund May 1, 2000 AIM V.I. Blue Chip Fund May 1, 2000 AIM V.I. Capital Appreciation Fund May 1, 2000 AIM V.I. Capital Development Fund May 1, 2000 AIM V.I. Dent Demographic Trends Fund May 1, 2000 AIM V.I. Diversified Income Fund May 1, 2000 AIM V.I. Global Utilities Fund May 1, 2000 AIM V.I. Government Securities Fund May 1, 2000 AIM V.I. Growth Fund May 1, 2000 AIM V.I. High Yield Fund May 1, 2000 AIM V.I. International Equity Fund May 1, 2000 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. New Technology Fund May 1, 2001 AIM V.I. Value Fund May 1, 2000 |
APPENDIX B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full compensation for all services rendered, an advisory fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. GROWTH FUND
AIM V.I. GROWTH AND INCOME FUND
AIM V.I. GLOBAL UTILITIES FUND
AIM V.I. VALUE FUND
NET ASSETS ANNUAL RATE ---------- ----------- First $250 million............................................................................... 0.65% Over $250 million................................................................................ 0.60% |
AIM V.I. AGGRESSIVE GROWTH FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $150 million............................................................................... 0.80%
Over $150 million................................................................................ 0.625%
|
AIM V.I. BALANCED FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $150 million............................................................................... 0.75%
Over $150 million................................................................................ 0.50%
|
AIM V.I. BLUE CHIP FUND
AIM V.I. CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $350 million............................................................................... 0.75%
Over $350 million................................................................................ 0.625%
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
NET ASSETS ANNUAL RATE
First $2 billion................................................................................. 0.85%
Over $2 billion.................................................................................. 0.80%
|
AIM V.I. DIVERSIFIED INCOME FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $250 million............................................................................... 0.60%
Over $250 million................................................................................ 0.55%
|
AIM V.I. NEW TECHNOLOGY FUND
NET ASSETS ANNUAL RATE
---------- -----------
Average Daily Net Assets......................................................................... 1.00%
|
AIM V.I. GOVERNMENT SECURITIES FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $250 million............................................................................... 0.50%
Over $250 million................................................................................ 0.45%
|
AIM V.I. HIGH YIELD FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $200 million............................................................................... 0.625%
Next $300 million................................................................................ 0.55%
Next $500 million................................................................................ 0.50%
Amount over $1 billion........................................................................... 0.45%
|
AIM V.I. INTERNATIONAL EQUITY FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $250 million............................................................................... 0.75%
Over $250 million................................................................................ 0.70%
|
AIM V.I. MONEY MARKET FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $250 million............................................................................... 0.40%
Over $250 million................................................................................ 0.35%"
|
2. In all other respects, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers on the date first written above.
Date: May 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
----------------------------- --------------------------------
Assistant Secretary President
|
(SEAL)
A I M ADVISORS, INC.
Attest: /s/NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
----------------------------- ---------------------------------
Assistant Secretary President
|
(SEAL)
EXHIBIT e(1)(a)
MASTER DISTRIBUTION AGREEMENT
BETWEEN
AIM VARIABLE INSURANCE FUNDS
AND
A I M DISTRIBUTORS, INC.
THIS AGREEMENT, made this 1st day of May, 2000, is by and between AIM VARIABLE INSURANCE FUNDS, a Delaware business trust (the "Trust"), with respect to its series of shares shown on Schedule A attached hereto (the "Funds"), and A I M DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WITNESSETH:
In consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt whereof is hereby acknowledged, the parties hereto agree as follows:
FIRST: The Trust on behalf of the Funds hereby appoints the Distributor as its principal underwriter and exclusive distributor for the sale of shares of the Funds to the separate accounts of United States life insurance companies.
SECOND: The Trust shall not sell any shares of the Funds except through the Distributor and under the terms and conditions set forth in paragraph FOURTH below.
THIRD: The Distributor hereby accepts appointment as exclusive agent for the sale of the shares of the Funds and agrees that it will use its best efforts to sell such shares; provided, however, that:
(A) the Distributor may, and when requested by the Trust on behalf of the Funds shall, suspend its efforts to effectuate such sales at any time when, in the opinion of the Distributor or of the Trust, no sales should be made because of market or other economic considerations or abnormal circumstances of any kind; and
(B) the Trust may withdraw the offering of the shares of the Funds (i)
at any time with the consent of the Distributor, or (ii) without such consent
when so required by the provisions of any statute or of any order, rule or
regulation of any governmental body having jurisdiction. It is mutually
understood and agreed that the Distributor does not undertake to sell any
specific amount of the shares of the Funds. The Trust shall have the right to
specify minimum amounts for initial and subsequent orders for the purchase of
shares of the Funds.
FOURTH: The public offering price of shares of the Funds (the "offering price") shall be the net asset value per share. Net asset value per share shall be determined in accordance with the provisions of the then current prospectus of the Trust.
FIFTH: The Distributor shall act as agent of the Trust on behalf of the Funds in connection with the sale and repurchase of shares of the Funds.
SIXTH: The Funds shall bear:
(A) the expenses of qualification of shares of the Fund for sale in connection with such public offerings in any jurisdictions where said qualification is required by law; and
(B) all legal expenses in connection with the foregoing.
SEVENTH: The Distributor shall bear the expenses of printing from the final proof and distributing the Funds' prospectuses and statements of additional information (including supplements thereto) relating to the sale of shares of the Funds made by the Distributor pursuant to this Agreement (which shall not include those prospectuses and statements of additional information, and supplements thereto, to be distributed to shareholders of the Funds).
EIGHTH: The Distributor will accept orders for the purchase of shares of the Funds only to the extent of purchase orders actually received and not in excess of such orders, and it will not avail itself of any opportunity of making a profit by expediting or withholding orders.
NINTH: The Company, on behalf of the Funds, and the Distributor shall each comply with all applicable provisions of the 1940 Act, the Securities Act of 1933 and of all other federal and state laws, rules and regulations governing the issuance and sale of shares of the Funds.
TENTH:
(A) In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Distributor, the Trust on behalf of the Funds agrees to indemnify the Distributor against any and all claims, demands, liabilities and expenses which the Distributor may incur under the Securities Act of 1933, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in any registration statement or prospectus of the Funds, or any omission to state a material fact therein, the omission of which makes any statement contained therein misleading, unless such statement or omission was made in reliance upon, and in conformity with, information furnished to the Trust or Funds in connection therewith by or on behalf of the Distributor. The Distributor agrees to indemnify the Trust and the Funds against any and all claims, demands, liabilities and expenses which Trust or the Funds may incur arising out of or based upon any act or deed of the Distributor or its sales representatives which has not been authorized by the Trust or the Funds in the prospectus or in this Agreement.
(B) The Distributor agrees to indemnify the Trust and the Funds against any and all claims, demands, liabilities and expenses which the Trust or the Funds may incur under the Securities Act of 1933, or common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in any registration statement or prospectus of the Funds, or any omission to state a material fact therein if such statement or omission was made in reliance upon, and in conformity with, information furnished to the Trust or the Funds in connection therewith by or on behalf of the Distributor.
(C) Notwithstanding any other provision of this Agreement, the Distributor shall not be liable for any errors of the Funds' transfer agent(s), or for any failure of any such transfer agent to perform its duties.
ELEVENTH: Nothing herein contained shall require the Trust to take any action contrary to any provision of its Agreement and Declaration of Trust, or to any applicable statute or regulation.
TWELFTH: This Agreement shall become effective as of the date hereof, shall continue in force and effect until June 30, 2001, and shall continue in force and effect from year to year thereafter, provided, that such continuance is specifically approved at least annually (a)(i) by the Board of Trustees of the Trust or (ii) by the vote of a majority of the Funds' outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act), and (b) by vote of a majority of the trustees of the Trust who are not parties to this Agreement or "interested persons" (as defined in Section 2(a)(19) of the 1940 Act) of any party to this Agreement cast in person at a meeting called for such purpose.
THIRTEENTH:
(A) This Agreement may be terminated at any time, without the payment of any penalty, by vote of the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Funds, or by the Distributor, on sixty (60) days' written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its assignment, the term "assignment" having the meaning set forth in Section 2(a)(4) of the 1940 Act.
FOURTEENTH: Any notice under this Agreement shall be in writing, addressed and delivered, or mailed postage prepaid, to the other party at such address as the other party may designate for the receipt of notices. Until further notice to the other party, it is agreed that the addresses of both the Trust and the Distributor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate on the day and year first above written.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
-------------------------------- --------------------------------
Name: Nancy L. Martin Name: Robert H. Graham
Title: Assistant Secretary Title: President
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A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: MICHAEL J. CEMO
-------------------------------- --------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
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SCHEDULE A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
o AIM V.I. Aggressive Growth Fund
o AIM V.I. Balanced Fund
o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Capital Development Fund
o AIM V.I. Dent Demographic Trends Fund
o AIM V.I. Diversified Income Fund
o AIM V.I. Global Growth and Income Fund
o AIM V.I. Global Utilities Fund
o AIM V.I. Government Securities Fund
o AIM V.I. Growth Fund
o AIM V.I. Growth and Income Fund
o AIM V.I. High Yield Fund
o AIM V.I. International Equity Fund
o AIM V.I. Money Market Fund
o AIM V.I. Telecommunications and Technology Fund
o AIM V.I. Value Fund
EXHIBIT e(1)(b)
AMENDMENT NO. 1
TO
MASTER DISTRIBUTION AGREEMENT
The Master Distribution Agreement (the "Agreement"), dated as of May 1, 2000, by and between AIM Variable Insurance Funds, a Delaware business trust and A I M Distributors, Inc., a Delaware corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
MASTER DISTRIBUTION AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
o AIM V.I. Aggressive Growth Fund
o AIM V.I. Balanced Fund
o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Capital Development Fund
o AIM V.I. Dent Demographic Trends Fund
o AIM V.I. Diversification Income Fund
o AIM V.I. Global Utilities Fund
o AIM V.I. Government Securities Fund
o AIM V.I. Growth Fund
o AIM V.I. Growth and Income Fund
o AIM V.I. High Yield Fund
o AIM V.I. International Equity Fund
o AIM V.I. Money Market Fund
o AIM V.I. New Technology Fund
o AIM V.I. Value Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: May 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
-------------------------- -----------------------------------
Assistant Secretary President
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
-------------------------- -----------------------------------
Assistant Secretary President
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EXHIBIT g(1)(a)
This Contract between each entity set forth in Appendix A hereto (as such Appendix A may be amended from time to time) (each such entity and each entity made subject to this Contract in accordance with Paragraphs 17 and 18, referred to herein as a "Fund") and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, a Fund may be authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and
WHEREAS, each Fund so authorized intends that this Contract be applicable to each of its series set forth on Appendix A hereto (as such Appendix A may be amended from time to time) (such series together with all other series subsequently established by the Fund and made subject to this Contract in accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:
Each Fund hereby employs the Custodian as the custodian of the assets of the Portfolios of the Fund, including securities which the Fund, on behalf of the applicable Portfolio desires to be held in places within the United States ("domestic securities") and securities it desires to be held outside the United States ("foreign securities") pursuant to the provisions of the Fund's articles of incorporation, agreement and declaration of trust, by-laws and/or registration statement (as applicable, the "Governing Documents"). Each Fund on behalf of its Portfolio(s) agrees to deliver to the Custodian all securities and cash of such Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by such Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of capital stock or beneficial interest of each Fund representing interests in the Portfolios, ("Shares") as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Portfolio held or received by the Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors or the Board of
Trustees of the applicable Fund on behalf of the applicable Portfolio(s) (as
appropriate and in each case, the "Board"), and provided that the Custodian
shall have no more or less responsibility or liability to the Fund on account of
any actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for each Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the applicable provisions of
Article 3.
2.1 Holding Securities. The Custodian shall hold and physically segregate for the account of each Portfolio all non-cash property, to be held by it in the United States including all domestic securities owned by such Portfolio, other than (a) securities which are maintained pursuant to Section 2.10 in a U.S. Securities System (as defined in Section 2.10) and b) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian (the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by a Portfolio held by the Custodian or in a U.S. Securities System account of the Custodian or in the Custodian's Direct Paper book entry system account ("Direct Paper System Account") only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of the Custodian or into the name or nominee name of any agent appointed pursuant to Section 2.9 or into the name or nominee name of any sub-custodian appointed pursuant to Article 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the Portfolio, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodian's account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian, and a futures commission merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission ("CFTC") and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the Fund ("Transfer Agent"), for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from
time to time in the currently effective prospectus and statement of additional information of the Fund, related to the Portfolio ("Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and
15) For any other proper trust or corporate purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the applicable Portfolio, a certified copy of a resolution of the Board of Trustees or of the Executive Committee signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, specifying the securities of the Portfolio to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper trust or corporate purpose, as applicable, and naming the person or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian (other than bearer securities) shall be registered in the name of the Portfolio or in the name of any nominee of the Fund on behalf of a Portfolio or of any nominee of the Custodian which nominee shall be assigned exclusively to the Portfolio, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment advisor as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.9 or in the name or nominee name of any sub-custodian appointed pursuant to Article 1. All securities accepted by the Custodian on behalf of a Portfolio under the terms of this Contract shall be in "street name" or other good delivery form. If, however, a Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of each Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940, as amended (the "1940 Act"). Funds held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the banking department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between any Fund on behalf of each applicable Portfolio and the Custodian, the Custodian shall, upon the receipt of Proper Instructions from such Fund on behalf of a Portfolio, make federal funds available to such Portfolio as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of such Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and shall credit such income, as collected, to such Portfolio's custodian account. Without limiting the generality of the foregoing the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2 (10) shall be the responsibility of the applicable Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data in its possession as may be necessary to assist the Fund in arranging, for the timely delivery to the Custodian of the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the 1940 Act to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.10 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.11; (d) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and the Custodian, or another bank, or a broker-dealer which is a member of NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by the Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Portfolio or (e) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined in Article 5 of this Contract;
2) In connection with conversion, exchange or surrender
of securities owned by the Portfolio as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred
by the Portfolio, including but not limited to the
following payments for the account of the Portfolio:
interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to the Fund's Governing Documents;
6) For payment of the amount of dividends received in respect of securities sold short; and
7) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the Portfolio, a certified copy of a resolution of the Board or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Secretary or an Assistant Secretary, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper trust or corporate purpose, as applicable, and naming the person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of domestic securities for the account of a Portfolio is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from a Fund on behalf of a Portfolio to so pay in advance, the Custodian shall be absolutely liable to such Fund for such securities to the same extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the 1940 Act to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may at any time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S Securities Systems. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in a clearing agency registered with the SEC under
Section 17A of the Securities Exchange Act of 1934, which acts
as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S. Securities System provided that such securities are represented in an account of the Custodian in the U.S. Securities System (a "U.S. Securities System Account") which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the Portfolio which are maintained in a U.S. Securities System shall identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that such securities have been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that payment for such securities has been transferred to the U.S. Securities System Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Portfolio. Copies of all advices from the U.S. Securities System of transfers of securities for the account of the Portfolio shall identify the Portfolio, be maintained for the Portfolio by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio in the form of a written advice or notice and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transactions in the U.S. Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any report obtained by the Custodian on the U.S. Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the U.S Securities System;
5) The Custodian shall have received from the Fund on behalf of the Portfolio the initial or annual certificate, as the case may be, required by Article 14 hereof; and
6) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for the benefit of the Portfolio for any loss or damage to the Portfolio resulting from use of the U.S. Securities System
by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the U.S. Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the U.S. Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Portfolio has not been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may deposit and/or maintain securities owned by a Portfolio in the Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions from the applicable Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper System only if such securities are represented in an account ("Account") of the Custodian in the Direct Paper System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the Portfolio which are maintained in the Direct Paper System shall identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transaction in the Direct Paper System for the account of the Portfolio; and
6) The Custodian shall provide the Fund on behalf of the Portfolio with any report on its system of internal accounting control as the Fund may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant
to Section 2.10 hereof, (i) in accordance with the provisions
of any agreement among the Fund on behalf of the Portfolio,
the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange (or the CFTC or any registered contract market), or
of any similar organization or organizations, regarding escrow
or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or
written by the Portfolio or commodity futures contracts or
options thereon purchased or sold by the Portfolio, (iii) for
the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities
and Exchange Commission ("SEC") or interpretative opinion of
the staff of the SEC, relating to the maintenance of
segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the applicable
Board or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper
corporate or trust purposes, as applicable.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund for each Portfolio all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio) received by the Custodian from issuers of the securities being held for the Portfolio. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Portfolio all written information received by the Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Portfolio desires to take action with respect to any tender offer, exchange offer or any other similar
transaction, the Portfolio shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action.
3.1 Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the Portfolio's securities and other assets maintained outside the United States the foreign banking institutions and foreign securities depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper Instructions", as defined in Section 5 of this Contract, together with a certified resolution of the Fund's Board, the Custodian and the Fund may agree to amend Schedule A hereto from time to time to designate additional foreign banking institutions and foreign securities depositories to act as sub-custodian. Upon receipt of Proper Instructions, each Fund may instruct the Custodian to cease the employment of any one or more such sub-custodians for maintaining custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other assets maintained in the custody of the foreign sub-custodians to: (a) "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under the 1940 Act, and b) cash and cash equivalents in such amounts as the Custodian or the applicable Fund may determine to be reasonably necessary to effect the Portfolio's foreign securities transactions. The Custodian shall identify on its books as belonging to the applicable Fund, the foreign securities of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in writing by the Custodian and each Fund, assets of the Portfolios shall be maintained in a clearing agency which acts as a securities depository or in a book-entry system for the central handling of securities located outside of the United States (each a "Foreign Securities System") only through arrangements implemented by the foreign banking institutions serving as sub-custodians pursuant to the terms hereof (Foreign Securities Systems and U.S. Securities Systems are collectively referred to herein as the "Securities Systems"). Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 3.5 hereof.
3.4 [Reserved.]
3.5 Agreements with Foreign Banking Institutions. Each agreement
with a foreign banking institution shall provide that: (a) the
assets of each Portfolio will not be subject to any right,
charge, security interest, lien or claim of any kind in favor
of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the assets of
each Portfolio will be freely transferable without the payment
of money or value other than for custody or administration;
(c) adequate records will be maintained identifying the assets
as belonging to each applicable Portfolio; (d) officers of or
auditors employed by, or other representatives of the
Custodian, including to the extent permitted under applicable
law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian; and (e) assets of the Portfolios held by the foreign sub-custodian will be subject only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of any Fund, the Custodian will use its best efforts to arrange for the independent accountants of such Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign sub-custodian insofar as such books and records relate to the performance of such foreign banking institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to each Fund from time to time, as mutually agreed upon, statements in respect of the securities and other assets of the Portfolio(s) held by foreign sub-custodians, including but not limited to an identification of entities having possession of the Portfolio(s) securities and other assets and advices or notifications of any transfers of securities to or from each custodial account maintained by a foreign banking institution for the Custodian on behalf of each applicable Portfolio indicating, as to securities acquired for a Portfolio, the identity of the entity having physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided in paragraph Co) of this Section 3.8, the provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to the foreign securities of each Fund held outside the United States by foreign sub-custodians. (b) Notwithstanding any provision of this Contract to the contrary, settlement and payment for securities received for the account of each applicable Portfolio and delivery of securities maintained for the account of each applicable Portfolio may be effected in accordance with the customary established securities trading or securities processing practices and procedures in the jurisdiction or market in which the transaction occurs, including, without limitation, delivering securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such securities from such purchaser or dealer. (c) Securities maintained in the custody of a foreign sub-custodian may be maintained in the name of such entity's nominee to the same extent as set forth in Section 2.3 of this Contract, and each Fund agrees to hold any such nominee harmless from any liability as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the Custodian employs a foreign banking institution as a foreign sub-custodian shall require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian and each Fund from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations. At the election of any Fund, it shall be entitled to be subrogated to the fights of the Custodian with respect to any claims against a foreign banking institution as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that such Fund has not been made whole for any such loss, damage, cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism or any loss where the sub-custodian has otherwise exercised reasonable care. Notwithstanding the foregoing provisions of this paragraph 3.10, in delegating custody duties to State Street London Ltd., the Custodian shall not be relieved of any responsibility to the Fund for any loss due to such delegation, except such loss as may result from (a) political risk (including, but not limited to, exchange control restrictions, confiscation, expropriation, nationalization, insurrection, civil strife or armed hostilities) or Co) other losses (excluding a bankruptcy or insolvency of State Street London Ltd. not caused by political risk) due to Acts of God, nuclear incident or other losses under circumstances where the Custodian and State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If any Fund requires the Custodian to advance cash or securities for any purpose for the benefit of a Portfolio including the purchase or sale of foreign exchange or of contracts for foreign exchange, or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should such Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolios assets to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to each Fund, during the month of June, information concerning the foreign sub-custodians employed by the Custodian. Such information shall be similar in kind and scope to that furnished to each Fund in connection with the initial approval of this Contract. In addition, the Custodian will promptly inform each Fund in the event that the Custodian learns of a material adverse change in the financial condition of a foreign sub-custodian or any material loss of the assets of a Fund or in the case of any foreign sub-custodian not the subject of an exemptive order from the SEC is notified by such foreign sub-custodian that there appears to be a substantial likelihood that its shareholders' equity will decline below $200 million (U.S. dollars or the equivalent thereof) or that its shareholders' equity has declined below $200 million (in each case computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract, the provisions hereof shall not apply where the custody of the Portfolios assets are maintained in a foreign branch of a banking institution which is a "bank" as defined by Section 2(a)(5) of the 1940 Act meeting the qualification set forth in Section 26(a) of said Act. The appointment of any such branch as a sub-custodian shall be governed by paragraph 1 of this Contract Cash held for each
Portfolio of each Fund in the United Kingdom shall be maintained in an interest beating account established for the Fund with the Custodian's London branch, which account shall be subject to the direction of the Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on any Fund or the Custodian as custodian of such Fund by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of each Fund to notify the Custodian of the obligations imposed on such Fund or the Custodian as custodian of the Fund by the tax law of jurisdictions other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist each Fund with respect to any claim for exemption or refund under the tax law of jurisdictions for which each Fund has provided such information.
The Custodian shall receive from the distributor for the Shares or from the Transfer Agent of each Fund and deposit into the account of the appropriate Portfolio such payments as are received for Shares of that Portfolio issued or sold from time to time by applicable Fund. The Custodian will provide timely notification to such Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the limitations of the Governing Documents and any applicable votes of the Board of any Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by a Fund to the holder of Shares, when presented to the Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time between a Fund and the Custodian.
Proper Instructions as used throughout this Contract includes the following:
(a) a writing signed or initialed by one or more person or persons as a Board shall have from time to time authorized. Each such writing shall set forth the specific transaction or type or transaction involved, including a specific statement of the purpose for which such action is requested;
(b) communications effected directly between electro-mechanical or electronic devices provided that each Fund and the Custodian agree to securities procedures, including but not limited to, the security procedures listed on the Funds Transfer Addendum attached hereto;
(c) oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. Each Fund shall cause all oral instructions to be confirmed in writing or through electro-mechanical or electronic devices; or
(d) Proper Instructions in connection with a segregated asset account which has been established pursuant to Section 2.12 hereof, shall include instructions received by the Custodian in accordance with the provisions of any three-party agreement, to which any Fund and the Custodian are each a party, governing such account or accounts.
The Custodian may in its discretion, without express authority from the applicable Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the applicable Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive form;
3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as otherwise directed by the applicable Board.
The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the applicable Fund. The Custodian may receive and accept a certified copy of a vote of the applicable Board of a Fund as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board pursuant to the Governing Documents as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary.
The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the applicable Board o to keep the books of account of each Portfolio and/or compute the net asset value per share of the outstanding Shares or, if directed in writing to do so by the applicable Fund on behalf of the Portfolio, shall itself keep such books of account and/or compute such net asset value per Share. If so directed, the Custodian shall also calculate daily the net income of the Portfolio as described in the applicable Fund's Prospectus related to such Portfolio and shall advise such Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of such Fund to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of each Portfolio shall be made at the time or times described from time to time in the applicable Fund's Prospectus.
The Custodian shall with respect to each Portfolio create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the applicable Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the applicable Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of such Fund and employees and agents of the SEC. The Custodian shall, at a Fund's request, supply such Fund with a tabulation of securities owned by each Portfolio and held by the Custodian and shall, when requested to do so by a Fund and for such compensation as shall be agreed upon between such Fund and the Custodian, include certificate numbers in such tabulations.
The Custodian shall take all reasonable action, as the applicable Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from such Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, Form N-2 (if applicable), and Form N-SAR or other annual reports to the SEC and with respect to any other requirements thereof.
The Custodian shall provide the applicable Fund, on behalf of each of the Portfolios at such times as such Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a U.S. Securities System, relating to the services provided by the Custodian under this Contract; such reports, shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state.
The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between each Fund on behalf of each applicable Portfolio and the Custodian.
So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to any Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for a Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to any Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical failures or
interruptions, communications disruptions, acts of war or terrorism, riots,
revolutions, work stoppages, natural disasters or other similar events or acts;
(ii) errors by any Fund or any Investment Advisor in their instructions to the
Custodian provided such instructions have been in accordance with this Contract;
(iii) the insolvency of or acts or omissions by a Securities System; (iv) any
delay or failure of any broker, agent or intermediary, central bank or other
commercially prevalent payment or clearing system that is not an affiliate of
the Custodian to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the Custodian,
any Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract.
If a Fund on behalf of a Portfolio requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, such Fund on behalf of
the Portfolio, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it.
If a Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign exchange contracts and assumed settlement) for the benefit of a Portfolio or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should a Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement.
This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties hereto and may be terminated with respect to any party by an instrument in writing delivered or mailed, postage prepaid to the other parties, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided, however that the Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the applicable Board has approved the initial use of a particular Securities System by such Portfolio, as required by Rule 17f-4 under the 1940 Act and that the Custodian shall not with respect to a Portfolio act under Section 2.11 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the applicable Board has approved the initial use of the Direct Paper System by such Portfolio; provided further, however, that each Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Fund's Governing Documents, and further provided, that each Fund on behalf of one or more of the Portfolios may at any time by action of its Board (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction.
Termination of this Contract with respect to any particular Portfolio shall in no way affect the rights and duties under this Contract with respect to any other Funds or Portfolios.
Upon termination of the Contract with respect to any Portfolio, such Fund on behalf of each applicable Portfolio shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements.
If a successor custodian for one or more Funds or Portfolios shall be appointed by the applicable Board, the Custodian shall, upon termination with respect to the applicable Fund: (i) deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder; (ii) transfer
to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System; and (iii) transfer to the successor custodian all records created and maintained by the Custodian with respect to each such Portfolio pursuant to Section 9.
If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the applicable Board, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or certified copy of a vote of the applicable Board shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the 1940 Act, doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Portfolio and all instruments held by the Custodian relative thereto and all other property held by it under this Contract on behalf of each applicable Portfolio and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof with respect to any Fund owing to failure of such Fund to procure the certified copy of the vote referred to or of the applicable Board to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect.
In connection with the operation of this Contract, the Custodian and each Fund on behalf of each of the Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by all parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any provision of the Fund's Governing Documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract.
In the event that any Fund establishes one or more series of Shares in addition to those listed on Appendix A attached hereto with respect to which it desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder.
In the event that any entity in addition to those listed on Appendix A
attached hereto desires to have the Custodian render services as custodian under
the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such entity shall become a
Fund hereunder and be bound by all terms, conditions and provisions hereof
including, without limitation, the representations and warranties set forth in
Section 22 below.
This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts.
This Contract supersedes and terminates, as of the date hereof, all prior contracts between each Fund on behalf of each of the Portfolios and the Custodian relating to the custody of each Fund's assets.
This Contract and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
All references herein to the "Fund" are to each of the funds listed on Appendix A hereto individually, as if this Contract were between such individual Fund and the Custodian. In the case of a series fund or trust, all references to the "Portfolio" are to the individual series or portfolio of such fund or trust, or to such fund or trust on behalf of the individual series or portfolio, as appropriate. Any reference in this Contract to "the parties" shall mean the Custodian and such other individual Fund as to which the matter pertains. Each party hereby represents and warrants to each other that (i) it has the requisite power and authority under applicable laws and its Governing Documents, as applicable, to enter into and perform this Contract, (ii) all requisite proceedings have been taken to authorize it to enter into and perform this Contract, and (iii) its entrance into this Contract shall not cause a material breach or be in material conflict with any other agreement or obligation of any party or any law or regulation applicable to it.
With respect to any Fund which is a party to this Contract and which is organized as a Delaware business trust, the term "Fund" means and refers to the trustees from time to time serving under the applicable trust agreement of such trust, as the same may be amended from time to time (the "Declaration of Trust"). It is expressly agreed that the obligations of any such
Fund hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of the Fund personally, but bind only the trust property of the Fund as set forth in the applicable Declaration of Trust. In the case of each Fund which is a Delaware business trust (in each case, a "Trust"), the execution and delivery of this Agreement on behalf of the Trust has been authorized by the trustees, and signed by an authorized officer of the Trust, in each case acting in such capacity and not individually, and neither such authorization by the trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually, but shall bind only the trust property of the Trust as provided in its Declaration of Trust.
SEC Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the role, the Custodian needs each Fund to indicate whether it authorizes the Custodian to provide such Fund's name, address, and share position to requesting companies whose stock the Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian "yes" or do not check either "yes" or "no" below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund's protection, the Rule prohibits the requesting company from using the Fund's name and address for any purpose other than corporate communications. Please indicate below whether the Fund consent or object by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [X] The Custodian is not authorized to release the
Fund's name, address, and share positions.
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The Custodian and each Fund agree to be bound by the terms of the Remote Access Services Addendum attached hereto.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of the 1st day of May, 2000.
ATTEST EACH OF THE ENTITIES SET FORTH ON
APPENDIX A ATTACHED HERETO
By: /s/ STEPHEN I. WINER By: /s/ CAROL F. RELIHAN
----------------------------- -------------------------------
Name: Carol F. Relihan
-----------------------------
Title: Senior Vice President
----------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
By: /s/ STEPHANIE L. POSTER By: /s/ RONALD E. LOGUE
----------------------------- -------------------------------
Vice President
Name: Ronald E. Logue
-----------------------------
Title: Vice Chairman
----------------------------
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APPENDIX A
(AS REVISED MAY 1, 2001)
AIM ADVISOR FUNDS AIM VARIABLE INSURANCE FUNDS
o AIM Advisor Flex Fund o AIM V.I. Aggressive Growth Fund
o AIM Advisor International Value Fund o AIM V.I. Balanced Fund
o AIM Advisor Real Estate Fund o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
AIM EQUITY FUNDS o AIM V.I. Capital Development Fund
o AIM V.I. Dent Demographic Trends Fund
o AIM Aggressive Growth Fund o AIM V.I. Diversified Income Fund
o AIM Blue Chip Fund o AIM V.I. Global Utilities Fund
o AIM Capital Development Fund o AIM V.I. Government Securities Fund
o AIM Charter Fund o AIM V.I. Growth and Income Fund
o AIM Constellation Fund o AIM V.I. Growth Fund
o AIM Dent Demographic Trends Fund o AIM V.I. High Yield Fund
o AIM Emerging Growth Fund o AIM V.I. International Equity Fund
o AIM Large Cap Basic Value Fund o AIM V.I. New Technology Fund
o AIM Large Cap Growth Fund o AIM V.I. Value Fund
o AIM Mid Cap Growth Fund
o AIM Weingarten Fund AIM FLOATING RATE FUND
AIM FUNDS GROUP AIM GROWTH SERIES
o AIM Balanced Fund o AIM Basic Value Fund
o AIM European Small Company Fund o AIM Euroland Growth Fund
o AIM Global Utilities Fund o AIM Japan Growth Fund
o AIM International Emerging Growth Fund o AIM Mid Cap Equity Fund
o AIM New Technology Fund o AIM Small Cap Growth Fund
o AIM Select Growth Fund
o AIM Small Cap Equity Fund AIM INVESTMENT FUNDS
o AIM Value Fund
o AIM Value II Fund o AIM Developing Markets Fund
o AIM Worldwide Spectrum Fund o AIM Global Consumer Products and
Services Fund
AIM INTERNATIONAL FUNDS, INC. o AIM Global Financial Services Fund
o AIM Global Health Care Fund
o AIM Asian Growth Fund o AIM Global Infrastructure Fund
o AIM European Development Fund o AIM Global Resources Fund
o AIM Global Aggressive Growth Fund o AIM Global Telecommunications and
o AIM Global Growth Fund Technology Fund
o AIM Global Income Fund o AIM Latin American Growth Fund
o AIM International Equity Fund o AIM Strategic Income Fund
AIM INVESTMENT SECURITIES FUNDS AIM SERIES TRUST
o AIM High Yield Fund o AIM Global Trends Fund
o AIM High Yield Fund II
o AIM Income Fund GLOBAL INVESTMENT PORTFOLIO
o AIM Intermediate Government Fund
o Global Consumer Products and
AIM SPECIAL OPPORTUNITIES FUNDS Services Portfolio
o Global Resources Portfolio
o AIM Large Cap Opportunities Fund
o AIM Mid Cap Opportunities Fund
o AIM Small Cap Opportunities Fund
AIM SUMMIT FUND
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SCHEDULE A
17f-5 APPROVAL
The Board of Directors/Trustees of each entity set forth on Appendix A to the Master Custodian Contract to which this Schedule A is attached has approved certain foreign banking institutions and foreign securities depositories within State Street's Global Custody Network for use as subcustodians for the Fund's securities, cash and cash equivalents held outside of the United States. Board approval is as indicated by the Fund's Authorized Officer:
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
STATE STREET'S ENTIRE GLOBAL CUSTODY NETWORK LISTED BELOW
-------
/s/ CFR Argentina Citibank, N.A. Caja de Valores S.A.
-------
/s/ CFR Australia Westpac Banking Corporation Austraclear Limited
-------
Reserve Bank Information and
Transfer System
/s/ CFR Austria Erste Bank der Oesterreichischen Oesterreichische Kontrollbank AG
------- Sparkassen AG (Wertpapiersammelbank Division)
Bahrain HSBC Bank Middle East None
------- (as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
/s/ CFR Bangladesh Standard Chartered Bank None
-------
/s/ CFR Belgium Fortis Bank NV/as. Caisse Interprofessionnelle de Depots
------- et de Virements de Titres S.A.
Banque Nationale de Belgique
/s/ CFR Bermuda The Bank of Bermuda Limited None
-------
Bolivia Citibank, N.A. None
-------
Botswana Barclays Bank of Botswana Limited None
-------
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FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Brazil Citibank, N.A. Companhia Brasileira be Liquidacao e
------- Custodia
------- Bulgaria ING Bank N.V. Central Depository AD
Bulgarian National Bank
/s/ CFR Canada State Street Trust Company Canada Canadian Depository
------- for Securities Limited
/s/ CFR Chile Citibank, N.A. Deposito Central de Valores S.A.
-------
/s/ CFR People's Republic The HongKong and Shanghai Shanghai Securities Central Clearing &
------- of China Banking Corporation Limited, Registration Corporation
Shanghai and Shenzhen branches
Shenzhen Securities Clearing
Co., Ltd.
/s/ CFR Colombia Citibank Colombia S.A. Deposito Centralizado de Valores
------- Sociedad Fiduciaria
Costa Rica Banco BCT S.A. Central de Valores S.A.
-------
/s/ CFR Croatia Privredna Banka Zagreb d.d. Ministry of Finance
-------
National Bank of Croatia
Sredisnja Depozitarna Agencija
/s/ CFR Cyprus The Cyprus Popular Bank Ltd. None
-------
/s/ CFR Czech Republic Ceskoslovenska Obchodi Stredisko cennych papiru
------- Banka, A.S.
Czech National Bank
/s/ CFR Denmark Den Danske Bank Vaerdipapircentralen (Danish
------- Securities Center)
Ecuador Citibank, N.A. None
-------
/s/ CFR Egypt Egyptian British Bank Misr Company for Clearing, Settlement,
------- (as delegate of The Hongkong and and Depository
Shanghai Banking Corporation
Limited)
------- Estonia Hansabank Eesti Vaartpaberite Keskdepositoorium
/s/ CFR Finland Merita Bank Plc. Finnish Central Securities
------- Depository
|
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR France Paribas, S.A. Societe Interprofessionnelle
-------- pour la Compensation des
Valeurs Mobilieres
/s/ CFR Germany Dresdner Bank AG Deutsche Borse Clearing AG
--------
Ghana Barclays Bank Of Ghana Limited None
--------
/s/ CFR Greece National Bank of Greece S.A. Central Securities Depository
-------- (Apothetirion Titlon AE)
Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
/s/ CFR Hong Kong Standard Chartered Bank Central Clearing and
-------- Settlement System
Central Moneymarkets Unit
/s/ CFR Hungary Citibank Rt. Kozponti Elszamolohaz es Ertektar
-------- (Budapest) Rt. (KELER)
Iceland Icebank Ltd. None
--------
/s/ CFR India Deutsche Bank AG The National Securities Depository
-------- Limited
Central Depository Services India
Limited
Reserve Bank of India
The Hongkong and Shanghai The National Securities Depository
-------- Banking Corporation Limited Limited
Central Depository Services India
Limited
Reserve Bank of India
/s/ CFR Indonesia Standard Chartered Bank Bank Indonesia
--------
PT Kustodian Sentral Efek Indonesia
/s/ CFR Ireland Bank of Ireland Central Bank of Ireland
-------- Securities Settlement Office
|
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Israel Bank Hapoalim B.M. Tel Aviv Stock Exchange
------- Clearing House Ltd. (TASE Clearinghouse)
Bank of Israel
(As part of the TASE Clearinghouse
system)
/s/ CFR Italy Paribas, S.A. Monte Titoli S.p.A.
-------
Banca d'Italia
Ivory Coast Societe Generale de Banques Depositaire Central -
------- en Cote d'Ivoire Banque de Reglement
Jamaica Scotiabank Jamaica Trust Jamaica Central Securities
------- and Merchant Bank Limited Depository
/s/ CFR Japan The Fuji Bank, Limited Japan Securities Depository
------- Center (JASDEC)
Bank of Japan Net System
The Sumitomo Bank, Limited Japan Securities Depository
------- Center (JASDEC)
Bank of Japan Net System
Jordan HSBC Bank Middle East None
------- (as delegate of the Hongkong and
Shanghai Banking Corporation
Limited)
Kenya Barclays Bank of Kenya Limited Central Bank of Kenya
-------
/s/ CFR Republic of Korea The Hongkong and Shanghai Korea Securities Depository Corporation
------- Banking Corporation Limited
Latvia A/s Hansabank Latvian Central Depository
-------
Lebanon HSBC Bank Middle East Custodian and Clearing Center of
------- (as delegate of the Hongkong and Financial Instruments for Lebanon and
Shanghai Banking Corporation the Middle East (MIDCLEAR) S.A.L.
Limited)
Central Bank of Lebanon
Lithuania Vilniaus Bankas AB Central Securities Depository of
------- Lithuania
|
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Malaysia Standard Chartered Bank Malaysian Central Depository Sdn.
-------- Malaysia Berhad Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and
Safekeeping Systems
Mauritius The Hongkong and Shanghai Central Depository & Settlement
-------- Banking Corporation Limited Co. Ltd.
/s/ CFR Mexico Citibank Mexico, S.A. S.D. INDEVAL
-------- (Instituto para el Deposito de
Valores)
Morocco Banque Commerciale du Maroc Maroclear
--------
/s/ CFR The Netherlands MeesPierson N.V. Nederlands Centraal Instituut voor
-------- Giraal Effectenverkeer B.V. (NECIGEF)
Namibia (via) Standard Bank of South Africa None
--------
/s/ CFR New Zealand ANZ Banking Group New Zealand Central Securities
-------- (New Zealand) Limited Depository Limited
/s/ CFR Norway Christiania Bank og Verdipapirsentralen (the Norwegian
-------- Kreditkasse ASA Central Registry of Securities)
Oman HSBC Bank Middle East Muscat Securities Market Depository &
-------- (as delegate of The Hongkong and Securities Registration Company
Shanghai Banking Corporation Limited)
/s/ CFR Pakistan Deutsche Bank AG Central Depository Company of
-------- Pakistan Limited
State Bank of Pakistan
Palestine HSBC Bank Middle East The Palestine Stock Exchange
-------- (as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
/s/ CFR Panama BankBoston, N.A. None
--------
/s/ CFR Peru Citibank, N.A. Caja de Valores y Liquidaciones,
-------- CAVALIICLV S.A.
/s/ CFR Philippines Standard Chartered Bank Philippines Central Depository, Inc.
--------
|
Registry of Scripless Securities (ROSS) of the Bureau of Treasury
FUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Poland Citibank (Poland) S.A. National Depository of Securities
------- (Krajowy Depozyt Papierow
Wartosciowych SA)
Central Treasury Bills Registrar
/s/ CFR Portugal Banco Comercial Portugues Central de Valores Mobiliarios
-------
------- Qatar HSBC Bank Middle East Doha Securities Market
/s/ CFR Romania ING Bank N.V. National Securities Clearing,
------- Settlement and Depository Company
Bucharest Stock Exchange Registry
Division
National Bank of Romania
------- Russia Credit Suisse First Boston AO, Moscow None
(as delegate of Credit Suisse
First Boston, Zurich)
/s/ CFR Singapore The Development Bank Central Depository (Pte)
------- of Singapore Limited Limited
Monetary Authority of Singapore
/s/ CFR Slovak Republic Ceskoslovenska Obchodni Stredisko cennych papierov SR
------- Banka, A.S. Bratislava, a.s.
National Bank of Slovakia
/s/ CFR Slovenia Bank Austria Creditanstalt Klirinsko Depotna Druzba d.d.
------- d.d. Ljubljana.
/s/ CFR South Africa Standard Bank of South Africa Limited The Central Depository Limited
-------
Strate Ltd.
/s/ CFR Spain Banco Santander Central Servicio de Compensacion y
------- Hispano, S.A. Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
/s/ CFR Sri Lanka The Hongkong and Shanghai Central Depository System
------- Banking Corporation Limited (Pvt) Limited
------- Swaziland Standard Bank Swaziland Limited None
|
FOUND
OFFICER
INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
-------- ------- ------------ ------------------
/s/ CFR Sweden Skandinaviska Enskilda Banken Vardepapperscentralen, VPC AB
-------- (the Swedish Central Securities
Depository)
/s/ CFR Switzerland UBS AG SIS - SegaIntersettle
--------
/s/ CFR Taiwan-R.O.C. Central Trust of China Taiwan Securities Central
-------- or Depository Co., Ltd.
-------- --------------------------------
(Client Designated Subcustodian)
/s/ CFR Thailand Standard Chartered Bank Thailand Securities Depository
-------- Company Limited
-------- Trinidad & Tobago Republic Bank Limited None
-------- Tunisia Banque Internationale Societe Tunisienne Interprofessionelle pour
Arabe de Tunisie La Compensation et de Depots de
Valeurs Mobilieres
/s/ CFR Turkey Citibank, N.A. Takas ve Saklama Bankasi A.S.
-------- (TAKASBANK)
Central Bank of Turkey
/s/ CFR Ukraine ING Bank Ukraine National Bank of Ukraine
--------
/s/ CFR United Kingdom State Street Bank and Trust The Bank of England,
-------- Company, London branch Central Gilts Office and
Central Moneymarkets Office
/s/ CFR Uruguay BankBoston N.A. None
--------
/s/ CFR Venezuela Citibank, N.A. Central Bank of Venezuela
--------
-------- Vietnam The Hongkong and Shanghai None
Banking Corporation Limited
-------- Zambia Barclays Bank of Zambia Limited LuSE Central Shares Depository Limited
Bank of Zambia
-------- Zimbabwe Barclays Bank of Zimbabwe Limited None
|
FUND OFFICER INITIALS COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY -------- ------- ------------ ------------------ -------- Euroclear (The Euroclear System)/ State Street London Limited -------- Cedelbank S.A/State Street London Limited |
CERTIFIED BY:
/s/ CAROL F. RELIHAN 5-1-2000 ------------------------------- ------------- FUND'S AUTHORIZED OFFICER DATE |
ADDENDUM to that certain Master Custodian Contract dated as of May 1, 2000 (the "Agreement") between the entities set forth on Exhibit A thereto (each, a "Customer") and State Street Bank and Trust Company ("State Street").
State Street has developed and utilizes proprietary accounting and other systems in conjunction with the custodian services which State Street provides to the Customer. In this regard, State Street maintains certain information in databases under its control and ownership which it makes available to its customers (the "Remote Access Services").
State Street agrees to provide the Customer, and its designated investment advisors, consultants or other third parties authorized by State Street who agree to abide by the terms of this Addendum ("Authorized Designees") with access to In-Sight(SM) as described in Exhibit A (the "System") on a remote basis for the purpose of obtaining and analyzing reports and information.
The Customer agrees to comply, and to cause its Authorized Designees to comply, with remote access operating standards and procedures and with user identification or other password control requirements and other security procedures as may be issued from time to time by State Street for use of the System and access to the Remote Access Services. The Customer agrees to advise State Street immediately in the event that it learns or has reason to believe that any person to whom it has given access to the System or the Remove Access Services has violated or intends to violate the terms of this Addendum and the Customer will cooperate with State Street in seeking injunctive or other equitable relief. The Customer agrees to discontinue use of the System and Remote Access Services, if requested, for any security reasons cited by State Street.
Fees and charges for the use of the System and the Remote Access Services and related payment terms shall be as set forth in the custody fee schedule in effect from time to time between the parties (the "Fee Schedule"). The Customer shall be responsible for any tariffs, duties or taxes imposed or levied by any government or governmental agency by reason of the transactions contemplated by this Addendum, including, without limitation, federal, state and local taxes, use, value added and personal property taxes (other than income, franchise or similar taxes which may be imposed or assessed against State Street). Any claimed exemption from such tariffs, duties or taxes shall be supported by proper documentary evidence delivered to State Street.
The System and Remote Access Services described herein and the databases, computer programs, screen formats, report formats, interactive design techniques, formulae, processes, systems, software, knowhow, algorithms, programs, training aids, printed materials, methods, books, records, files, documentation and other information made available to the Customer by State Street as part of the Remote Access Services and through the use of the System and all copyrights, patents, trade secrets and other proprietary rights of
State Street related thereto are the exclusive, valuable and confidential property of State Street and its relevant licensors (the "Proprietary Information"). The Customer agrees on behalf of itself and its Authorized Designees to keep the Proprietary Information confidential and to limit access to its employees and Authorized Designees (under a similar duty of confidentiality) who require access to the System for the purposes intended. The foregoing shall not apply to Proprietary Information in the public domain or required by law to be made public.
The Customer agrees to use the Remote Access Services only in connection with the proper purposes of this Addendum. The Customer will not, and will cause its employees and Authorized Designees not to, (i) permit any third party to use the System or the Remote Access Services, (ii) sell, rent, license or otherwise use the System or the Remote Access Services in the operation of a service bureau or for any purpose other than as expressly authorized under this Addendum, (iii) use the System or the Remote Access Services for any fund, trust or other investment vehicle without the prior written consent of State Street, or (iv) allow or cause any information transmitted from State Street's databases, including data from third party sources, available through use of the System or the Remote Access Services, to be redistributed or retransmitted for other than use for or on behalf of the Customer, as State Street's customer.
The Customer agrees that neither it nor its Authorized Designees will modify the System in any way, enhance or otherwise create derivative works based upon the System, nor will the Customer or its Authorized Designees reverse engineer, decompile or otherwise attempt to secure the source code for all or any part of the System.
The Customer acknowledges that the disclosure of any Proprietary Information, or of any information which at law or equity ought to remain confidential, will immediately give rise to continuing irreparable injury to State Street inadequately compensable in damages at law and that State Street shall be entitled to obtain immediate injunctive relief against the breach or threatened breach of any of the foregoing undertakings, in addition to any other legal remedies which may be available.
State Street represents and warrants that it is the owner of and has the right to grant access to the System and to provide the Remote Access Services contemplated herein. Because of the nature of computer information technology and the necessity of relying upon third party sources, and data and pricing information obtained form third parties, the System and Remote Access Services are provided "AS IS", and the Customer and its Authorized Designees shall be solely responsible for the investment decisions, regulatory reports and statements produced using the Remote Access Services. State Street and its relevant licensors will not be liable to the Customer or its Authorized Designees for any direct or indirect, special, incidental, punitive or consequential damages arising out of or in any way connected with the System or the Remote Access Services, nor shall either party be responsible for delays or nonperformance under this Addendum arising out of any cause or event beyond such party's control.
State Street will take reasonable steps to ensure that its products (and those of its third-party suppliers) reflect the available state of the art technology to offer products that are Year 2000 compliant, including, but not limited to, century recognition of dates, calculations that correctly compute same century and multi century formulas and date values, and interface values that reflect the date issues arising between now and the next one-hundred years, and if any changes are required, State Street will make the changes to its products at no cost to you and in a commercially reasonable time frame and will require third-party suppliers to do likewise. The Customer will do likewise for its systems.
EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET FOR ITSELF AND ITS RELEVANT LICENSORS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE.
State Street will defend or, at our option, settle any claim or action brought against the Customer to the extent that it is based upon an assertion that access to the System or use of the Remote Access Services by the Customer under this Addendum constitutes direct infringement of any United States patent or copyright or misappropriation of a trade secret, provided that the Customer notifies State Street promptly in writing of any such claim or proceeding and cooperates with State Street in the defense of such claim or proceeding. Should the System or the Remote Access Services or any part thereof become, or in State Street's opinion be likely to become, the subject of a claim of infringement or the like under the patent or copyright or trade secret laws of the United States, State Street shall have the right, at State Street's sole option, to (i) procure for the Customer the right to continue using the System or the Remote Access Services, (ii) replace or modify the System or the Remote Access Services so that the System or the Remote Access Services becomes noninfringing, or (iii) terminate this Addendum without further obligation.
Either party to the Custodian Agreement may terminate this Addendum (i) for any reason by giving the other party at least one-hundred and eighty (180) days' prior written notice in the case of notice of termination by State Street to the Customer or thirty (30) days' notice in the case of notice from the Customer to State Street of termination, or (ii) immediately for failure of the other party to comply with any material term and condition of the Addendum by giving the other party written notice of termination. This Addendum shall in any event terminate within ninety (90) days after the termination of the Custodian Agreement. In the event of termination, the Customer will return to State Street all copies of documentation and other confidential information in its possession or in the possession of its Authorized Designees. The foregoing provisions with respect to confidentiality and infringement will survive termination for a period of three (3) years.
No term hereof is intended to alter the standard of care applicable to State Street, as set forth in the Agreement, with respect to data made available to the Customer via the Remote Access Services. This Addendum and the exhibit hereto constitutes the entire understanding of the parties to the Custodian Agreement with respect to access to the System and the Remote Access Services. This Addendum cannot be modified or altered except in a writing duly executed by each of State Street and the Customer and shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.
By its execution of the Custodian Agreement, the Customer, for itself and its Authorized Designees, accepts the terms of this Addendum.
IN-SIGHT(SM)
System Product Description
In-Sight(SM) provides information delivery and on-line access to State Street. In-Sight(SM) allows users a single point of entry into the many views of data created by the diverse systems and applications. Reports and data from systems such as Investment Policy Monitor(SM), Multicurrency Horizon(SM), Securities Lending, Performance & Analytics can be accessed though In-Sight(SM). This Internet-enabled application is designed to run from a Web browser and perform across low-speed data line or corporate high-speed backbones. In-Sight(SM) also offers users a flexible toolset, including an ad-hoc query function, a custom graphics package, a report designer, and a scheduling capability. Data and reports offered through In-Sight(SM) will continue to increase in direct proportion with the customer roll out, as it is viewed as the information delivery system will grow with State Street's customers.
EXHIBIT g(1)(b)
This Amendment to the Custodian Contract is made as of May 1, 2000, by and between each entity set forth in Appendix A hereto (each such entity referred to herein as the "Fund") and State Street Bank and Trust Company (the "Custodian"). Capitalized terms used in this Amendment without definition shall have the respective meanings ascribed to such terms in the Custodian Contract referred to below.
WHEREAS, each Fund and the Custodian entered into a Master Custodian Contract dated as of May 1, 2000 (as amended and in effect from time to time, the "Contract"); and
WHEREAS, each Fund so authorized may issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets, (each such series, together with all other series subsequently established by each Fund and made subject to the Contract in accordance with the terms thereof, shall be referred to as a "Portfolio", and, collectively, the "Portfolios"); and
WHEREAS, each Fund and the Custodian desire to amend certain provisions of the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, each Fund and the Custodian desire to amend and restate certain other provisions of the Contract relating to the terms and conditions of the custody of assets of each of the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter contained, the parties hereby agree to amend the Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 25 of the Contract are hereby amended, as of the effective date of this Amendment, by renumbering same as Articles 5 through 26, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective date of this Amendment, as set forth below.
Capitalized terms in this Article 3 of the Contract shall have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such country's political environment; economic and financial infrastructure (including any Mandatory
Securities Depositories operating in the country); prevailing or developing custody and settlement practices; laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country; and factors comprising the "prevailing country risk", including the effects of foreign law on the safekeeping of Portfolio assets, the likelihood of expropriation, nationalization, freezing, or confiscation of a Portfolio's assets and any reasonably foreseeable difficulties in repatriating a Portfolio's assets.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act, except that the term does not include Mandatory Securities Depositories.
"Foreign Assets" means any of a Portfolio's investments (including foreign currencies) for which the primary market is outside the United States, currency contracts that are settled outside the United States and such cash and cash equivalents as are reasonably necessary to effect a Portfolio's transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule 17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if a
Fund determines to place Foreign Assets in a country outside the United States
(i) because required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency; or (iii)
because maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with prevailing or
developing custodial or market practices.
Each applicable Fund, by resolution adopted by its Board of Trustees or Board of Directors (as appropriate and in each case, the "Board"), hereby delegates to the Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set forth in this Article 3 with respect to Foreign Assets held outside the United States, and the Custodian hereby accepts such delegation, as Foreign Custody Manager of each Portfolio.
The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to (a) the countries listed on Schedule A hereto as approved by the applicable Fund's Board, which list of Board-approved countries may be amended from time to time by a Fund with the agreement of the Foreign Custody Manager, and (b) the custody arrangements set forth on such Schedule A. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign Custodians
selected by the Foreign Custody Manager to maintain the assets of each
Portfolio, which list of Eligible Foreign Custodians may be amended from time to
time in the sole discretion of the Foreign Custody Manager. Mandatory Securities
Depositories are listed on Schedule B to this Contract, which Schedule B may be
amended from time to time by the Foreign Custody Manager. The Foreign Custody
Manager will provide amended versions of Schedules A and B in accordance with
Section 3.7 of this Article 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account, or to place or maintain Foreign Assets, in a country listed on Schedule A, and the fulfillment by a Fund of the account opening requirements for such country (if any), the Foreign Custody Manager shall be deemed to have been appointed by the Board as Foreign Custody Manager with respect to that country and to have accepted the delegation. Execution of this Amendment by a Fund shall be deemed to be a Proper Instruction to open an account, or to place or maintain Foreign Assets, in each Board-approved country listed on Schedule A in which the Custodian has previously placed or currently maintains Foreign Assets pursuant to the terms of the Contract. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board to the Custodian as Foreign Custody Manager for that country shall be deemed to have been withdrawn and the Custodian shall immediately cease to be the Foreign Custody Manager of the Portfolio with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the applicable Fund. Thirty days (or such longer period as to which the parties agree in writing) after receipt of any such notice by the applicable Fund, the Custodian shall have no further responsibility as Foreign Custody Manager to a Portfolio with respect to the country as to which the Custodian's acceptance of delegation is withdrawn.
Subject to the provisions of this Article 3, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodians selected by the Foreign Custody Manager in each country listed as "approved" on Schedule A, as such Schedule is amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place or maintain the Foreign Assets with an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the country in which the Foreign Assets will be held by that Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation, the factors specified in Rule 17f-5(c)(1).
The Foreign Custody Manager shall determine that the contract (or the rules or established practices or procedures in the case of an Eligible Foreign Custodian that is a foreign securities depository or clearing agency) governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
In each case in which the Foreign Custody Manager maintains Foreign Assets with an Eligible Foreign Custodian, selected by the Foreign Custody Manager, the Foreign Custody Manager shall maintain a system to monitor (i) the appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian, and (ii) the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules or established practices and procedures in the case of an Eligible Foreign Custodian selected by the Foreign Custody Manager which is a foreign securities depository or clearing agency that is not a Mandatory Securities Depository). The Foreign Custody Manager shall provide the Board with information at least annually as to the factors used in such monitoring system. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian that it has selected are no longer appropriate, the Foreign Custody Manager shall promptly transfer each Fund's Foreign Assets to another Eligible Foreign Custodian in the market and shall notify the Board in accordance with Section 3.7 hereunder.
For purposes of this Article 3, each Fund's Board shall be deemed to have considered and determined to accept such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which the Custodian is serving as Foreign Custody Manager of a Portfolio, and such Board shall be deemed to be monitoring on a continuing basis such Country Risk to the extent that such Board considers necessary or appropriate.
Notwithstanding any provision of this Contract to the contrary, each Fund on behalf of the Portfolios and the Custodian expressly acknowledge and agree that the Foreign Custody Manager shall not be delegated any responsibilities under this Article 3 with respect to Mandatory Securities Depositories, and that the determination by or on behalf of each Fund's Board to place the Foreign Assets in a particular country shall be deemed to include the determination to place such Foreign Assets eligible for any Mandatory Securities Depository with such Mandatory Securities Depository, whether the Mandatory Securities Depository exists at the time the Foreign Assets are acquired, or after the acquisition thereof.
In performing the responsibilities delegated to it, the Foreign Custody Manager shall exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of assets of management investment companies registered under the 1940 Act would exercise.
The Foreign Custody Manager shall report at least quarterly on the Foreign Assets held with each Eligible Foreign Custodian and in connection therewith if applicable, provide to the Board amended Schedules A or B at the end of the calendar quarter in which an amendment to either Schedule has occurred. The Foreign Custody Manager will make written reports notifying the Board of any other material change in the foreign custody arrangements of the Portfolios described in this Article 3 promptly after the occurrence of the material change.
The Foreign Custody Manager represents to each Fund that it is a U.S. Bank as defined in section (a)(7) of Rule 17f-5.
Each Fund represents to the Custodian that its Board has determined that it is reasonable for such Board to rely on the Custodian to perform the responsibilities delegated pursuant to this Contract to the Custodian as the Foreign Custody Manager of each Portfolio.
Each Fund's Board's delegation to the Custodian as Foreign Custody Manager of a Portfolio shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty days after receipt by the non-terminating party of such notice. The provisions of Section 3.3 hereof shall govern the delegation to and termination of the Custodian as Foreign Custody Manager of the applicable Fund with respect to designated countries.
If at any time prior to termination of this Amendment the Custodian as a matter of standard business practice, accepts delegation as Foreign Custody Manager for its U.S. mutual fund clients on terms materially different than set forth in this Amendment, the Custodian hereby agrees to negotiate with each Fund in good faith with respect thereto.
Terms used in this Article 4 and not defined below shall have the meanings ascribed them in the Contract or in this Amendment:
"Foreign Securities System" means either a clearing agency or a securities depository which is listed on Schedule A hereto or a Mandatory Securities Depository.
"Foreign Sub-Custodian" means a foreign banking institution serving as an Eligible Foreign Custodian.
The Custodian shall identify on its books as belonging to the Portfolios the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. The Custodian may hold foreign securities for all of its customers, including the Portfolios, with any Foreign Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to foreign securities of the Portfolios which are maintained in such account shall identify those securities as belonging to the Portfolios and (ii), to the extent permitted and customary in the market in which the account is maintained, the Custodian shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
Foreign securities shall be maintained in a Foreign Securities System in a designated country only through arrangements implemented by the Foreign Sub-Custodian in such country pursuant to the terms of this Contract.
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of a Portfolio held by such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:
(i) upon sale of such foreign securities for the applicable Portfolio in accordance with reasonable market practice in the country where such Foreign Assets are held or traded, including, without limitation: (A)
delivery against expectation of receiving later payment; or (B), in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign securities;
(iii) to the depository agent in connection with tender or other similar offers for foreign securities of the applicable Portfolio;
(iv) to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of the Custodian (or the name of the respective Foreign Sub-Custodian or of any nominee of the Custodian (or such Foreign Sub-Custodian)) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with reasonable market practices in the country where such securities are held or traded; provided that in any such case the Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Sub-Custodian's own negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by any Fund requiring a pledge of assets by the applicable Portfolio;
(x) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper corporate purpose, but only upon receipt of, in addition to Proper Instructions, a copy of a resolution of the applicable
Board or of an Executive Committee of the applicable Board so authorized by the Board, signed by an officer of the applicable Fund and certified by its Secretary or an Assistant Secretary that the resolution was duly adopted and is in full force and effect (a "Certified Resolution"), specifying the Foreign Assets to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such Foreign Assets shall be made.
Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, moneys of a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the applicable Portfolio, unless otherwise directed by Proper Instructions, in accordance with reasonable market settlement practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of foreign securities of the applicable Portfolio;
(iii) for the payment of any expense or liability of the applicable
Portfolio including but not limited to the following payments:
interest, taxes, investment advisory fees, transfer agency
fees, fees under this Contract, legal fees, accounting fees,
and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange contracts for the applicable Portfolio, including transactions executed with or through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities; and
(viii) for any other proper purpose, but only upon receipt of, in addition to Proper Instructions, a Certified Resolution specifying the amount of such
payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made.
Notwithstanding any provision of this Contract to the contrary, settlement and payment for Foreign Assets received for the account of a Portfolio and delivery of Foreign Assets maintained for the account of a Portfolio may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs generally accepted by Institutional Clients, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer. For purposes of this Contract, "Institutional Clients" means U.S. registered investment companies or major U.S. based commercial banks, insurance companies, pension funds or substantially similar institutions which, as a part of their ordinary business operations, purchase or sell securities and make use of global custody services.
The Custodian shall provide to each Fund's Board the information with respect to custody and settlement practices in countries in which the Custodian employs a Foreign Sub-Custodian, including without limitation information relating to Foreign Securities Systems, described on Schedule C hereto at the time or times set forth on such Schedule. The Custodian may revise Schedule C from time to time, provided that no such revision shall result in each Fund's Board being provided with substantively less information than had been previously provided hereunder and, provided further, that the Custodian shall in any event provide to each Fund's Board and to A I M Advisors, Inc. annually the following information and opinions with respect to the Board-approved countries listed on Schedule A:
(i) legal opinions relating to whether local law restricts with
respect to U.S. registered mutual funds (a) access of a fund's
independent public accountants to books and records of a
Foreign Sub-Custodian or Foreign Securities System, (b) a
fund's ability to recover in the event of bankruptcy or
insolvency of a Foreign Sub-Custodian or Foreign Securities
System, (c) a fund's ability to recover in the event of a loss
by a Foreign Sub-Custodian or Foreign Securities System, and
(d) the ability of a foreign investor to convert cash and cash
equivalents to U.S. dollars;
(ii) summary of information regarding Foreign Securities Systems; and
(iii) country profile information containing market practice for (a) delivery versus payment, (b) settlement method, (c) currency restrictions, (d) buy-in practices, (e) foreign ownership limits, and (f) unique market arrangements.
The foreign securities maintained in the custody of a Foreign Custodian (other than bearer securities) shall be registered in the name of the applicable Fund (on behalf of the
applicable Portfolio) or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the applicable Fund agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities, except to the extent that the applicable Fund incurs loss or damage due to failure of such nominee to meet its standard of care as set forth in the Contract. The Custodian or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of the applicable Fund (on behalf of the applicable Portfolio) under the terms of this Contract unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice.
Sub-Custodians from issuers of the foreign securities being held for the account
of a Portfolio. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the applicable Fund written information so received by the
Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
Subject to the standard of care to which the Custodian is held under this
Contract, the Custodian shall not be liable for any untimely exercise of any
tender, exchange or other right or power in connection with foreign securities
or other property of the applicable Portfolio at any time held by it unless (i)
the Custodian or the respective Foreign Sub-Custodian is in actual possession of
such foreign securities or property and (ii) the Custodian receives Proper
Instructions with regard to the exercise of any such right or power, and both
(i) and (ii) occur at least two New York business days prior to the date on
which the Custodian is to take action to exercise such right or power.
other relevant facts concerning tax treatment of such Fund and further to inform the Custodian if such Fund is or becomes the beneficiary of any special ruling or treatment not applicable to the general nationality and category of entity of which such Fund is a part under general laws and treaty provisions. The Custodian shall be entitled to rely on any information supplied by the applicable Fund. The Custodian may engage reasonable professional advisors disclosed to each Fund by the Custodian, which may include attorneys, accountants or financial institutions in the regular business of investment administration and may rely upon advice received therefrom.
The Custodian shall be liable to each Fund on account of any actions or omissions of any Foreign Sub-Custodian to the same extent as such Foreign Sub-Custodian shall be liable to the Custodian.
The Custodian shall maintain separate and distinct records for each Portfolio and the assets allocated solely with such Portfolio shall be held and accounted for separately from the assets of each Fund associated solely with any other Portfolio. The debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Portfolio shall be enforceable against the assets of such Portfolio only, and not against the assets of any Fund generally or the assets of any other Portfolio.
III. Except as specifically superseded or modified herein, the terms and provisions of the Contract shall continue to apply with full force and effect. In the event of any conflict between the terms of the Contract prior to this Amendment and this Amendment, the terms of this Amendment shall prevail. If the Custodian is delegated the responsibilities of Foreign Custody Manager pursuant to the terms of Article 3 hereof, in the event of any conflict between the provisions of Articles 3 and 4 hereof, the provisions of Article 3 shall prevail.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed in its name and behalf by its duly authorized representative as of the date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST COMPANY
/s/ STEPHANIE L. POSTER By: /s/ RONALD E. LOGUE ---------------------------- ---------------------------------- Stephanie L. Poster Name: Ronald E. Logue Vice President Title: Vice Chairman |
WITNESSED BY:
EACH OF THE ENTITIES SET FORTH ON
APPENDIX A ATTACHED HERETO
/s/ STEPHEN I. WINER By: /s/ CAROL F. RELIHAN ---------------------------- ---------------------------------- Name: Stephen I. Winer Name: Carol F. Relihan Title: Assistant Secretary Title: Senior Vice President |
APPENDIX A
(AS REVISED MAY 1, 2001)
AIM ADVISOR FUNDS AIM VARIABLE INSURANCE FUNDS
o AIM Advisor Flex Fund o AIM V.I. Aggressive Growth Fund
o AIM Advisor International Value Fund o AIM V.I. Balanced Fund
o AIM Advisor Real Estate Fund o AIM V.I. Blue Chip Fund
o AIM V.I. Capital Appreciation Fund
AIM EQUITY FUNDS o AIM V.I. Capital Development Fund
o AIM V.I. Dent Demographic Trends Fund
o AIM Aggressive Growth Fund o AIM V.I. Diversified Income Fund
o AIM Blue Chip Fund o AIM V.I. Global Utilities Fund
o AIM Capital Development Fund o AIM V.I. Government Securities Fund
o AIM Charter Fund o AIM V.I. Growth and Income Fund
o AIM Constellation Fund o AIM V.I. Growth Fund
o AIM Dent Demographic Trends Fund o AIM V.I. High Yield Fund
o AIM Emerging Growth Fund o AIM V.I. International Equity Fund
o AIM Large Cap Basic Value Fund o AIM V.I. New Technology Fund
o AIM Large Cap Growth Fund o AIM V.I. Value Fund
o AIM Mid Cap Growth Fund
o AIM Weingarten Fund AIM FLOATING RATE FUND
AIM FUNDS GROUP AIM GROWTH SERIES
o AIM Balanced Fund o AIM Basic Value Fund
o AIM European Small Company Fund o AIM Euroland Growth Fund
o AIM Global Utilities Fund o AIM Japan Growth Fund
o AIM International Emerging Growth Fund o AIM Mid Cap Equity Fund
o AIM New Technology Fund o AIM Small Cap Growth Fund
o AIM Select Growth Fund
o AIM Small Cap Equity Fund AIM INVESTMENT FUNDS
o AIM Value Fund
o AIM Value II Fund o AIM Developing Markets Fund
o AIM Worldwide Spectrum Fund o AIM Global Consumer Products and
Services Fund
AIM INTERNATIONAL FUNDS, INC. o AIM Global Financial Services Fund
o AIM Global Health Care Fund
o AIM Asian Growth Fund o AIM Global Infrastructure Fund
o AIM European Development Fund o AIM Global Resources Fund
o AIM Global Aggressive Growth Fund o AIM Global Telecommunications and
o AIM Global Growth Fund Technology Fund
o AIM Global Income Fund o AIM Latin American Growth Fund
o AIM International Equity Fund o AIM Strategic Income Fund
AIM INVESTMENT SECURITIES FUNDS AIM SERIES TRUST
o AIM High Yield Fund o AIM Global Trends Fund
o AIM High Yield Fund II
o AIM Income Fund GLOBAL INVESTMENT PORTFOLIO
o AIM Intermediate Government Fund
o Global Consumer Products and
AIM SPECIAL OPPORTUNITIES FUNDS Services Portfolio
o Global Resources Portfolio
o AIM Large Cap Opportunities Fund
o AIM Mid Cap Opportunities Fund
o AIM Small Cap Opportunities Fund
AIM SUMMIT FUND
|
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Fortis Bank NV/as. --
Bermuda The Bank of Bermuda Limited --
Bolivia Citibank, N.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada State Street Trust Company Canada --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
|
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Costa Rica Banco BCT S.A. --
Croatia Privredna Banka Zagreb d.d. --
Cyprus The Cyprus Popular Bank Ltd. --
Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt Egyptian British Bank --
(as delegate of The Hongkong
and Shanghai Banking Corporation
Limited)
Estonia Hansabank --
Finland Merita Bank Plc. --
France Paribas, S.A. --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. Bank of Greece,
System for Monitoring Transactions in
Securities in Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungary Citibank Rt. --
|
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Iceland Icebank Ltd.
India Deutsche Bank A.G. --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Paribas, S.A. --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Limited
Japan The Fuji Bank, Limited Japan Securities Depository
Center (JASDEC)
The Sumitomo Bank, Limited
Jordan HSBC Bank Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation
Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking --
Corporation Limited
Latvia A/s Hansabank --
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SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Lebanon HSBC Bank Middle East
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse ASA
Oman HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank A.G. --
Palestine HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Panama BankBoston, N.A. --
Peru Citibank, N.A. --
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SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Philippines Standard Chartered Bank --
Poland Citibank (Poland) S.A. --
Portugal Banco Comercial Portugues --
Qatar HSBC Bank Middle East --
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S. --
Slovenia Bank Austria Creditanstalt d.d. Ljubljana --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander Central Hispano, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
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SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
Taiwan - R.O.C Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
Ukraine ING Bank Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay BankBoston N.A. --
Venezuela Citibank, N.A. --
Vietnam The Hongkong and Shanghai --
Banking Corporation Limited
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
|
Euroclear (The Euroclear System)/State Street London Limited
Cedelbank S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depots et de Virements
de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e Custodia
Bulgaria Central Depository AD
Bulgarian National Bank
Canada Canadian Depository for Securities Limited
Chile Deposito Central de Valores S.A.
People's Republic Shanghai Securities Central Clearing & Registration
of China Corporation
Shenzhen Securities Clearing Co., Ltd.
Colombia Deposito Centralizado de Valores
Costa Rica Central de Valores S.A.
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Croatia Ministry of Finance
National Bank of Croatia
Sredisnja Depozitarna Agencija
Czech Republic Stredisko cennych papirfi
Czech National Bank
Denmark Vaerdipapircentralen (Danish Securities Center)
Egypt Misr Company for Clearing, Settlement, and Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland Finnish Central Securities Depository
France Societe Interprofessionnelle pour la Compensation des
Valeurs Mobilieres
Germany Deutsche Borse Clearing AG
Greece Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong Central Clearing and Settlement System
Central Moneymarkets Unit
Hungary Kozponti Elszamolohaz es Ertektar
(Budapest) Rt. (KELER)
[Mandatory for Gov't Bonds and dematerialized
equities only; SSB does not use for other securities]
|
* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
India The National Securities Depository Limited
Central Depository Services India Limited
Reserve Bank of India
Indonesia Bank Indonesia
PT Kustodian Sentral Efek Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel Tel Aviv Stock Exchange Clearing
House Ltd. (TASE Clearinghouse)
Bank of Israel
(As part of the TASE Clearinghouse system)
Italy Monte Titoli S.p.A.
Banca d'Italia
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica Jamaica Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia Latvian Central Depository
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* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Lebanon Custodian and Clearing Center of Financial
Instruments for Lebanon and the Middle East
(MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania Central Securities Depository of Lithuania
Malaysia Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping System
Mauritius Central Depository & Settlement Co. Ltd.
Mexico S.D. INDEVAL
(Instituto para el Deposito de Valores)
Morocco Maroclear
The Netherlands Nederlands Centraal Instituut voor Giraal
Effectenverkeer B.V. (NECIGEF)
New Zealand New Zealand Central Securities Depository Limited
Norway Verdipapirsentralen (the Norwegian Central Registry
of Securities)
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* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Oman Muscat Securities Market Depository & Securities
Registration Company
Pakistan Central Depository Company of Pakistan Limited
State Bank of Pakistan
Palestine The Palestine Stock Exchange
Peru Caja de Valores y Liquidaciones
CAVALIICLV S.A.
Philippines Philippines Central Depository, Inc.
Registry of Scripless Securities
(ROSS) of the Bureau of Treasury
Poland National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych SA)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios
Qatar Doha Securities Market
Romania National Securities Clearing, Settlement and
Depository Company
Bucharest Stock Exchange Registry Division
National Bank of Romania
Singapore Central Depository (Pte)
Limited
Monetary Authority of Singapore
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* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Slovak Republic Stredisko cennych papierov SR
Bratislava, a.s.
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Strate Ltd.
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
(Pvt) Limited
Sweden Vardepapperscentralen VPC AB
(the Swedish Central Securities Depository)
Switzerland SIS-SegaIntersettle
Taiwan - R.O.C. Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle pour la
Compensation et de Depots de
Valeurs Mobilieres
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* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Turkey Takas ve Saklama Bankasi A.S. (TAKASBANK)
Central Bank of Turkey
Ukraine National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Venezuela Central Bank of Venezuela
Zambia LuSE Central Shares Depository Limited
Bank of Zambia
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* Mandatory depositories include entities for which use is mandatory as a matter of law or effectively mandatory as a matter of market practice.
SCHEDULE C
MARKET INFORMATION
PUBLICATION/TYPE OF
INFORMATION BRIEF DESCRIPTION
------------------- -----------------
(FREQUENCY)
The Guide to Custody in An overview of safekeeping and settlement practices and procedures in each market in which State Street
----------------------- Bank and Trust Company offers custodial services.
World Markets
-----------------------
(annually)
Global Custody Network Information relating to the operating history and structure of depositories and subcustodians located in
----------------------- the markets in which State Street Bank and Trust Company offers custodial services, including
Review transnational depositories.
-----------------------
(annually)
Global Legal Survey With respect to each market in which State Street Bank and Trust Company offers custodial services,
----------------------- opinions relating to whether local law restricts (i) access of a fund's independent public accountants
(annually) to books and records of a Foreign Sub-Custodian or Foreign Securities System, (ii) the Fund's ability
to recover in the event of bankruptcy or insolvency of a Foreign Sub-Custodian or Foreign Securities
System, (iii) the Fund's ability to recover in the event of a loss by a Foreign Sub-Custodian or Foreign
Securities System, and (iv) the ability of a foreign investor to convert cash and cash equivalents to
U.S. dollars.
Subcustodian Agreements Copies of the subcustodian contracts State Street Bank and Trust Company has entered into with each
----------------------- subcustodian in the markets in which State Street Bank and Trust Company offers subcustody services to
(annually) its US mutual fund clients.
Network Bulletins Developments of interest to investors in the markets in which State Street Bank and Trust Company offers
(weekly): custodial services.
Foreign Custody With respect to markets in which State Street Bank and Trust Company offers custodial services which
Advisories (as exhibit special custody risks, developments which may impact State Street's ability to deliver expected
necessary): levels of service.
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EXHIBIT g(2)
CUSTODY AGREEMENT
Agreement made as of this 19th day of September 2000, between AIM VARIABLE INSURANCE FUNDS, a business trust organized and existing under the laws of Delaware, having its principal office and place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a banking business, having its principal office and place of business at 90 Washington Street, New York, New York 10286 (hereinafter called the "Custodian").
WITNESSETH:
that for and in consideration of the mutual promises hereinafter set forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include any person, whether or not such person is an Officer or employee of the Fund, duly authorized by the Board of Trustees of the Fund to give Written Instructions on behalf of the Fund and listed in the Certificate annexed hereto as Appendix A or such other Certificate as may be received by the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry system for United States and federal agency securities, its successor or successors and its nominee or nominees.
3. "Call Option" shall mean an exchange traded option with respect to Securities other than Stock Index Options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying Securities.
4. "Certificate" shall mean any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to the Custodian which is actually received by the Custodian and signed on behalf of the Fund by any two Officers, and the term Certificate shall also include instructions by the Fund to the Custodian communicated by a Terminal Link.
5. "Certificate" shall mean any notice, instruction, or any other instrument in writing, authorized or required by this Agreement to be given to the Custodian which is actually received by the Custodian and signed on behalf of the Fund by any two Officers, and the term Certificate shall also include instructions by the Fund to the Custodian communicated by a Terminal Link.
6. "Collateral Account" shall mean a segregated account so denominated which is specifically allocated to a Series and pledged to the Custodian as security for, and in consideration
of, the Custodian's issuance of (a) any Put Option guarantee letter or similar document described in paragraph 8 of Article V herein, or (b) any receipt described in Article V or VIII herein.
7. "Covered Call Option" shall mean an exchange traded option entitling the holder, upon timely exercise and payment of the exercise price, as specified therein, to purchase from the writer thereof the specified underlying Securities (excluding Futures Contracts) which are owned by the writer thereof and subject to appropriate restrictions.
8. "Depository" shall mean The Depository Trust Company ("DTC"), a clearing agency registered with the Securities and Exchange Commission, its successor or successors and its nominee or nominees. The term "Depository" shall further mean and include any other person authorized to act as a depository under the Investment Company Act of 1940, its successor or successors and its nominee or nominees, specifically identified in a certified copy of a resolution of the Fund's Board of Trustees specifically approving deposits therein by the Custodian.
9. "Financial Futures Contract" shall mean the firm commitment to buy or sell fixed income securities including, without limitation, U.S. Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank certificates of deposit, and Eurodollar certificates of deposit, during a specified month at an agreed upon price.
10. "Futures Contract" shall mean a Financial Futures Contract and/or Stock Index Futures Contracts.
11. "Futures Contract Option" shall mean an option with respect to a Futures Contract.
12. "Margin Account" shall mean a segregated account in the name of a broker, dealer, futures commission merchant, or a Clearing Member, or in the name of the Fund for the benefit of a broker, dealer, futures commission merchant, or Clearing Member, or otherwise, in accordance with an agreement between the Fund, the Custodian and a broker, dealer, futures commission merchant or a Clearing Member (a "Margin Account Agreement"), separate and distinct from the custody account, in which certain Securities and/or money of the Fund shall be deposited and withdrawn from time to time in connection with such transactions as the Fund may from time to time determine. Securities held in the Book-Entry System or the Depository shall be deemed to have been deposited in, or withdrawn from, a Margin Account upon the Custodian's effecting an appropriate entry in its books and records.
13. "Money Market Security" shall be deemed to include, without limitation, certain Reverse Repurchase Agreements, debt obligations issued or guaranteed as to interest and principal by the government of the United States or agencies or instrumentalities thereof, any tax, bond or revenue anticipation note issued by any state or municipal government or public authority, commercial paper, certificates of deposit and bankers' acceptances, repurchase agreements with respect to the same and bank time deposits, where the purchase and sale of such securities normally requires settlement in federal funds on the same day as such purchase or sale.
14. "O.C.C." shall mean the Options Clearing Corporation, a clearing agency registered under Section 17A of the Securities Exchange Act of 1934, its successor or successors, and its nominee or nominees.
15. "Officer" shall be deemed to include the President, any Vice President, the Secretary, the Treasurer, the Controller, any Assistant Secretary, any Assistant Treasurer, and any other person
or persons, whether or not any such other person is an officer of the Fund, duly authorized by the Board of Trustees of the Fund to execute any Certificate, instruction, notice or other instrument on behalf of the Fund and listed in the Certificate annexed hereto as Appendix B or such other Certificate annexed hereto as Appendix B or such other Certificate as may be received by the Custodian from time to time.
16. "Option" shall mean a Call Option, Covered Call Option, Stock Index Option and/or a Put Option.
17. "Oral Instructions" shall mean verbal instructions actually received by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person.
18. "Put Option" shall mean an exchange traded option with respect to Securities other than Stock Index Options, Futures Contracts, and Futures Contract Options entitling the holder, upon timely exercise and tender of the specified underlying Securities, to sell such Securities to the writer thereof for the exercise price.
19. "Reverse Repurchase Agreement" shall mean an agreement pursuant to which the Fund sells Securities and agrees to repurchase such Securities at a described or specified date and price.
20. "Security" shall be deemed to include, without limitation, Money Market Securities, Call Options, Put Options, Stock Index Options, Stock Index Futures Contracts, Stock Index Futures Contract Options, Financial Futures Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements, common stocks and other securities having characteristics similar to common stocks, preferred stocks, debt obligations issued by state or municipal governments and by public authorities, (including, without limitation, general obligation bonds, revenue bonds and industrial bonds and industrial development bonds), bonds, debentures, notes, mortgages or other obligations, and any certificates, receipts, warrants or other instruments representing rights to receive, purchase, sell or subscribe for the same, or evidencing or representing any other rights or interest therein, or any property or assets.
21. "Senior Security Account" shall mean an account maintained and specifically allocated to a Series under the terms of this Agreement as a segregated account, by recordation or otherwise, within the custody account in which certain Securities and/or other assets of the Fund specifically allocated to such Series shall be deposited and withdrawn from time to time in accordance with Certificates received by the Custodian in connection with such transactions as the Fund may from time to time determine.
22. "Series" shall mean the various portfolios, if any, of the Fund as described from time to time in the current and effective prospectus for the Fund.
23. "Shares" shall mean the shares of beneficial interest of the Fund, each of which is in the case of a Fund having Series allocated to a particular Series.
24. "Stock Index Futures Contract" shall mean a bilateral agreement pursuant to which the parties agree to take or make delivery of an amount of cash equal to a specified dollar amount times the difference between the value of a particular stock index at the close of the last business day of the contract and the price at which the futures contract is originally struck.
25. "Stock Index Option" shall mean an exchange traded option entitling the holder, upon timely exercise, to receive an amount of cash determined by reference to the difference between the exercise price and the value of the index on the date of exercise.
26. "Terminal Link" shall mean an electronic data transmission link between the Fund and the Custodian requiring in connection with each use of the Terminal Link by or on behalf of the Fund use of an authorization code provided by the Custodian and at least two access codes established by the Fund.
27. "Written Instructions" shall mean written communications actually received by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person by telex or any other such system whereby the receiver of such communications is able to verify by codes or otherwise with a reasonable degree of certainty the identity of the sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of the Securities and moneys at any time owned by the AIM V.I. Money Market Fund portfolio of the Fund during the period of this Agreement. The Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund authorizing appointment of the Custodian.
2. The Custodian hereby accepts appointment as such custodian and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, the Fund will deliver or cause to be delivered to the Custodian all Securities and all moneys owned by it, at any time during the period of this Agreement, and shall specify with respect to such Securities and money the Series to which the same are specifically allocated. The Custodian shall segregate, keep and maintain the assets of the Series separate and apart. The Custodian will not be responsible for any Securities and moneys not actually received by it. The Custodian will be entitled to reverse any credits made on the Fund's behalf where such credits have been previously made and moneys are not finally collected. The Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund, approving, authorizing and instructing the Custodian on a continuous and on-going basis to deposit in the Book-Entry System all Securities eligible for deposit therein, regardless of the Series to which the same are specifically allocated and to utilize the Book-Entry System to the extent possible in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. Prior to a deposit of Securities specifically allocated to a Series in the Depository, the Fund shall deliver to the Custodian a certified resolution of the Board of Trustees of the Fund, approving, authorizing and instructing the Custodian on a
continuous and ongoing basis until instructed to the contrary by a Certificate actually received by the Custodian to deposit in the Depository all Securities specifically allocated to such Series eligible for deposit therein, and to utilize the Depository to the extent possible with respect to such Securities in connection with its performance hereunder, including, without limitation, in connection with settlements of purchases and sales of Securities, loans of Securities, and deliveries and returns of Securities collateral. Securities and moneys deposited in either the Book-Entry System or the Depository will be represented in accounts which include only assets held by the Custodian for customers, including, but not limited to, accounts in which the Custodian acts in a fiduciary or representative capacity and will be specifically allocated on the Custodian's books to the separate account for the applicable Series. Prior to the Custodian's accepting, utilizing and acting with respect to Clearing Member confirmations for Options and transactions in Options for a Series as provided in this Agreement, the Custodian shall have received a certified resolution of the Fund's Board of Trustees, approving, authorizing and instructing the Custodian on a continuous and on-going basis, until instructed to the contrary by a Certificate actually received by the Custodian, to accept, utilize and act in accordance with such confirmations as provided in this Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts, in the name of each Series, and shall credit to the separate account for each Series all moneys received by it for the account of the Fund with respect to such Series. Money credited to a separate account for a Series shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and address of the person to whom the payment is to be made, the Series account from which payment is to be made, and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day the Custodian shall furnish the Fund with confirmations and a summary, on a per Series basis, of all transfers to or from the account of the Fund for a Series, either hereunder or with any co-custodian or sub-custodian appointed in accordance with this Agreement during said day. Where Securities are transferred to the account of the Fund for a Series, the Custodian shall also by book-entry or otherwise identify as belonging to such Series a quantity of Securities in a fungible bulk of Securities registered in the name of the Custodian (or its nominee) or shown on the Custodian's account on the books of the Book-Entry System or the Depository. At least monthly and from time to time, the Custodian shall furnish the Fund with a detailed statement, on a per Series basis, of the Securities and moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in Article VIII, all Securities held by the Custodian hereunder, which are issued or issuable only in bearer form, except such Securities as are held in the Book-Entry System, shall be held by the Custodian in that form; all other Securities held hereunder may be registered in the name of the Fund, in the name of any duly appointed registered nominee of the Custodian as the Custodian may from time to time determine, or in the name of the Book-Entry System or the Depository or their successor or successors, or their nominee or nominees. The Fund agrees to furnish to the Custodian appropriate instruments to enable the Custodian to hold or deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-Entry System or the Depository any Securities which it may hold hereunder and which may from time to time be registered in the name of the Fund. The Custodian shall hold all such Securities specifically allocated to a Series which are not held in the Book-Entry System or in the Depository in a separate account in the name of such Series physically segregated at all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise instructed to the contrary by a Certificate, the Custodian by itself, or through the use of the Book-Entry System or the Depository with respect to Securities held hereunder and therein deposited, shall with respect to all Securities held for the Fund hereunder in accordance with preceding paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon such Securities which are called, but only if either (i) the Custodian receives a written notice of such call, or (ii) notice of such call appears in one or more of the publications listed in Appendix C annexed hereto, which may be amended at any time by the Custodian without the prior notification or consent of the Fund;
(c) Present for payment and collect the amount payable upon all Securities which mature;
(d) Surrender Securities in temporary form for definitive Securities;
(e) Execute, as custodian, any necessary declarations or certificates of ownership under the Federal Income Tax Laws or the laws or regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the Depository with respect to Securities therein deposited, for the account of a Series, all rights and similar securities issued with respect to any Securities held by the Custodian for such Series hereunder.
6 . Upon receipt of a Certificate and not otherwise, the Custodian, directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such Certificate proxies, consents, authorizations, and any other instruments whereby the authority of the Fund as owner of any Securities held by the Custodian hereunder for the Series specified in such Certificate may be exercised;
(b) Deliver any Securities held by the Custodian hereunder for the Series specified in such Certificate in exchange for other Securities or cash issued or paid in connection with the liquidation, reorganization, refinancing, merger, consolidation or recapitalization of any corporation, or the exercise of any conversion privilege and receive and hold hereunder specifically allocated to such Series any cash or other Securities received in exchange;
(c) Deliver any Securities held by the Custodian hereunder for the Series specified in such Certificate to any protective committee, reorganization committee or other person in connection with the reorganization, refinancing, merger, consolidation, recapitalization or sale of assets of any corporation and receive and hold hereunder specifically allocated to such Series such
certificates of deposit, interim receipts or other instruments or documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Series specified in such Certificate, and take such other steps as shall be stated in such Certificate to be for the purpose of effectuating any duly authorized plan of liquidation, reorganization, merger, consolidation or recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon Securities not described in preceding paragraph 5(b) of this Article which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the Custodian shall not be required to obtain possession of any instrument or certificate representing any Futures Contract, any option, or any Futures Contract Option until after it shall have determined, or shall have received a Certificate from the Fund stating, that any such instruments or certificates are available. The Fund shall deliver to the Custodian such a Certificate no later than the business day preceding the availability of any such instrument or certificate. Prior to such availability, the Custodian shall comply with Section 17(f) of the Investment Company Act of 1940, as amended, in connection with the purchase, sale, settlement, closing out or writing of Futures Contracts, Options, or Futures Contract Options by making payments or deliveries specified in Certificates received by the Custodian in connection with any such purchase, sale, writing, settlement or closing out upon its receipt from a broker, dealer, or futures commission merchant of a statement or confirmation reasonably believed by the Custodian to be in the form customarily used by brokers, dealers, or future commission merchants with respect to such Futures Contracts, Options, or Futures Contract Options, as the case may be, confirming that such Security is held by such broker, dealer or futures commission merchant, in book-entry form or otherwise, in the name of the Custodian (or any nominee of the Custodian) as custodian for the Fund, provided, however, that payments to or deliveries from the Margin Account shall be made in accordance with the terms and conditions of the Margin Account Agreement. Whenever any such instruments or certificates are available, the Custodian shall, notwithstanding any provision in this Agreement to the contrary, make payment for any Futures Contract, Option, or Futures Contract Option for which such instruments or such certificates are available only against the delivery to the Custodian of such instrument or such certificate, and deliver any Futures Contract, Option or Futures Contract Option for which such instruments or such instruments or such certificates are available only against receipt by the Custodian of payment therefor. Any such instrument or certificate delivered to the Custodian shall be held by the Custodian hereunder in accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other than a
purchase of an Option, a Futures Contract, or a Futures Contract Option, the
Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
purchase: (a) the Series to which such Securities are to be specifically
allocated; (b) the name of the issuer and the title of the Securities; (c) the
number of shares or the principal amount purchased and accrued interest, if any;
(d) the date of purchase and settlement; (e) the purchase price per unit; (f)
the total amount payable upon such purchase; (g) the name of the person from
whom or the broker through whom the purchase was made and the name of the
clearing broker, if any; and (h) the name of the broker to whom payment is to be
made. The Custodian shall, upon receipt of Securities purchased by or for the
Fund, pay to the broker specified in the Certificate out of the moneys held for
the account of such Series the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund, other than a
sale of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a Certificate,
Oral Instructions or Written Instructions, specifying with respect to each such
sale: (a) the Series to which such Securities were specifically allocated; (b)
the name of the issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest, if any; (d) the date of sale;
(e) the sale price per unit; (f) the total amount payable to the Fund upon such
sale; (g) the name of the broker through whom or the person to whom the sale was
made, and the name of the clearing broker, if any; and (h) the name of the
broker to whom the Securities are to be delivered. The Custodian shall deliver
the Securities specifically allocated to such Series to the broker specified in
the Certificate upon the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund
shall deliver to the Custodian a Certificate specifying with respect to each
Option purchased: (a) the Series to which such Option is specifically allocated;
(b) the type of Option (put or call); (c) the name of the issuer and the title
and number of shares subject to such Option or, in the case of a Stock Index
Option, the stock index to which such Option relates and the number of Stock
Index Options purchased; (d) the expiration date; (e) the exercise price; (f)
the dates of purchase and settlement; (g) the total amount payable by the Fund
in connection with such purchase; (h) the name of the Clearing Member through
whom such Option was purchased; and (i) the name of the broker to whom payment
is to be made. The Custodian shall pay, upon receipt of a Clearing Member's
statement confirming the purchase
of such Option held by such Clearing Member for the account of the Custodian (or any duly appointed and registered nominee of the Custodian) as custodian for the Fund, out of moneys held for the account of the Series to which such Option is to be specifically allocated, the total amount payable upon such purchase to the Clearing Member through whom the purchase was made, provided that the same conforms to the total amount payable as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a Certificate specifying with respect to each such sale: (a) the Series to which such Option was specifically allocated; (b) the type of Option (put or call); (c) the name of the issuer and the title and number of shares subject to such Option or, in the case of a Stock Index Option, the stock index to which such Option relates and the number of Stock Index Options sold; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the Clearing Member through whom the sale was made. The Custodian shall consent to the delivery of the Option sold by the Clearing Member which previously supplied the confirmation described in preceding paragraph 1 of this Article with respect to such Option against payment to the Custodian of the total amount payable to the Fund, provided that the same conforms to the total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Call Option: (a) the
Series to which such Call Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid by the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Call Option was exercised.
The Custodian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the Series to
which such Call Option was specifically allocated the total amount payable to
the Clearing Member through whom the Call Option was exercised, provided that
the same conforms to the total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Put Option: (a) the
Series to which such Put Option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid to the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Put Option was exercised.
The Custodian shall, upon receipt of the amount payable upon the exercise of the
Put Option deliver or direct the Depository to deliver the Securities
specifically allocated to such Series, provided the same conforms to the amount
payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such Stock Index Option:
(a) the Series to which such Stock Index Option was specifically allocated; (b)
the type of Stock Index Option (put or call); (c) the number of options being
exercised; (d) the stock index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the total amount to be received by the Fund in
connection with such exercise; and (h) the Clearing Member from whom such
payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Covered Call Option: (a) the Series for which such Covered Call Option was written; (b) the name of the issuer and the title and number of shares for which the Covered Call Option was written and which underlie the same; (c) the expiration date; (d) the exercise price; (e) the premium to be received by the Fund; (f) the date such Covered Call Option was written; and (g) the name of the Clearing Member through whom the premium is to be received. The Custodian shall deliver or cause to be delivered, in exchange for receipt of the premium specified in the Certificate with respect to such Covered Call Option, such receipts as are required in accordance with the customs prevailing among Clearing Members dealing in Covered Call Options and shall impose, or direct the Depository to impose, upon the underlying Securities specified in the Certificate specifically allocated to such Series such restrictions as may be required by such receipts. Notwithstanding the foregoing, the Custodian has the right, upon prior written notification to the Fund, at any time to refuse to issue any receipts for Securities in the possession of the Custodian and not deposited with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate instructing the Custodian to deliver, or to direct the Depository to deliver, the Securities subject to such Covered Call Option and specifying: (a) the Series for which such Covered Call Option was written; (b) the name of the issuer and the title and number of shares subject to the Covered Call Option; (c) the Clearing Member to whom the underlying Securities are to be delivered; and (d) the total amount payable to the Fund upon such delivery. Upon the return and/or cancellation of any receipts delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver, or direct the Depository to deliver, the underlying Securities as specified in the Certificate for the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Put Option: (a) the Series for which such Put Option was written; (b) the name of the issuer and the title and number of shares for which the Put Option is written and which underlie the same; (c) the expiration date; (d) the exercise price; (e) the premium to be received by the Fund; (f) the date such Put Option is written; (g) the name of the Clearing Member through whom the premium is to be received and to whom a Put Option guarantee letter is to be delivered; (h) the amount of cash, and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in the Senior Security Account for such Series; and (i) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited into the Collateral Account for such Series. The Custodian shall, after making the deposits into the Collateral Account specified in the Certificate, issue a Put Option guarantee letter substantially in the form utilized by the Custodian on the date hereof, and deliver the same to the Clearing Member specified in the Certificate against receipt of the premium specified in said Certificate. Notwithstanding the foregoing, the Custodian shall be under no obligation to issue any Put Option guarantee letter or similar document if it is unable to make any of the representations contained therein.
9. Whenever a Put Option written by the Fund and described in the preceding paragraph is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Put Option was written; (b) the name of the issuer and title and number of shares subject to the Put Option; (c) the Clearing Member from whom the underlying Securities are to be received; (d) the total amount payable by the Fund upon such delivery; (e) the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be withdrawn from the Collateral Account for such Series and (f) the amount of cash and/or the amount and kind of
Securities, specifically allocated to such Series, if any, to be withdrawn from the Senior Security Account. Upon the return and/or cancellation of any Put Option guarantee letter or similar document issued by the Custodian in connection with such Put Option, the Custodian shall pay out of the moneys held for the account of the Series to which such Put Option was specifically allocated the total amount payable to the Clearing Member specified in the Certificate as set forth in such Certificate, and shall make the withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index Option was
written; (b) whether such Stock Index Option is a put or a call; (c) the number
of options written; (d) the stock index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through whom
such Option was written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Security Account for such
Series; (j) the amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Collateral Account
for such Series; and (k) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to be deposited in a
Margin Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium specified in the
Certificate, make the deposits, if any, into the Senior Security Account
specified in the Certificate, and either (1) deliver such receipts, if any,
which the Custodian has specifically agreed to issue, which are in accordance
with the customs prevailing among Clearing Members in Stock Index Options and
make the deposits into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described in the preceding paragraph of this Article is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Stock Index Option: (a) the Series for which such Stock Index Option was written; (b) such information as may be necessary to identify the Stock Index option being exercised; (c) the Clearing Member through whom such Stock Index Option is being exercised; (d) the total amount payable upon such exercise, and whether such amount is to be paid by or to the Fund; (e) the amount of cash and/or amount and kind of Securities, if any, to be withdrawn from the Margin Account; and (f) the amount of cash and/or amount and kind of Securities, if any, to be withdrawn from the Senior Security Account for such Series; and the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Collateral Account for such Series. Upon the return and/or cancellation of the receipt, if any, delivered pursuant to the preceding paragraph of this Article, the Custodian shall pay out of the moneys held for the account of the Series to which such Stock Index Option was specifically allocated to the Clearing Member specified in the Certificate the total amount payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to a previously
written Option described in paragraphs 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction; (b) the
Series for which the Option was written; (c) the name of the issuer and the
title and number of shares subject to the Option, or, in the case of a Stock
Index Option, the stock index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the type of Option (put or call) (h) the date of
such purchase; (i) the name of the Clearing Member to whom the premium is to be
paid; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account, a specified Margin Account, or the Senior Security Account for such Series. Upon the Custodian's payment of the premium and the return and/or cancellation of any receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to the Option being liquidated through the Closing Purchase Transaction, the Custodian shall remove, or direct the Depository to remove, the previously imposed restrictions on the Securities underlying the Call Option.
13. Upon the expiration, exercise or consummation of a Closing Purchase Transaction with respect to, any Option purchased or written by the Fund and described in this Article, the Custodian shall delete such Option from the statements delivered to the Fund pursuant to paragraph 3 Article III herein, and upon the return and/or cancellation of any receipts issued by the Custodian, shall make such withdrawals from the Collateral Account, and the Margin Account and/or the Senior Security Account as may be specified in a Certificate received in connection with such expiration, exercise, or consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Futures Contract, (or with respect to any number of identical Futures
Contract(s)): (a) the Series for which the Futures Contract is being entered;
(b) the category of Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures Contracts entered
into; (d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity date; (f)
whether the Fund is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of Securities, if
any, to be deposited in the Senior Security Account for such Series; (h) the
name of the broker, dealer, or futures commission merchant through whom the
Futures Contract was entered into; and (i) the amount of fee or commission, if
any, to be paid and the name of the broker, dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian shall make the
deposits, if any, to the Margin Account in accordance with the terms and
conditions of the Margin Account Agreement. The Custodian shall make payment out
of the moneys specifically allocated to such Series of the fee or commission, if
any, specified in the Certificate and deposit in the Senior Security Account for
such Series the amount of cash and/or the amount and kind of Securities
specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to be made by the Fund to a broker, dealer, or futures commission merchant with respect to an outstanding Futures Contract, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a broker, dealer, or futures commission merchant to the Fund with respect to an outstanding Futures Contract, shall be received and dealt with by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is retained by the Fund until delivery or settlement is made on such Futures Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a) the Futures Contract and the Series to which the same relates;
(b) with respect to a Stock Index Futures Contract, the total cash settlement amount to be paid or received, and with respect to a Financial Futures Contract, the Securities and/or amount of cash to be delivered or received; (c) the broker, dealer, or futures commission merchant to or from whom payment or delivery is to be made or received; and (d) the amount of cash and/or Securities to be withdrawn from the Senior Security Account for such Series. The Custodian shall make the payment or delivery specified in the Certificate, and delete such Futures Contract from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a Futures Contract held by the Custodian hereunder, the Fund shall deliver to the Custodian a Certificate specifying: (a) the items of information required in a Certificate described in paragraph 1 of this Article, and (b) the Futures Contract being offset. The Custodian shall make payment out of the money specifically allocated to such Series of the fee or commission, if any, specified in the Certificate and delete the Futures Contract being offset from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein, and make such withdrawals from the Senior Security Account for such Series as may be specified in such Certificate. The withdrawals, if any, to be made from the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series to which such Option is specifically allocated; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option purchased; (d) the expiration date; (e) the exercise price; (f) the dates of purchase and settlement; (g) the amount of premium to be paid by the Fund upon such purchase; (h) the name of the broker or futures commission merchant through whom such Option was purchased; and (i) the name of the broker, or futures commission merchant, to whom payment is to be made. The Custodian shall pay out of the moneys specifically allocated to such Series the total amount to be paid upon such purchase to the broker or futures commissions merchant through whom the purchase was made, provided that the same conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Option purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such sale: (a) Series to which such Futures Contract Option was specifically allocated; (b) the type of Future Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g) the total amount payable to the Fund upon such sale; and (h) the name of the broker of futures commission merchant through whom the sale was made. The Custodian shall consent to the cancellation of the Futures Contract Option being closed against payment to the Custodian of the total amount payable to the Fund, provided the same conforms to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying:
(a) the Series to which such Futures Contract Option was specifically allocated;
(b) the particular Futures Contract Option (put or call) being exercised; (c)
the type of Futures Contract underlying the Futures Contract Option; (d) the
date of exercise; (e) the name of the broker or futures commission merchant
through whom the Futures Contract Option is exercised; (f) the net total amount,
if any, payable by the Fund; (g) the amount, if any, to be received by the Fund;
and (h) the amount of cash and/or the amount and kind of Securities to be
deposited in the Senior Security Account for such Series. The Custodian shall
make, out of the moneys and Securities specifically allocated to such Series,
the payments if any, and the deposits, if any, into the Senior Security Account
as specified in the Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to such Futures Contract Option: (a) the Series for which such Futures Contract Option was written; (b) the type of Futures Contract Option (put or call); (c) the type of Futures Contract and such other information as may be necessary to identify the Futures Contract underlying the Futures Contract Option; (d) the expiration date; (e) the exercise price; (f) the premium to be received by the Fund; (g) the name of the broker or futures commission merchant through whom the premium is to be received; and (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in the Senior Security Account for such Series. The Custodian shall, upon receipt of the premium specified in the Certificate, make out of the moneys and Securities specifically allocated to such Series the deposits into the Senior Security Account, if any, as specified in the Certificate. The deposits, if any, to be made to the Margin Account shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a
call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in such Certificate make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and which is a put is exercised, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series to which such Option was specifically allocated; (b) the particular Futures Contract Option exercised; (c) the type of Futures Contract underlying such Futures Contract Option; (d) the name of the broker or futures commission merchant through whom such Futures Contract Option is exercised; (e) the net total amount, if any, payable to the Fund upon such exercise; (f) the net total amount, if any, payable by the Fund upon such exercise; and (g) the amount and kind of Securities and/or cash to be withdrawn from or deposited in, the Senior Security Account for such Series, if any. The Custodian shall, upon its receipt of the net total amount payable to the Fund, if any, specified in the Certificate, make out of the moneys and Securities specifically allocated to such Series, the payments, if any, and the deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account, if any, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical to
a previously written Futures Contract Option described in this Article in order
to liquidate its position as a writer of such Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect to
the Futures Contract option being purchased: (a) the Series to which such Option
is specifically allocated; (b) that the transaction is a closing transaction;
(c) the type of Future Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Option Contract; (d) the
exercise price; (e) the premium to be paid by the Fund; (f) the expiration date;
(g) the name of the broker or futures commission merchant to whom the premium is
to be paid; and (h) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for such Series. The
Custodian shall effect the withdrawals from the Senior Security Account
specified in the Certificate. The withdrawals, if any, to be made from the
Margin Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a closing transaction with respect to, any Futures Contract Option written or purchased by the Fund and described in this Article, the Custodian shall (a) delete such Futures Contract Option from the statements delivered to the Fund pursuant to paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in the case of an exercise such deposits into the Senior Security Account as may be specified in a Certificate. The deposits to and/or withdrawals from the Margin Account, if any, shall be made by the Custodian in accordance with the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a Futures Contract Option described in this Article shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the Series for which such short sale was made; (b) the name of the issuer and the title of the Security; (c) the number of shares or principal amount sold, and accrued interest or dividends, if any; (d) the dates of the sale and settlement; (e) the sale price per unit; (f) the total amount credited to the Fund upon such sale, if any, (g) the amount of cash and/or the amount and kind of Securities, if any, which are to be deposited in a Margin Account and the name in which such Margin Account has been or is to be established; (h) the amount of cash and/or the amount and kind of Securities, if any, to be deposited in a Senior Security Account, and (i) the name of the broker through whom such short sale was made. The Custodian shall upon its receipt of a statement from such broker confirming such sale and that the total amount credited to the Fund upon such sale, if any, as specified in the Certificate is held by such broker for the account of the Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a receipt or make the deposits into the Margin Account and the Senior Security Account specified in the Certificate.
2. In connection with the closing-out of any short sale, the Fund shall promptly deliver to the Custodian a Certificate specifying with respect to each such closing out: (a) the Series for which such transaction is being made; (b) the name of the issuer and the title of the Security; (c) the
number of shares or the principal amount, and accrued interest or dividends, if any, required to effect such closing-out to be delivered to the broker; (d) the dates of closing-out and settlement; (e) the purchase price per unit; (f) the net total amount payable to the Fund upon such closing-out; (g) the net total amount payable to the broker upon such closing-out; (h) the amount of cash and the amount and kind of Securities to be withdrawn, if any, from the Margin Account; (i) the amount of cash and/or the amount and kind of Securities, if any, to be withdrawn from the Senior Security Account; and (j) the name of the broker through whom the Fund is effecting such closing-out. The Custodian shall, upon receipt of the net total amount payable to the Fund upon such closing-out, and the return and/or cancellation of the receipts, if any, issued by the Custodian with respect to the short sale being closed-out, pay out of the moneys held for the account of the Fund to the broker the net total amount payable to the broker, and make the withdrawals from the Margin Account and the Senior Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement with respect to Securities and money held by the Custodian hereunder, the Fund shall deliver to the Custodian a Certificate or in the event such Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral Instructions, or Written Instructions specifying: (a) the Series for which the Reverse Repurchase Agreement is entered; (b) the total amount payable to the Fund in connection with such Reverse Repurchase Agreement and specifically allocated to such Series; (c) the broker or dealer through or with whom the Reverse Repurchase Agreement is entered; (d) the amount and kind of Securities to be delivered by the Fund to such broker or dealer; (e) the date of such Reverse Repurchase Agreement; and (f) the amount of cash and/or the amount and kind of Securities, if any, specifically allocated to such Series to be deposited in a Senior Security Account for such Series in connection with such Reverse Repurchase Agreement. The Custodian shall, upon receipt of the total amount payable to the Fund specified in the Certificate, Oral Instructions, or Written Instructions make the delivery to the broker or dealer, and the deposits, if any, to the Senior Security Account, specified in such Certificate, Oral Instructions, or Written Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described in preceding paragraph 1 of this Article, the Fund shall promptly deliver a Certificate or, in the event such Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral Instructions, or Written Instructions to the Custodian specifying: (a) the Reverse Repurchase Agreement being terminated and the Series for which same was entered; (b) the total amount payable by the Fund in connection with such termination; (c) the amount and kind of Securities to be received by the Fund and specifically allocated to such Series in connection with such termination; (d) the date of termination; (e) the name of the broker or dealer with or through whom the Reverse Repurchase Agreement is to be terminated; and (f) the amount of cash and/or the amount and kind of Securities to be withdrawn from the Senior Securities Account for such Series. The Custodian shall, upon receipt of the amount and kind of Securities to be received by the Fund specified in the Certificate, Oral Instructions, or Written Instructions, make the payment to the broker or dealer, and the withdrawals, if any, from the Senior Security Account, specified in such Certificate, Oral Instructions, or Written Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically allocated to a Series held by the Custodian hereunder, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities, (c) the number of shares or the principal amount loaned, (d) the date of loan and delivery, (e) the total amount to be delivered to the Custodian against the loan of the Securities, including the amount of cash collateral and the premium if any, separately identified, and (f) the name of the broker, dealer, or financial institution to which the loan was made. The Custodian shall deliver the Securities thus designated to the broker, dealer or financial institution to which the loan was made upon receipt of the total amount designated as to be delivered against the loan of Securities. The Custodian may accept payment in connection with a delivery otherwise than through the Book-Entry System or Depository only in the form of a certified or bank cashier's check payable to the order of the Fund or the Custodian drawn on New York Clearing House funds and may deliver Securities in accordance with the customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund, the Fund shall deliver or cause to be delivered to the Custodian a Certificate specifying with respect to each such loan termination and return of Securities: (a) the Series to which the loaned Securities are specifically allocated; (b) the name of the issuer and the title of the Securities to be returned, (c) the number of shares or the principal amount to be returned, (d) the date of termination, (e) the total amount to be delivered by the Custodian (including the cash collateral for such Securities minus any offsetting credits as described in said Certificate), and (f) the name of the broker, dealer, or financial institution from which the Securities will be returned. The Custodian shall receive all Securities returned from the broker, dealer, or financial institution to which such Securities were loaned and upon receipt thereof shall pay, out of the moneys held for the account of the Fund, the total amount payable upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or withdrawals from, a Senior Security Account as specified in a Certificate received by the Custodian. Such Certificate shall specify the Series for which such deposit or withdrawal is to be made, and the amount of cash and/or the amount and kind of Securities specifically allocated to such Series to be deposited in, or withdrawn from, such Senior Security Account for such Series. In the event that the Fund fails to specify in a Certificate the Series, the name of the issuer, the title and the number of shares or the principal amount of any particular Securities to be deposited by the Custodian into, or withdrawn from, a Senior Securities Account, the Custodian shall be under no obligation to make any such deposit or withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin Account to the broker, dealer, futures commission merchant or Clearing Member in whose name, or for whose benefit, the account was established as specified in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with respect to Securities deposited in any Margin Account shall be dealt with in accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest in and to any property at any time held by the Custodian in any Collateral Account described herein. In accordance with applicable law the Custodian may enforce its lien and realize on any such property whenever the Custodian has made payment or delivery pursuant to any Put Option guarantee letter or similar document or any receipt issued hereunder by the Custodian. In the event the Custodian should realize on any such property net proceeds which are less than the Custodian's obligations under any Put Option guarantee letter or similar document or any receipt, such deficiency shall be a debt owed the Custodian by the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a statement with respect to each Margin Account in which money or Securities are held specifying as of the close of business on the previous business day: (a) the name of the Margin Account; (b) the amount and kind of Securities held therein; and (c) the amount of money held therein. The Custodian shall make available upon request to any broker, dealer, or futures commission merchant specified in the name of a Margin Account a copy of the statement furnished the Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in which cash and/or Securities are maintained in a Collateral Account for any Series, the Custodian shall furnish the Fund with a Statement with respect to such Collateral Account specifying the amount of cash and/or the amount and kind of Securities held therein. No later than the close of business next succeeding the delivery to the Fund of such statement, the Fund shall furnish to the Custodian a Certificate or Written Instructions specifying the then market value of the Securities described in such statement. In the event such then market value is indicated to be less than the Custodian's obligation with respect to any outstanding Put Option guarantee letter or similar document, the Fund shall promptly specify in a Certificate the additional cash and/or Securities to be deposited in such Collateral Account to eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of the Board of Trustees of the Fund certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, either (i) setting forth with respect to the Series specified therein the date of the declaration of a dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent and any sub-dividend agent or co-dividend agent of the Fund on the payment date, or (ii) authorizing with respect to the Series specified therein the declaration of dividends and distributions on a daily basis and authorizing the Custodian to rely on Oral Instructions, Written Instructions or a Certificate setting forth the date of the declaration of such dividend or distribution, the date of payment thereof, the record date as of which shareholders entitled to payment shall be determined, the amount payable per Share of such Series to the shareholders of record as of that date and the total amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral Instructions, Written Instructions or Certificate, as the case may be, the Custodian shall pay out of the moneys held for the account of each Series the total amount payable to the Dividend Agent, and any sub-dividend agent or co-dividend agent of the Fund with respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale of such Shares and specifically allocated to the separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian shall credit such money to the separate account in the name of the Series for which such money was received.
3. Upon issuance of any Shares of any Series described in the foregoing provisions of this Article, the Custodian shall pay, out of the money held for the account of such Series, all original issue or other taxes required to be paid by the Fund in connection with such issuance upon the receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the Custodian to make payment out of the money held by the Custodian hereunder in connection with a redemption of any Shares, it shall furnish to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth the Series and number of Shares received by the Transfer Agent for redemption and that such Shares are in good form for redemption, the Custodian shall make payment to the Transfer Agent out of the moneys held in the separate account in the name of the Series the total amount specified in the Certificate issued pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any Shares, whenever any Shares are redeemed pursuant to any check redemption privilege which may from time to time be offered by the Fund, the Custodian, unless otherwise instructed by a Certificate, shall, upon receipt of an advice from the Fund or its agent setting forth that the redemption is in good form for redemption in accordance with the check redemption procedure, honor the check presented as part of such check redemption privilege out of the moneys held in the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on behalf of any Series which results in an overdraft because the moneys held by the Custodian in the separate account for such Series shall be insufficient to pay the total amount payable upon a purchase of Securities specifically allocated to such Series, as set forth in a Certificate, Oral Instructions, or Written Instructions or which results in an overdraft in the separate account of such Series for some other reason, or if the Fund is for any other reason indebted to the Custodian with respect to a Series (except a borrowing for investment or for temporary or emergency purposes using Securities as collateral pursuant to a separate agreement and subject to the provisions of paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to be a loan made by the Custodian to the Fund for such Series payable on demand and shall bear interest from the date incurred at a rate per annum (based on a 360-day year for the actual number of days involved) equal to 1/2% over Custodian's prime commercial lending rate in effect from time to time, such rate to be adjusted on the effective date of any change in such prime commercial lending rate but in no event to be less than 6% per annum. In addition, the Fund hereby agrees that the Custodian shall have a continuing lien and security interest in and to any property specifically allocated to such Series at any time held by it for the benefit of such Series or in which the Fund may have an interest which is then in the Custodian's possession or control or in possession or control of any third party acting in the Custodian's behalf. The Fund authorizes the Custodian, in its sole discretion, at any time to charge any such overdraft or indebtedness together with interest due thereon against any balance of account standing to such Series' credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) he name of the bank, (c) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or other loan
agreement, (d) the time and date, if known, on which the loan is to be entered
into, (e) the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (h) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the
Series, the name of the issuer, the title and number of shares or the principal amount of any particular Securities to be delivered as collateral by the Custodian, the Custodian shall not be under any obligation to deliver any Securities.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee shall be liable for any loss or damage including counsel fees, resulting from its action or omission to act or otherwise, either hereunder or under any Margin Account Agreement, except for any such loss or damage arising out of its own negligence or willful misconduct. The Custodian may, with respect to questions of law arising hereunder or under any Margin Account Agreement, apply for and obtain the advice and opinion of counsel to the Fund or of its own counsel, at the expense of the Fund, and shall be fully protected with respect to anything done or omitted by it in good faith in conformity with such advice or opinion. The Custodian shall be liable to the Fund for any loss or damage resulting from the use of the Book-Entry System or any Depository arising by reason of any negligence, misfeasance or willful misconduct on the part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased, sold, or written by or for the Fund, the legality of the purchase, sale or writing thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any Shares, or the propriety of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend by the Fund;
(d) The legality of any borrowing by the Fund using Securities as collateral;
(e) The legality of any loan of portfolio Securities, nor shall the Custodian be under any duty or obligation to see to it that any cash collateral delivered to it by a broker, dealer, or financial institution or held by it at any time as a result of such loan of portfolio Securities of the Fund is adequate collateral for the Fund against any loss it might sustain as a result of such loan. The Custodian specifically, but not by way of limitation, shall not be under any duty or obligation periodically to check or notify the Fund that the amount of such cash collateral held by it for the Fund is sufficient collateral for the Fund, but such duty or obligation shall be the sole responsibility of the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer or financial institution to which portfolio Securities of the Fund are Ient pursuant to Article XIV of this Agreement makes payment to it of any dividends or interest which are payable to or for the account of the Fund during the period of such loan or at the termination of such loan, provided, however, that the Custodian shall promptly notify the Fund in the event that such dividends or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or Securities held in any Margin Account, Senior Security Account, Exempt Account or Collateral Account in connection
with transactions by the Fund. In addition, the Custodian shall be under no duty or obligation to see that any broker, dealer, futures commission merchant or Clearing Member makes payment to the Fund of any variation margin payment or similar payment which the Fund may be entitled to receive from such broker, dealer, futures commission merchant or Clearing Member, to see that any payment received by the Custodian from any broker, dealer, futures commission merchant or Clearing Member is the amount the Fund is entitled to receive, or to notify the Fund of the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the Custodian of, any money, whether or not represented by any check, draft, or other instrument for the payment of money, received by it on behalf of the Fund until the Custodian actually receives and collects such money directly or by the final crediting of the account representing the Fund's interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be liable for ascertaining or acting upon any calls, conversions, exchange, offers, tenders, interest rate changes or similar matters relating to Securities held in the Depositary, unless the Custodian shall have actually received timely notice from the Depositary. In no event shall the Custodian have any responsibility or liability for the failure of the Depositary to collect, or for the late collection or late crediting by the Depositary of any amount payable upon Securities deposited in the Depositary which may mature or be redeemed, retired, called or otherwise become payable. However, upon receipt of a Certificate from the Fund of an overdue amount on Securities held in the Depositary the Custodian shall make a claim against the Depositary on behalf of the Fund, except that the Custodian shall not be under any obligation to appear in, prosecute or defend any action suit or proceeding in respect to any Securities held by the Depositary which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obligation to take action to effect collection of any amount due to the Fund from the Transfer Agent of the Fund nor to take any action to effect payment or distribution by the Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take action to effect collection, of any amount, if the Securities upon which such amount is payable are in default, or if payment is refused after due demand or presentation, unless and until (i) it shall be directed to take such action by a Certificate and (ii) it shall be assured to its satisfaction of reimbursement of its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as Co-Custodian or Co-Custodians including, but not limited to, banking institutions located in foreign countries, of Securities and moneys at any time owned by the Fund, upon such terms and conditions as may be approved in a Certificate or contained in an agreement executed by the Custodian, the Fund and the appointed institution.
8. The Custodian shall not be under any duty or obligation (a) to ascertain whether any Securities at any time delivered to, or held by it, for the account of the Fund and specifically allocated to a Series are such as properly may be held by the Fund or such Series under the provisions of its then current prospectus, or (b) to ascertain whether any transactions by the Fund, whether or not involving the Custodian, are such transactions as may properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to pay to the Custodian all out-of-pocket expenses and such compensation as may be agreed upon from time to time between the Custodian and the Fund. The Custodian may charge such compensation and any expenses with respect to a Series incurred by the Custodian in the performance of its duties pursuant to such agreement against any money specifically allocated to such Series. Unless and until the Fund instructs the Custodian by a Certificate to apportion any loss, damage, liability or expense among the Series in a specified manner, the Custodian shall also be entitled to charge against any money held by it for the account of a Series such Series' pro rata share (based on such Series net asset value at the time of the charge to the aggregate net asset value of all Series at that time) of the amount of any loss, damage, liability or expense, including counsel fees, for which it shall be entitled to reimbursement under the provisions of this Agreement. The expenses for which the Custodian shall be entitled to reimbursement hereunder shall include, but are not limited to the expenses of sub-custodians and foreign branches of the Custodian incurred in settling outside of New York City transactions involving the purchase and sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate, notice or other instrument in writing received by the Custodian and reasonably believed by the Custodian to be a Certificate. The Custodian shall be entitled to rely upon any Oral Instructions and any Written Instructions actually received by the Custodian hereinabove provided for. The Fund agrees to forward to the Custodian a Certificate or facsimile thereof confirming such Oral Instructions or Written Instructions in such manner so that such Certificate or facsimile thereof is received by the Custodian, whether by hand delivery, telecopier or other similar device, or otherwise, by the close of business of the same day that such Oral Instructions or Written Instructions are given to the Custodian. The Fund agrees that the fact that such confirming instructions are not received by the Custodian shall in no way affect the validity of the transactions or enforceability of the transactions hereby authorized by the Fund. The Fund agrees that the Custodian shall incur no liability to the Fund in acting upon Oral Instructions or Written Instructions given to the Custodian hereunder concerning such transactions provided such instructions reasonably appear to have been received from an Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument, instruction or notice received by the Custodian and reasonably believed by the Custodian to be given in accordance with the terms and conditions of any Margin Account Agreement. Without limiting the generality of the foregoing, the Custodian shall be under no duty to inquire into, and shall not be liable for, the accuracy of any statements or representations contained in any such instrument or other notice including, without limitation, any specification of any amount to be paid to a broker, dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund which are in the possession of the Custodian shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the Investment Company Act of 1940, as amended, and other applicable securities laws and rules and regulations. The Fund, or the Fund's authorized representatives shall have access to such books and records during the Custodian's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by the Custodian to the Fund or the Fund's authorized representative, and the Fund shall reimburse the Custodian its expenses of providing such copies. Upon reasonable request of the Fund, the Custodian shall provide in hard copy or on micro-film, whichever the Custodian elects, any records included in any such delivery which are maintained by the Custodian on a computer disc, or are similarly maintained, and the Fund shall reimburse the Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report obtained by the Custodian on the system of internal accounting control of the Book-Entry System, the Depository, or O.C.C., and with such reports on its own systems of internal accounting control as the Fund may reasonably request from time to time.
14. The Fund agrees to indemnify the Custodian against and save the Custodian harmless from all liability, claims, losses and demands whatsoever, including attorney's fees, howsoever arising or incurred because of or in connection with the Custodian's payment or non-payment of checks pursuant to paragraph 6 of Article XIII as part of any check redemption privilege program of the Fund, except for any such liability, claim, loss and demand arising out of the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the Custodian may deliver and receive Securities, and receipts with respect to such Securities, and arrange for payments to be made and received by the Custodian in accordance with the customs prevailing from time to time among brokers or dealers in such Securities.
16. The Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied in this Agreement against the Custodian.
ARTICLE XVI
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be obligated to have or utilize the Terminal Link, and the provisions of this Article shall apply if, but only if, the Fund in its sole and absolute discretion elects to utilize the Terminal Link to transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized by the Fund only for the purpose of the Fund providing Certificates to the Custodian with respect to transactions involving Securities or for the transfer of money to be applied to the payment of dividends, distributions or redemptions of Fund Shares, and shall be utilized by the Custodian only for purpose of providing notices to the Fund. Such use shall commence only after the Fund shall have delivered to the Custodian a Certificate and shall have established access codes and safekeeping procedures to safeguard and protect the confidentiality and availability of such access codes. Each use of the Terminal Link by the Fund shall constitute a representation and warranty that the Terminal Link is being used only for the purposes permitted hereby, that at least two Officers have each utilized in access code, that such safekeeping procedures have been established by the Fund, and that such use does not contravene the Investment Company Act of 1940, as amended, or the rules or regulations thereunder.
3. The Fund shall obtain and maintain at its own cost and expense all equipment and services, including, but not limited to communications services, necessary for it to utilize the Terminal Link, and the Custodian shall not be responsible for the reliability or availability of any such equipment or services.
4. The Fund acknowledges that any data bases made available as part of, or through the Terminal Link and any proprietary data, software, processes, information and documentation (other than which are or become part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"), are the exclusive and confidential property of the Custodian. The Fund shall, and shall cause others to which it discloses the Information, to keep the Information confidential by using the same care and discretion it uses with respect to its own confidential property and trade secrets, and shall neither make nor permit any disclosure without the express prior written consent of the Custodian.
5. Upon termination of this Agreement for any reason, the Fund shall return to the Custodian any and all copies of the Information which are in the Fund's possession or under its control, or which the Fund distributed to third parties. The provisions of this Article shall not affect the copyright status of any of the Information which may be copyrighted and shall apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from time to time without notice to the Fund, except that the Custodian shall give the Fund notice not less than 75 days in advance of any modification which would materially adversely affect the Fund's operation, and the Fund agrees not to modify or attempt to modify the Terminal Link without the Custodian's prior written consent. The Fund acknowledges that any software or procedures provided the Fund as part of the Terminal Link are the property of the Custodian and, accordingly, the Fund agrees that any modifications to the Terminal Link, whether by the Fund or the Custodian and whether with or without the Custodian's consent, shall become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it utilizes or the Fund utilizes in connection with the Terminal Link makes any warranties or representations, express or implied, in fact or in law, including but not limited to warranties of merchantability and fitness for a particular purpose.
8. The Fund will cause its Officers and employees to treat the authorization codes and the access codes applicable to Terminal Link with extreme care, and irrevocably authorizes the Custodian to act in accordance with and rely on Certificates received by it through the Terminal Link. The Fund acknowledges that it is its responsibility to assure that only its Officers use the Terminal Link on its behalf, and that the Custodian shall not be responsible nor liable for use of the Terminal Link on the Fund's behalf by persons other than Officers or by only a single Officer.
9. (a) Except as otherwise specifically provided in Section 9(b) of this Article, the Custodian shall have no liability for any losses, damages, injuries, claims, costs or expenses arising out of or in connection with any failure, malfunction or other problem relating to the Terminal Link except for money damages suffered as the direct result of the negligence of the Custodian in an amount not exceeding for any incident $25,000, provided however, that the Custodian shall have no liability under this Section 9 if the Fund fails to comply with the provisions of Section 11.
(b) The Custodian's liability for its negligence in executing or failing to act in accordance with a Certificate received through Terminal Link shall be only with respect to a transfer of funds which is not made in accordance with such Certificate after such Certificate shall have been duly acknowledged by the Custodian, and shall be contingent upon the Fund complying with the provisions of Section 11 of this Article, and shall be limited to (i) restoration of the principal amount mistransferred, if and to the extent that the Custodian would be required to make such restoration under applicable law, and (ii) the lesser of (A) the Fund's actual pecuniary loss incurred by reason of its loss of use of the mistransferred funds or the funds which were not transferred, as the case may be, or (B) compensation for the loss of use of the mistransferred funds or the funds which were not transferred, as the case may be, at a rate per annum equal to the average federal funds rate as
computed from the Federal Reserve Bank of New York's daily determination of the effective rate for federal funds, for the period during which the Fund has lost use of such funds. In no event shall the Custodian have any liability for failing to transfer funds in accordance with a Certificate received by the Custodian through Terminal Link other than through the applicable transfer module for the particular instructions contained in such Certificate.
10. Without limiting the generality of the foregoing, in no event shall the Custodian or any manufacturer or supplier of its computer equipment, software or services relating to the Terminal Link be responsible for any special, indirect, incidental or consequential damages which the Fund may incur or experience by reason of its use of the Terminal Link, even if the Custodian or any manufacturer or supplier has been advised of the possibility of such damages, nor with respect to the use of the Terminal Link shall the Custodian or any such manufacturer or supplier be liable for acts of God, or with respect to the following to the extent beyond such person's reasonable control: machine or computer breakdown or malfunction, interruption or malfunction of communication facilities, labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or interruptions in, or delay or unavailability of, the Terminal Link as promptly as practicable, and in any event within 24 hours after the earliest of (i) discovery thereof, (ii) the business day on which discovery should have occurred through the exercise of reasonable care, and (iii) in the case of any error, the date of actual receipt of the earliest notice which reflects such error, it being agreed that discovery and receipt of notice may only occur on a business day. The Custodian shall promptly advise the Fund whenever the Custodian learns of any errors, omissions or interruption in, or delay or unavailability of, the Terminal Link.
12. The Custodian shall verify to the Fund, by use of the Terminal Link, receipt of each Certificate the Custodian receives through the Terminal Link, and in the absence of such verification the Custodian shall not be liable for any failure to act in accordance with such Certificate and the Fund may not claim that such Certificate was received by the Custodian. Such verification, which may occur after the Custodian has acted upon such Certificate, shall be accomplished on the same day on which such Certificate is received.
ARTICLE XVII
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be not less than ninety (90) days after the date of giving of such notice. In the event such notice is given by the Fund, it shall be accompanied by a copy of a resolution of the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, electing to terminate this Agreement and designating a successor custodian or custodians, each of which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. In the event such notice is given by the Custodian, the Fund shall, on or before the termination date, deliver to the Custodian a copy of a resolution of the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant Clerk, designating a successor custodian or custodians. In the absence of such designation by the Fund, the Custodian may designate a successor custodian which shall be a bank or trust company having not less than $2,000,000 aggregate capital, surplus and undivided profits. Upon the date set forth in such notice this Agreement shall terminate, and the Custodian shall upon receipt of a notice of acceptance by the successor custodian on that date deliver directly to the successor custodian all Securities and moneys then owned by the Fund and held by it as Custodian, after deducting all fees, expenses and other amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the Custodian in accordance with the preceding paragraph, the Fund shall upon the date specified in the notice of termination of this Agreement and upon the delivery by the Custodian of all Securities (other than Securities held in the Book-Entry System which cannot be delivered to the Fund) and moneys then owned by the Fund be deemed to be its own custodian and the Custodian shall thereby be relieved of all duties and responsibilities pursuant to this Agreement, other than the duty with respect to Securities held in the Book Entry System which cannot be delivered to the Fund to hold such Securities hereunder in accordance with this Agreement.
ARTICLE XVIII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by a present Officer of the Fund under its seal, setting forth the names and the signatures of the present Authorized Persons. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event that any such present Authorized Person ceases to be an Authorized Person or in the event that other or additional Authorized Persons are elected or appointed. Until such new Certificate shall be received, the Custodian shall be fully protected in acting under the provisions of this Agreement upon signatures of the present Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by a present Officer of the Fund under its seal, setting forth the names and the signatures of the present Officers of the Fund. The Fund agrees to furnish to the Custodian a new Certificate in similar form in the event any such present Officer ceases to be an Officer of the Fund, or in the event that other or additional Officers are elected or appointed. Until such new Certificate shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement upon the signatures of the Officers as set forth in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Custodian, shall be sufficiently given if addressed to the Custodian and mailed or delivered to it at its offices at 90 Washington Street, New York, New York 10286, or at such other place as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Fund shall be sufficiently given if addressed to the Fund and mailed or delivered to it at its office at the address for the Fund first above written, or at such other place as the Fund may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties with the same formality as this Agreement and approved by a resolution of the Board of Trustees of the Fund.
6. This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of the Custodian, or by the Custodian without the written consent of the Fund, authorized or approved by a resolution of the Fund's Board of Trustees.
7. This Agreement shall be construed in accordance with the laws of the State of New York.
8. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file with the Secretary of The State of Delaware, and notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Fund as Trustees and not individually and that the obligations of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Fund; provided, however, that the Declaration of Trust of the Fund provides that the assets of a particular Series of the Fund shall under no circumstances be charged with liabilities attributable to any other Series of the Fund and that all persons extending credit to, or contracting with or having any claim against a particular Series of the Fund shall look only to the assets of that particular Series for payment of such credit, contract or claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective Officers, thereunto duly authorized and their respective seals to be hereunto affixed, as of the day and year first above written.
AIM VARIABLE INSURANCE FUNDS
By: /s/ CHARLES T. BAUER
-------------------------------
Attest:
/s/ LISA A. MOSS
-------------------------------
|
THE BANK OF NEW YORK
By: /s/ JAMES E. HILLMAN SVP
-------------------------------
27 Sept 2000
Attest:
/s/ILLEGIBLE
-------------------------------
|
APPENDIX A
CERTIFICATE OF THE SECRETARY
OF
AIM VARIABLE INSURANCE FUNDS
The undersigned, Carol F. Relihan, Senior Vice President and Secretary of AIM VARIABLE INSURANCE FUNDS (the "Fund"), a Delaware business trust, hereby certifies that the Custodian for the Fund be, and hereby is authorized to act upon written instructions executed by any two (2) of the following individuals and that the signature set forth opposite their names are their true and correct signatures.
NAME SIGNATURE
Polly A. Ahrendts
----------------------------------------
Robert G. Alley
----------------------------------------
Richard A. Berry
----------------------------------------
Laurie F. Brignac
----------------------------------------
Stuart W. Coco
----------------------------------------
Claude C. Cody, IV
----------------------------------------
Sharon A. Copper
----------------------------------------
Gary T. Crum
----------------------------------------
Jan H. Friedli
----------------------------------------
Carolyn L. Gibbs
----------------------------------------
Scot W. Johnson
----------------------------------------
Karen Dunn Kelley
----------------------------------------
Edgar M. Larsen
----------------------------------------
Lyman Missimer, III
----------------------------------------
|
Franklin Ruben
----------------------------------------
Craig A. Smith
----------------------------------------
Stephen D. Turman
----------------------------------------
Meggan M. Walsh
----------------------------------------
AUTHORIZED FOR CASH MANAGEMENT INVESTMENT DECISIONS ONLY:
W. Clinton Dudley
----------------------------------------
Dineen Hughes
----------------------------------------
Eric H. Lane
----------------------------------------
Michael E. Marek
----------------------------------------
Marques E. Mercier
----------------------------------------
Esther S. Munoz
----------------------------------------
Marcel S. Theriot
----------------------------------------
Colleen A. Ziegler
----------------------------------------
AUTHORIZED FOR CUSTODIAN TRADE COMMUNICATION ONLY (SECOND SIGNATURE):
Rick J. Ankrom
----------------------------------------
Gerilyn A. Edgar
----------------------------------------
Linda A. Felchak
----------------------------------------
Stacey R. Frakes
----------------------------------------
Sharon A. Lester
----------------------------------------
|
AUTHORIZED FOR NET CASH MOVEMENTS FOR INSTITUTIONAL FUNDS:
Sidney M. Dilgren
----------------------------------------
Roxanne Larsen
----------------------------------------
Robert W. Morris, Jr.
----------------------------------------
James K. Schaper
----------------------------------------
AUTHORIZED FOR HANDLING OF SETTLEMENT FOR RETAIL ACCOUNTS:
Robert A. Frazer
----------------------------------------
Damon L. Hall
----------------------------------------
|
The undersigned also hereby certifies that the Custodian be, and hereby is, authorized to accept written instructions executed by any two of the following individuals for the payment of any expense or liability incurred by a portfolio of the Fund (including but not limited to interest, taxes, management, accounting, transfer agent and legal fees and operating expenses); and that the signatures set forth opposite their respective names are their true and correct signatures.
NAME SIGNATURE
Charles T. Bauer
Chairman ----------------------------------------
Robert H. Graham
President ----------------------------------------
Gary T. Crum
Senior Vice President ----------------------------------------
Carol F. Relihan
Senior Vice President and Secretary ----------------------------------------
Dana R. Sutton
Vice President and Treasurer ----------------------------------------
Mary J. Benson
Assistant Vice President and
Assistant Treasurer ----------------------------------------
Sheri Steward Morris
Assistant Vice President and
Assistant Treasurer ----------------------------------------
|
Nancy L. Martin
Assistant Secretary ----------------------------------------
Kip A. Helm
----------------------------------------
Sharon A. Lester
----------------------------------------
Paul S. Nielsen
----------------------------------------
Thomas Kelly Niland
----------------------------------------
Susan R. Pawlak Olson
----------------------------------------
Vanessa L. Riley
----------------------------------------
|
IN WITNESS WHEREOF, I have hereunto set my hand as Senior Vice President and Secretary of the Fund and affixed the seal of the Fund this ________________ day of __________, 2000.
APPENDIX B
CERTIFICATE OF THE SECRETARY
OF
AIM VARIABLE INSURANCE FUNDS
The undersigned, Carol F. Relihan, Senior Vice President and Secretary of AIM VARIABLE INSURANCE FUNDS (the "Fund"), a Delaware business trust, hereby certifies that in accordance with the terms of the Fund's Custodian Agreement the following individuals serve in the positions shown with the Fund, that each individual has been duly elected or appointed to each such position and qualified therefor in conformity with the Fund's Agreement and Declaration of Trust and By-Laws, and that the signatures set forth opposite their respective names are their true and correct signatures.
NAME SIGNATURE
Charles T. Bauer
Chairman ----------------------------------------
Robert H. Graham
President ----------------------------------------
Gary T. Crum
Senior Vice President ----------------------------------------
Carol F. Relihan
Senior Vice President & Secretary ----------------------------------------
Dana R. Sutton
Vice President & Treasurer ----------------------------------------
Robert G. Alley
Vice President ----------------------------------------
Stuart W. Coco
Vice President ----------------------------------------
Melville B. Cox
Vice President ----------------------------------------
Karen Dunn Kelley
Vice President ----------------------------------------
Edgar M. Larsen
Vice President ----------------------------------------
Mary J. Benson
Assistant Vice President &
Assistant Treasurer ----------------------------------------
Sheri Steward Morris
Assistant Vice President &
Assistant Treasurer ----------------------------------------
|
Jim A. Coppedge Assistant Secretary ---------------------------------------- Renee A. Friedli Assistant Secretary ---------------------------------------- P. Michelle Grace Assistant Secretary ---------------------------------------- Nancy L. Martin Assistant Secretary ---------------------------------------- Ofelia M. Mayo Assistant Secretary ---------------------------------------- Lisa A. Moss Assistant Secretary ---------------------------------------- Kathleen J. Pflueger Assistant Secretary ---------------------------------------- |
IN WITNESS WHEREOF, I have hereunto set my hand as Senior Vice President and Secretary of the Fund and affixed the seal of the Fund this day _________ of ______________, 2000.
(SEAL) ---------------------------------------------
Carol F. Relihan
Senior Vice President and Secretary
|
APPENDIX C
I, ______________________________________, an Assistant Vice President with THE BANK OF NEW YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
EXHIBIT h(1)(b)
AMENDMENT NO. 1
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated May 1, 2000, by and between A I M Advisors, Inc., a Delaware corporation, and AIM Variable Insurance Funds, a Delaware business trust, is hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM V.I. Aggressive Growth Fund May 1, 2000 AIM V.I. Balanced Fund May 1, 2000 AIM V.I. Blue Chip Fund May 1, 2000 AIM V.I. Capital Appreciation Fund May 1, 2000 AIM V.I. Capital Development Fund May 1, 2000 AIM V.I. Dent Demographic Trends Fund May 1, 2000 AIM V.I. Diversified Income Fund May 1, 2000 AIM V.I. Global Utilities Fund May 1, 2000 AIM V.I. Government Securities Fund May 1, 2000 AIM V.I. Growth and Income Fund May 1, 2000 AIM V.I. Growth Fund May 1, 2000 AIM V.I. High Yield Fund May 1, 2000 AIM V.I. International Equity Fund May 1, 2000 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. New Technology Fund May 1, 2001 AIM V.I. Value Fund May 1, 2000" |
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
A I M ADVISORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
-------------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
-------------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
|
(SEAL)
EXHIBIT h(2)
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
AIM VARIABLE INSURANCE FUNDS
AND
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
----
Article 1 Terms of Appointment; Duties of the Bank 2
Article 2 Fees and Expenses 4
Article 3 Representations and Warranties of the Bank 5
Article 4 Representations and Warranties of the Fund 5
Article 5 Indemnification 6
Article 6 Covenants of the Fund and the Bank 9
Article 7 Termination of Agreement 10
Article 8 Additional Funds 10
Article 9 Assignment 11
Article 10 Amendment 11
Article 11 Massachusetts Law to Apply 11
Article 12 Merger of Agreement 12
Article 13 Counterparts 12
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TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of May, 2000, by and between AIM VARIABLE INSURANCE FUNDS, a Delaware business trust, having its principal office and place of business at 11 Greenway Plaza, Suite 100, Houston, Texas 77046 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its principal office and place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and
WHEREAS, the Fund on behalf of each of the AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Blue Chip Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Dent Demographic Trends Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Growth and Income Fund, AIM V.I. Global Utilities Fund, AIM V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and Income Fund, AIM V.I. High Yield Fund, AIM V.I. International Equity Fund, AIM V.I. Money Market Fund, AIM V.I. Telecommunications and Technology Fund, and AIM V.I. Value Fund (the "Portfolios") desires to appoint the Bank as its transfer agent, and agent in connection with certain other activities, with respect to the Portfolios, and the Bank desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.01 Subject to the terms and conditions set forth in this Agreement, the Fund, on behalf of the Portfolios, hereby employs and appoints the Bank to act as, and the Bank agrees to act as its transfer agent for the authorized and issued shares of beneficial interest of the Fund representing interests in each of the respective Portfolios ("Shares"), dividend disbursing agent, ("Shareholders") and set out in the currently effective prospectus and statement of additional information ("prospectus") of the Fund on behalf of the Portfolios, including without limitation any periodic investment plan or periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by agreement between the Fund on behalf of each of the Portfolios, as applicable and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation thereof to the Custodian of the Fund authorized pursuant to the Agreement and Declaration of Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation thereof to the Custodian;
(iv) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the Fund;
(v) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions declared by the Fund on behalf of the applicable Portfolio;
(vii) Maintain records of account for and advise the Fund and its Shareholders as to the foregoing; and
(viii) Record the issuance of Shares of the Fund and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of Shares which are authorized, based upon data provided to it by the Fund, and issued and outstanding.
The Bank shall also provide the Fund on a regular basis with the total number of Shares which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which function shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall perform the
customary services of a transfer agent, including but not limited to:
maintaining all Shareholder accounts, mailing Shareholder reports and
prospectuses to current Shareholders preparing and mailing confirmation forms
and statements of accounts to Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in Shareholder accounts,
preparing and mailing activity statements for Shareholders, and providing Shareholder account information.
(c) Procedures as to who shall provide certain of these services in Article 1 may be established from time to time by agreement between the Fund on behalf of each Portfolio and the Bank per the attached service responsibility schedule. The Bank may at times perform only a portion of these services and the Fund or its agent may perform these services on the Fund's behalf.
ARTICLE 2 FEES AND EXPENSES
2.01 For performance by the Bank pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Bank a transaction fee for
each Shareholder transaction as set out in the initial fee schedule attached
hereto. Such fees and out-of-pocket expenses and advances identified under
Section 2.02 below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees on behalf of each of the Portfolios to reimburse the Bank for out-of-pocket expenses or advances incurred by the Bank for the items set out in the fee schedule attached hereto. In addition, any other expenses incurred by the Bank at the request or with the consent of the Fund will be reimbursed by the Fund on behalf of the applicable Portfolio.
2.03 The Fund agrees on behalf of each of the Portfolios to pay all fees and reimbursable expenses following the mailing of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to the Bank by the Fund at least (7) days prior to the mailing date of such materials.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in good standing under the laws of Delaware.
4.02 It is empowered under applicable laws and by its Agreement and Declaration of Trust and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Agreement and Declaration of Trust and By-Laws have been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end, management investment company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as amended on behalf of each of the Portfolios is currently effective and will remain effective, with respect to all Shares of the Fund being offered for sale.
ARTICLE 5 INDEMNIFICATION
5.01 The Bank shall not be responsible for, and the Fund shall on behalf of the applicable Portfolio, indemnify and hold the Bank harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of information, records and documents or services which (i) are received or relied upon by the Bank or its agents or subcontractors and/or furnished to it or performed by on behalf of the Fund, and (ii) have been prepared, maintained and/or performed by the Fund or any other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the bank or its agents or subcontractors of any instructions or requests of the Fund on behalf of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state.
(f) The Bank will accept shareholder activity from the Fund with respect to each Portfolio, through electronic transmission; however, the Bank shall not be responsible for the execution of or content of such transmission. The execution of said transmission is the Fund's authorization for the Bank to accept the content of the transmission.
5.02 The Bank shall indemnify and hold the Fund harmless from and against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any action or failure or omission to act by the Bank as result of the Bank's lack of good faith, negligence or willful misconduct.
5.03 At any time the Bank may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Bank under this Agreement, and the Bank and its agents or subcontractors shall not be liable and shall be indemnified by the Fund on behalf of the applicable Portfolio for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Bank or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund.
5.04 In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes.
5.05 Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this Article 5 shall apply, upon the assertion of a claim for which either party may be required to indemnify the other, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent.
ARTICLE 6 COVENANTS OF THE FUND AND THE BANK
6.01 The Fund shall on behalf of each of the Portfolios promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of the Fund authorizing the appointment of the Bank and the execution and delivery of this Agreement.
(b) A copy of the Agreement and Declaration of Trust and By-Laws of the Fund and all amendments thereto.
6.02 The Bank shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, the Bank agrees that all such records prepared or maintained by the Bank relating to the services to be performed by the Bank hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request.
6.03 The Bank and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law.
6.04 In case of any requests or demands for the inspection of the Shareholder records of the Fund, the Bank will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. The Bank reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person.
ARTICLE 7 TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon one hundred twenty (120) days written notice to the other.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund on behalf of the applicable Portfolio(s). Additionally, the Bank reserves the right to charge for any other reasonable expenses associated with such termination and/or a charge equivalent to the average of three (3) months' fees.
ARTICLE 8 ADDITIONAL FUNDS
8.01 In the event that the Fund establishes one or more series of Shares in addition to the Portfolios with respect to which it desires to have the Bank render services as transfer agent under the terms hereof, it shall so notify the Bank in writing, and if the Bank agrees in writing to provide such services, such services of Shares shall become a Portfolio hereunder.
ARTICLE 9 ASSIGNMENT
9.01 Except as provided in Section 9.03 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.
9.03 The Bank may, without further consent on the part of the Fund, subcontract for the performance hereof with (i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS"), which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934 as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate; provided, however, that the Bank shall be as fully responsible to the Fund for the acts and omissions of any subcontractor as it is for its own acts and omissions.
ARTICLE 10 AMENDMENT
10.01 This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Trustees of the Fund.
ARTICLE 11 MASSACHUSETTS LAW TO APPLY
11.01 This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts.
ARTICLE 12 MERGER OF AGREEMENT
12.01 This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.
ARTICLE 13 COUNTERPARTS
13.01 This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.
AIM VARIABLE INSURANCE FUNDS
BY: /s/ GARY T. CRUM
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Senior Vice President
ATTEST:
BY: /s/ NANCY L. MARTIN
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Assistant Secretary
COMPANY STATE STREET BANK AND TRUST COMPANY
BY: /s/ RONALD E. LOGUE
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Name: Ronald E. Logue
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Title: Executive Vice President
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ATTEST:
BY: /s/ STEPHANIE L. POSTER
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Name: Stephanie L. Poster
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Title: Vice President
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STATE STREET BANK AND TRUST COMPANY
TRANSFER AGENT SUPPORT SERVICES
FOR
AIM VARIABLE INSURANCE FUNDS
Services rendered in support of in-house transfer agency include:
o Systems Support
o Receipt of Trade Data
o Trade Confirmation
o Reconciliation/Communication with Custody Group (As Appropriate)
o Communication with AIM Management
o Wire Processing Coordination (As Appropriate)
$2.00 per trade, to be billed monthly
Out-of-Pocket Expenses - To be billed at cost to AIM, including paper, mailing, communication, year-end reporting, faxing and similar incurred expenses.
AIM VARIABLE INSURANCE FUNDS STATE STREET BANK AND TRUST COMPANY
By: /s/ GARY T. CRUM By: /s/ RONALD E. LOGUE
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Title: Senior Vice President Title: Executive Vice President
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Date: May 1, 2000 Date: as of May 1, 2000
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EXHIBIT i(1)(i)
FOLEY & LARDNER
ATTORNEYS AT LAW
CONSENT OF
FOLEY & LARDNER
We hereby consent to the reference to our firm under the caption "Legal Matters" in the statement of additional information contained in Post-Effective Amendment No. 19 to the Form N-1A Registration Statement of AIM Variable Insurance Funds (File No. 33-57340).
/s/ FOLEY & LARDNER
FOLEY & LARDNER
Washington, D.C.
April 4, 2001
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ESTABLISHED 1842
A member of GlobaLex with member offices in Berlin, Brussels, Dresden, Frankfurt, London, Singapore,
Stockholm and Stuttgart
EXHIBIT i(2)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our reports each dated February 1, 2001 on the financial statements and financial highlights of AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Blue Chip Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Dent Demographic Trends Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Utilities Fund, AIM V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and Income Fund, AIM V.I. High Yield Fund, AIM V.I. International Equity Fund, AIM V.I. Money Market Fund, AIM V.I. Telecommunications and Technology Fund, and AIM V.I. Value Fund, each a series of AIM Variable Insurance Funds. Such financial statements and financial highlights are included in the Post Effective Amendment No. 19 to the Registration Statement on Form N-1A of AIM Variable Insurance Funds. We also consent to the references to our Firm in such Registration Statement.
/s/ TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
APRIL 12, 2001
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