As filed with the Securities and Exchange Commission on April 29, 2003
1933 Act Registration No. 83-57340
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. ____ ---
Post-Effective Amendment No. 25 X
------ ---
|
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 24 X
------ ---
(Check appropriate box or boxes.)
|
Copy to:
Jim Coppedge, 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:
______ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
AIM VARIABLE INSURANCE FUNDS
May 1, 2003
Prospectus
SERIES I SHARES
AIM V.I. Aggressive Growth Fund AIM V.I. Global Utilities Fund AIM V.I. Balanced Fund AIM V.I. Government Securities Fund AIM V.I. Basic Value Fund AIM V.I. Growth Fund AIM V.I. Blue Chip Fund AIM V.I. High Yield Fund AIM V.I. Capital Appreciation Fund AIM V.I. International Growth Fund AIM V.I. Capital Development Fund AIM V.I. Mid Cap Core Equity Fund AIM V.I. Core Equity Fund AIM V.I. Money Market Fund AIM V.I. Dent Demographic Trends AIM V.I. New Technology Fund Fund AIM V.I. Premier Equity Fund AIM V.I. Diversified Income Fund |
Shares of the funds are currently offered only to insurance company separate accounts. The investment objective(s) of each fund are described under the heading "Investment Objectives and Strategies."
This prospectus contains important information about the Series I class shares ("Series I shares") of each fund. 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.
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
|
----------------------------
|
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUNDS 6 ------------------------------------------------------ PERFORMANCE INFORMATION 10 ------------------------------------------------------ Annual Total Returns 10 Performance Tables 20 FEE TABLE AND EXPENSE EXAMPLE 29 ------------------------------------------------------ Fees and Expenses of the Funds 29 Expense Example 30 FUND MANAGEMENT 31 ------------------------------------------------------ The Advisors 31 Advisor Compensation 31 Portfolio Managers 31 OTHER INFORMATION 35 ------------------------------------------------------ Purchase and Redemption of Shares 35 Pricing of Shares 35 Taxes 35 Dividends and Distributions 35 Share Classes 35 Future Fund Closure 35 FINANCIAL HIGHLIGHTS 36 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM Lifetime America, 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, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, AIM Investments, AIM Investments and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and Your goals. Our solutions. 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) and policies 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 these 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 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 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 the security no longer has that potential.
AIM V.I. BASIC VALUE FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 65% of its total assets in equity securities of U.S. issuers that have market capitalizations of greater than $500 million and that the portfolio managers believe to be undervalued in relation to long-term earning power or other factors.
The fund may also invest up to 35% of its total assets in equity securities of U.S. issuers that have market capitalizations of less than $500 million and in investment-grade non-convertible debt securities, U.S. government securities and high-quality money market instruments, all of which are issued by U.S. issuers. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers seek to identify those companies whose prospects and growth potential are undervalued by investors and that provide the potential for attractive returns. The portfolio managers allocate investments among fixed-income securities based on their views as to the best values then available in the marketplace. The portfolio managers consider whether to sell a particular security when any of these factors materially changes.
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, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of blue chip companies. In complying with this 80% investment requirement, the fund may invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers blue chip companies to be 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) with leading market positions and which possess the following characteristics:
- Market characteristics--Companies that 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 (i) superior growth prospects compared with other companies in the same industry; (ii) possession of proprietary technology with the potential to bring about major changes within an industry; and/or (iii) leading sales within an industry, or the potential to become a market leader.
- Financial characteristics--Companies that possess at least one of the
following attributes: (i) faster earnings growth than its competitors and the
market in general; (ii) higher profit margins relative to its competitors;
(iii) strong cash flow relative to its competitors; and/or (iv) a balance
sheet with relatively low debt and a high return on equity relative to its
competitors.
The portfolio managers consider whether to sell a particular security when they believe the issuer of the security is no longer a market leader, and/or it no longer has the characteristics described above. When the portfolio managers believe securities other than marketable equity securities offer the opportunity for long-term growth and current income, the fund may invest in United States government securities and high-quality debt securities. 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 these 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. CORE EQUITY FUND
The fund's investment objective is growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, including convertible 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. In complying with this 80% investment requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund may also invest up to 25% of its total assets in foreign securities. For risk management or cash management purposes, the fund may hold a portion of its assets in cash or cash equivalents, including shares of affiliated money market funds.
A larger position in cash or cash equivalents could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
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.
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. 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. Developing
countries are those countries that are in the initial stages of their industrial
cycles. 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 these 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 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of domestic and foreign public utility companies. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, and debt securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. 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 a significant amount of its assets in the securities of U.S. issuers. 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 non-diversified, which means it can invest a greater percentage of its assets in any one issuer than can a diversified fund. With respect to 50% of its total assets, a non-diversified fund 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 they believe the security no longer has that prospect.
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, normally, at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in
debt securities issued, guaranteed or otherwise backed by the U.S. Government.
In complying with this 80% investment requirement, the fund's investments may
include investments in synthetic instruments. Synthetic instruments are
investments that have economic characteristics similar to the fund's direct
investments, and may include futures and options. 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 3 and 10 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 30
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 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. 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 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. 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, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in non-investment grade debt securities, i.e., "junk bonds". In complying with this 80% investment requirement, the fund's investments may include investments in synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include futures and options. The fund considers a bond to be a junk bond if it is rated Ba or lower by Moody's Investors Service, Inc. or BB or lower by Standard & Poor's Ratings. The fund will invest principally in junk bonds rated B or above by Moody's Investors Services, Inc. or Standard & Poor's Ratings or deemed by the portfolio managers to be of comparable quality. 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 these factors materially changes.
AIM V.I. INTERNATIONAL GROWTH 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 focuses its investments in marketable equity
securities of foreign companies that are listed on a recognized foreign or U.S.
securities exchange or traded in a foreign or U.S. over-the-counter market. The
fund will normally invest in companies located in at least four countries
outside of the U.S., 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 these factors materially changes.
AIM V.I. MID CAP CORE EQUITY FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its assets in equity securities, including convertible securities, of mid-capitalization companies. In complying with this 80% investment requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a mid-capitalization company if it has a market capitalization, at the time of purchase, within the range of the largest and smallest capitalized companies included in the Russell Midcap--Trademark-- Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. The Russell Midcap--Trademark-- Index measures the performance of the 800 companies with the lowest market capitalization in the Russell 1000--Registered Trademark-- Index. The Russell 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks of the 1000 largest companies in the Russell 3000--Registered Trademark--Index, which measures the performance of the 3000 largest U.S. companies based on total market capitalization. The companies in the Russell Midcap--Trademark-- Index are considered representative of medium-sized companies.
The fund may invest up to 20% of its net assets in equity securities of companies in other market capitalization ranges or in investment-grade debt securities. The fund may also invest up to 25% of its total assets in foreign securities. For risk management or cash management purposes, the fund may also hold a portion of its assets in cash or cash equivalents, including shares of affiliated money market funds.
In selecting investments, the portfolio managers seek to identify those
companies that are, in their view, undervalued relative to current or projected
earnings, or the current market value of assets owned by the company. The
primary emphasis of the portfolio managers' search for undervalued equity
securities is in four categories: (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 which are not yet reflected in the value of the
companies' equity securities; and (4) companies whose equity securities are
selling at prices that do not yet reflect the current market value of their
assets. The portfolio managers consider whether to sell a particular security
when any of these factors materially changes. A larger position in cash or cash
equivalents could detract from achieving the fund's objective, but could also
reduce the fund's exposure in the event of a market downturn.
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
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of technology and science companies that the portfolio managers believe are likely to benefit from new or innovative products, services or processes. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. Technology and science 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. 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. PREMIER EQUITY 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, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, including convertible securities. In complying with this 80% investment requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. 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 or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, each fund may temporarily hold all or a portion of its assets in cash, cash equivalents or high-quality debt instruments. As a result, a fund may not achieve its investment objective(s). For cash management purposes, each fund may also hold a portion of its assets in cash or cash equivalents, including shares of affiliated money market funds.
A larger position in cash or cash equivalents could also detract from the achievement of the funds' objective(s), but could also reduce the funds' exposure in the event of a market downturn.
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. BASIC VALUE 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. 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. CORE EQUITY 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. 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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
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. 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 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.
AIM V.I. MID CAP CORE 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
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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
AIM V.I. PREMIER EQUITY 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.
To the extent a fund holds cash or cash equivalents rather than equity securities for risk management, the fund may not achieve its investment objective(s).
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.
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. All performance shown assumes the reinvestment of dividends and capital gains. 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.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 44.67%
2000................................................................... 2.60%
2001................................................................... -26.06%
2002................................................................... -22.66%
|
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 -24.54% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 19.31%
2000................................................................... -4.20%
2001................................................................... -11.42%
2002................................................................... -17.10%
|
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 -11.97% (quarter ended September 30, 2001).
The following bar chart shows the performance of the fund's Series I shares.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2002................................................................... -22.15%
|
During the period shown in the bar chart, the highest quarterly return was 7.69% (quarter ended December 31, 2002) and the lowest quarterly return was -20.06% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... -8.18%
2001................................................................... -22.54%
2002................................................................... -26.16%
|
During the periods shown in the bar chart, the highest quarterly return was 12.52% (quarter ended December 31, 2001) and the lowest quarterly return was -19.83% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... -23.28%
2002................................................................... -24.35%
|
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 -23.09% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 29.10%
2000................................................................... 9.25%
2001................................................................... -8.08%
2002................................................................... -21.36%
|
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 -21.21% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... -22.83%
2002................................................................... -15.58%
|
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 -21.54% (quarter ended September 30, 2001). Effective September 30, 2002 the AIM V.I. Core Equity Fund changed its investment objective. Performance shown for the fund reflects the investment objective of the fund in effect during the periods shown.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... -17.90%
2001................................................................... -31.91%
2002................................................................... -32.20%
|
During the periods shown in the bar chart, the highest quarterly return was 23.67% (quarter ended December 31, 2001) and the lowest quarterly return was -31.55% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... 3.59%
2002................................................................... 2.30%
|
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).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... -27.93%
2002................................................................... -25.53%
|
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 -20.19% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... 6.41%
2002................................................................... 9.59%
|
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).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... -33.88%
2002................................................................... -30.97%
|
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 -27.44% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 10.52%
2000................................................................... -19.01%
2001................................................................... -5.00%
2002................................................................... -5.84%
|
During the periods shown in the bar chart, the highest quarterly return was 7.13% (quarter ended December 31, 2001) and the lowest quarterly return was -14.05% (quarter ended December 31, 2000).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... -23.53%
2002................................................................... -15.67%
|
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 -19.80% (quarter ended September 30, 2002).
The following bar chart shows the performance of the fund's Series I shares.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2002................................................................... -11.10%
|
During the period shown in the bar chart, the highest quarterly return was 5.89% (quarter ended December 31, 2002) and the lowest quarterly return was -14.37% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... 3.61%
2002................................................................... 1.19%
|
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 0.25% (quarter ended December 31, 2002).
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... -47.47%
2002................................................................... -45.13%
|
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 -50.03% (quarter ended March 31, 2001). 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. Also, for the periods prior to May 1, 2001, the performance shown above relates to the fund before changing its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
The following bar chart shows changes in the performance of the fund's Series I shares from year to year.
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%
2001................................................................... -12.56%
2002................................................................... -30.26%
|
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 -18.40% (quarter ended June 30, 2002).
The following performance tables compare the funds' Series I share's performance to those of unmanaged broad-based securities market indices, style-specific indices and peer-group indices. The AIM V.I. Money Market Fund's Series I share's performance table reflects the fund's performance over the periods indicated.
AIM V.I. AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Aggressive Growth Fund (22.66)% (3.65)% 05/01/98 Standard & Poor's 500 Index(1) (22.09)% (3.57)%(2) 04/30/98(2) Russell 2500--Trademark-- Index(3) (17.80)% (0.50)%(2) 04/30/98(2) Russell 2500--Trademark-- Growth Index(4) (29.09)% (5.76)%(2) 04/30/98(2) Lipper Mid-Cap Growth Fund Index(5) (28.47)% (4.04)%(2) 04/30/98(2) -------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 2500--Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund has also included the Russell 2500 Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Mid-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 2500--Trademark-- 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.
(4) The Russell 2500--Trademark-- Growth Index measures the performance of those Russell 2500 Index companies with higher price-to-book ratios and higher forecasted growth values.
(5) The Lipper Mid-Cap Growth Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Mid-Cap Growth category. These funds typically invest in stocks with market capitalizations between $1 and $5 billion at the time of purchase and have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P MidCap 400 Index.
AIM V.I. BALANCED FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Balanced Fund (17.10)% (1.12)% 05/01/98 Standard & Poor's 500 Index(1) (22.09)% (3.57)%(2) 04/30/98(2) Custom Balanced Index(3) (9.47)% 1.30%(2) 04/30/98(2) Lipper Balanced Fund Index(4) (10.69)% 0.45%(2) 04/30/98(2) -------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the "Custom Balanced" 60% Russell 3000/40% Lehman Brothers U.S. Aggregate Bond Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Balanced Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the inception date closest to the inception date of the fund's Series I shares.
(3) The Custom Balanced Index is an index created by A I M Advisors, Inc. to benchmark the fund. This index consists of 60% Russell 3000--Registered Trademark-- Index and 40% Lehman Brothers U.S. Aggregate Bond Index. The Russell 3000--Registered Trademark-- Index is a widely recognized index of common stocks that measures the performance of the 3,000 largest U.S. companies based on total market capitalization. The Lehman Brothers U.S. Aggregate Bond Index is an index generally considered representative of treasury issues, agency issues, corporate bond issues and mortgage-backed securities.
(4) The Lipper Balanced Fund Index is an equally weighted representation of the 30 largest funds in the Lipper balanced category. These funds invest to conserve principal by maintaining at all times a balanced portfolio of stocks and bonds. Typically the stock/bond ratio is approximately 60/40.
AIM V.I. BASIC VALUE FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Basic Value Fund (22.15)% (15.78)% 09/10/01 Standard & Poor's 500 Index(1) (22.09)% (15.99)%(2) 08/31/01(2) Russell 1000--Registered Trademark-- Index(3) (21.65)% (15.67)%(2) 08/31/01(2) Russell 1000--Registered Trademark-- Value Index(4) (15.52)% (12.01)%(2) 08/31/01(2) Lipper Large-Cap Value Fund Index(5) (19.68)% (15.00)%(2) 08/31/01(2) -------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 1000--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark-- Value Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Large-Cap Value Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 1000--Registered Trademark-- Index is a widely recognized 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.
(4) The Russell 1000--Registered Trademark-- Value Index measures the performance of those Russell 1000--Registered Trademark-- Index companies with lower price-to-book ratios and lower forecasted growth values.
(5) The Lipper Large-Cap Value Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Value category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have a below-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. BLUE CHIP FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Blue Chip Fund (26.16)% (19.29)% 12/29/99 Standard & Poor's 500 Index(1) (22.09)% (14.54)%(2) 12/31/99(2) Russell 1000--Registered Trademark-- Index(3) (21.65)% (14.16)%(2) 12/31/99(2) Lipper Large-Cap Core Fund Index(4) (21.23)% (14.00)%(2) 12/31/99(2) -------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 1000--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. In addition, the Lipper Large-Cap Core Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 1000--Registered Trademark-- Index is a widely recognized 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.
(4) The Lipper Large-Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Core category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. CAPITAL APPRECIATION FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund (24.35)% (2.26)% 7.32% 05/05/93 Standard & Poor's 500 Index(1) (22.09)% (0.58)% 9.47%(2) 04/30/93(2) Russell 1000--Registered Trademark-- Growth Index(3) (27.88)% (3.84)% 7.49%(2) 04/30/93(2) Lipper Multi-Cap Growth Fund Index(4) (29.82)% (3.34)% 6.51%(2) 04/30/93(2) ------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark--Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Multi-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 1000--Registered Trademark-- Growth Index measures the performance of those securities in the Russell 1000--Registered Trademark-- Index with a greater than average growth orientation. The Russell 1000--Registered Trademark-- Index 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.
(4) The Lipper Multi-Cap Growth Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Multi-Cap Growth category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index.
AIM V.I. CAPITAL DEVELOPMENT FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Capital Development Fund (21.36)% (1.25)% 05/01/98 Standard & Poor's 500 Index(1) (22.09)% (3.57)%(2) 04/30/98(2) Russell 2500--Trademark-- Index(3) (17.80)% (0.50)%(2) 04/30/98(2) Lipper Mid-Cap Core Fund Index(4) (17.37)% 0.43%(2) 04/30/98(2) ------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 2500--Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund will continue to include the Russell 2500 Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Mid-Cap Core Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 2500--Trademark-- 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.
(4) The Lipper Mid-Cap Core Index is an equally weighted representation of the 30 largest funds in the Lipper Mid-Cap Core category. These funds typically invest in stocks with market capitalizations between $1 and $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P MidCap 400 Index.
AIM V.I. CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Core Equity Fund (15.58)% (0.94)% 7.86% 05/02/94 Standard & Poor's 500 Index(1) (22.09)% (0.58)% 9.96%(2) 04/30/94(2) Russell 1000--Registered Trademark-- Index(3) (21.65)% (0.58)% 9.80%(2) 04/30/94(2) Lipper Large-Cap Core Fund Index(4) (21.23)% (0.74)% 8.29%(2) 04/30/94(2) -------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark--Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Large-Cap Core Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 1000--Registered Trademark-- Index is a widely recognized 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.
(4) The Lipper Large-Cap Core Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Core category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Dent Demographic Trends Fund (32.20)% (27.59)% 12/29/99 Standard & Poor's 500 Index(1) (22.09)% (14.54)%(2) 12/31/99(2) Russell 3000--Registered Trademark-- Index(3) (21.54)% (13.69)%(2) 12/31/99(2) Russell 3000--Registered Trademark-- Growth Index(4) (28.03)% (23.44)%(2) 12/31/99(2) Lipper Multi-Cap Growth Fund Index(5) (29.82)% (22.70)%(2) 12/31/99(2) -------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 3000--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund has also included the Russell 3000--Registered Trademark-- Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Multi-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 3000--Registered Trademark-- Index is a widely recognized index of common stocks that measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(4) The Russell 3000--Registered Trademark-- Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are members of either the Russell 1000--Registered Trademark-- Growth or Russell 2000--Registered Trademark-- Growth indices.
(5) The Lipper Multi-Cap Growth Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Multi-Cap Growth category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index.
AIM V.I. DIVERSIFIED INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS -------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE -------------------------------------------------------------------------------- AIM V.I. Diversified Income Fund 2.30% 1.63% 4.75% 05/05/93 Lehman Brothers U.S. Aggregate Bond Index(1) 10.25% 7.55% 7.26%(2) 04/30/93(2) Lipper BBB Rated Fund Index 7.20% 5.42% 6.43%(2) 04/30/93(2) -------------------------------------------------------------------------------- |
(1) The Lehman Brothers U.S. 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's Series I shares.
(3) The Lipper BBB Rated Index is an equally weighted representation of the 30 largest funds in the Lipper BBB rated funds category. The funds invest at least 65% of assets in corporate and government debt issues rated in the top four grades.
AIM V.I. GLOBAL UTILITIES FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Global Utilities Fund (25.53)% (3.99)% 3.69% 05/02/94 Standard & Poor's 500 Index(1) (22.09)% (0.58)% 9.96%(2) 04/30/94(2) Lipper Utility Fund Index(3) (22.70)% (2.19)% 4.79%(2) 04/30/94(2) ------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. In addition, the Lipper Utility Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Lipper Utility Fund Index measures the performance of the 30 largest utility funds charted by Lipper Inc., an independent mutual funds performance monitor.
AIM V.I. GOVERNMENT SECURITIES FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Government Securities Fund 9.59% 6.43% 5.90% 05/05/93 Lehman Brothers Intermediate U.S. Government Bond Index(1) 9.64% 7.44% 6.67%(2) 04/30/93(2) Lehman Brothers U.S. Aggregate Bond Index(3) 10.25% 7.55% 7.26%(2) 04/30/93(2) Lehman Brothers Intermediate U.S. Government and Mortgage Index(4) 9.11% 7.39% N/A 04/30/93(2) Lipper Intermediate U.S. Government Fund Index(5) 10.00% 7.01% 6.35%(2) 04/30/93(2) ------------------------------------------------------------------------------- |
(1) The Lehman Brothers Intermediate U.S. Government Bond Index is a 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. The fund has also included the Lehman Brothers Intermediate U.S. Government and Mortgage Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Intermediate U.S. Government Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Lehman Brothers U.S. Aggregate Bond Index is an index generally considered representative of treasury issues, agency issues, corporate issues and mortgage-backed securities.
(4) The Lehman Brothers Intermediate U.S. Government and Mortgage Index is a market weighted combination of the Lehman Brothers Intermediate U.S. Government Index and the Lehman Brothers Mortgage Index. The index contains securities with maturities ranging from one to ten years.
(5) The Lipper Intermediate U.S. Government Fund Index measures the performance of the largest government securities funds. It is compiled by Lipper Analytical Services, Inc., an independent mutual funds performance monitor. Results shown reflect reinvestment of dividends.
AIM V.I. GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Growth Fund (30.97)% (8.02)% 3.80% 05/05/93 Standard & Poor's 500 Index(1) (22.09)% (0.58)% 9.47%(2) 04/30/93(2) Russell 1000--Registered Trademark-- Growth Index(3) (27.88)% (3.84)% 7.49%(2) 04/30/93(2) Lipper Large-Cap Growth Fund Index(4) (28.11)% (4.16)% 6.68%(2) 04/30/93(2) ------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark--Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Large-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 1000--Registered Trademark-- Growth Index measures the performance of those securities in the Russell 1000--Registered Trademark-- Index with a greater than average growth orientation. The Russell 1000--Registered Trademark-- Index 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.
(4) The Lipper Large-Cap Growth Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Growth category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. HIGH YIELD FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. High Yield Fund (5.84)% (6.25)% 05/01/98 Lehman Brothers Aggregate Bond Index(1) 10.25% 7.63%(2) 04/30/98(2) Lehman Brothers High Yield Index(3) (1.41)% (0.38)%(2) 04/30/98(2) Lipper High Yield Bond Fund Index(4) (2.41)% (2.90)%(2) 04/30/98(2) ------------------------------------------------------------------------------- |
(1) The Lehman Brothers U.S. Aggregate Bond Index is an index which represents the U.S. investment-grade fixed-rate bond market (including government and corporate securities and asset-backed securities). The fund has elected to use the Lehman Brothers U.S. Aggregate Bond Index as its broad-based index rather than the Lehman Brothers High Yield Index since the Lehman Brothers U.S. Aggregate Bond Index is such a widely recognized gauge of U.S. stock market performance. The fund will continue to include the Lehman Brothers High Yield Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper High Yield Bond Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Lehman Brothers 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 million, and at least one year to maturity.
(4) The Lipper High Yield Bond Fund Index is an equally weighted representation of the 30 largest funds within the Lipper High Yield Funds category. The funds have no credit rating restriction, but tend to invest in fixed-income securities with lower credit ratings.
AIM V.I. INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------- AIM V.I. International Growth Fund (15.67)% (3.20)% 4.26% 05/05/93 Morgan Stanley Capital International- -Registered Trademark-- EAFE Index(1) (15.94)% (2.89)% 1.97%(2) 04/30/93(2) Morgan Stanley Capital International- -Registered Trademark-- EAFE Growth Index(3) (16.02)% (5.43)% (0.14)%(2) 04/30/93(2) Lipper International Fund Index(4) (13.83)% (1.64)% 4.31%(2) 04/30/93(2) ----------------------------------------------------------------------------- |
(1) The Morgan Stanley Capital International--Registered Trademark-- Europe, Australasia and Far East Index measures performance of global stock markets in 20 developed countries. The fund has also included the Morgan Stanley Capital International--Registered Trademark-- EAFE Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper International Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Morgan Stanley Capital International--Registered Trademark-- EAFE Growth Index is recognized as the pre-eminent benchmark in the U.S. to measure international "growth" equity performance (high P/BV securities). It includes securities from 21 countries, representing the developed markets outside North America, Europe, Australasia, and the Far East.
(4) The Lipper International Fund Index is an equally weighted representation of the 30 largest funds in the Lipper International category. These funds invest in securities with primary trading outside of the U.S. and may own U.S. securities as well.
AIM V.I. MID CAP CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Mid Cap Core Equity Fund (11.10)% (3.50)% 09/10/01 Standard & Poor's 500 Index(1) (22.09)% (15.99)%(2) 08/31/01(2) Russell Midcap--Registered Trademark-- Index(3) (16.19)% (10.40)%(2) 08/31/01(2) Lipper Mid-Cap Core Fund Index(4) (17.37)% (11.43)%(2) 08/31/01(2) ------------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to the use the S&P 500 Index as its broad-based index rather than the Russell Midcap--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund will continue to include the Russell Midcap--Registered Trademark-- Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Mid-Cap Core Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell Midcap--Registered Trademark-- Index represents the performance of the stocks of domestic mid-capitalization companies.
(4) The Lipper Mid-Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Mid-Cap Core category. These funds typically invest in stocks with market capitalizations between $1 and $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P MidCap 400 Index.
AIM V.I. MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ------------------------------------------------------------------------------- AIM V.I. Money Market Fund 1.19% 4.06% 4.26% 05/05/93 ------------------------------------------------------------------------------- |
The AIM V.I. Money Market Fund's seven day yield on December 31, 2002 was 0.82%. For the current seven day yield, call (800) 347-4246.
AIM V.I. NEW TECHNOLOGY FUND
AVERAGE ANNUAL TOTAL RETURNS ---------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ---------------------------------------------------------------------------- AIM V.I. New Technology Fund(1) (45.13)% (14.27)% (0.98)% 10/18/93 Standard & Poor's 500 Index(2) (22.09)% (0.58)% 9.11%(3) 10/31/93(3) PSE Technology Index(4) (33.33)% 9.54% 17.05%(3) 10/31/93(3) Lipper Science & Technology Fund Index(5) (41.38)% (3.46)% 5.32%(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. Also, for the periods prior to May 1, 2001, the performance shown above relates to the fund before changing 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 index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the PSE Technology Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Science & Technology Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The PSE Technology Index is a price-weighted index of the top 100 technology stocks listed on the Pacific Stock Exchange.
(5) The Lipper Science & Technology Fund Index is an equally weighted representation of the 30 largest funds that make up the Lipper Science & Technology category. These funds invest more than 65% of their portfolios in science and technology stocks.
AIM V.I. PREMIER EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS ----------------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE ----------------------------------------------------------------------------- AIM V.I. Premier Equity Fund (30.26)% (2.19)% 7.84% 05/05/93 Standard & Poor's 500 Index(1) (22.09)% (0.58)% 9.47%(2) 04/30/93(2) Lipper Large-Cap Core Fund Index(3) (21.23)% (0.74)% 8.07%(2) 04/30/93(2) ----------------------------------------------------------------------------- |
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. In addition, the Lipper Large-Cap Core Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Lipper Large-Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Core category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
FEE TABLE AND EXPENSE EXAMPLE
FEES AND EXPENSES OF THE FUNDS
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable contract owner buys, holds, or redeems interest in a separate account that invests in the Series I shares of the funds but does not represent the effect of any fees or other expenses of any variable annuity or variable life insurance product.
SHAREHOLDER FEES ------------------------------------------------------------------------------------ (fees paid directly from SERIES I your investment) SHARES ------------------------------------------------------------------------------------ Maximum Sales Charge (Load) None Maximum Deferred Sales Charge (Load) None ------------------------------------------------------------------------------------ |
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES)(1)
----------------------------------------------------------------------------------------------------
TOTAL
ANNUAL
FUND FEE WAIVER AND
(expenses that are deducted MANAGEMENT OTHER OPERATING EXPENSE NET
from Series I share assets) FEES EXPENSES EXPENSES REIMBURSEMENTS EXPENSES
----------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund 0.80% 0.36% 1.16% 0.00% 1.16%
AIM V.I. Balanced Fund 0.75 0.42 1.17 0.00 1.17
AIM V.I. Basic Value Fund 0.73 0.43 1.16 0.00 1.16
AIM V.I. Blue Chip Fund 0.75 0.43 1.18 0.00 1.18(2)
AIM V.I. Capital Appreciation Fund 0.61 0.24 0.85 0.00 0.85
AIM V.I. Capital Development Fund 0.75 0.39 1.14 0.00 1.14
AIM V.I. Core Equity Fund 0.61 0.17 0.78 0.00 0.78
AIM V.I. Dent Demographic Trends Fund 0.85 0.58 1.43 0.13 1.30(2)
AIM V.I. Diversified Income Fund 0.60 0.34 0.94 0.00 0.94
AIM V.I. Global Utilities Fund 0.65 0.57 1.22 0.00 1.22(3)
AIM V.I. Government Securities Fund 0.50 0.31 0.81 0.00 0.81
AIM V.I. Growth Fund 0.63 0.28 0.91 0.00 0.91
AIM V.I. High Yield Fund 0.62 0.68 1.30 0.00 1.30(2)
AIM V.I. International Growth Fund 0.74 0.35 1.09 0.00 1.09
AIM V.I. Mid Cap Core Equity Fund 0.73 0.57 1.30 0.00 1.30(2)
AIM V.I. Money Market Fund 0.40 0.27 0.67 0.00 0.67
AIM V.I. New Technology Fund 1.00 0.71 1.71 0.41 1.30(2)
AIM V.I. Premier Equity Fund 0.61 0.24 0.85 0.00 0.85
----------------------------------------------------------------------------------------------------
|
(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2002 and are expressed as a percentage of fund average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) The fund's advisor has contractually agreed to waive advisory fees or reimburse expenses of Series I shares to the extent necessary to limit total annual fund operating expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) to 1.30%.
(3) The fund's advisor has voluntarily agreed to waive advisory fees or reimburse expenses of Series I shares to the extent necessary to limit total annual fund operating expenses (excluding interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) to 1.30%. This agreement may be terminated at any time.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the Series I shares of the funds with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in a fund's Series I shares for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. The examples do not assume that any fund expense waiver or reimbursement arrangements are in effect for the periods indicated. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
SERIES I SHARES
----------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund $118 $368 $638 $1,409
AIM V.I. Balanced Fund 119 372 644 1,420
AIM V.I. Basic Value Fund 118 368 638 1,409
AIM V.I. Blue Chip Fund 120 375 649 1,432
AIM V.I. Capital Appreciation Fund 87 271 471 1,049
AIM V.I. Capital Development Fund 116 362 628 1,386
AIM V.I. Core Equity Fund 80 249 433 966
AIM V.I. Dent Demographic Trends Fund 146 452 782 1,713
AIM V.I. Diversified Income Fund 96 300 520 1,155
AIM V.I. Global Utilities Fund 124 387 670 1,477
AIM V.I. Government Securities Fund 83 259 450 1,002
AIM V.I. Growth Fund 93 290 504 1,120
AIM V.I. High Yield Fund 132 412 713 1,568
AIM V.I. International Growth Fund 111 347 601 1,329
AIM V.I. Mid Cap Core Equity Fund 132 412 713 1,568
AIM V.I. Money Market Fund 68 214 373 835
AIM V.I. New Technology Fund 174 539 928 2,019
AIM V.I. Premier Equity Fund 87 271 471 1,049
----------------------------------------------------------------------------
|
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.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 190 investment portfolios, including the funds, encompassing a broad range of investment objectives.
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 for AIM V.I. Dent Demographic Trends Fund since 1999.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2002, 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 0.80%
AIM V.I. Balanced Fund 0.75%
AIM V.I. Basic Value Fund 0.73%
AIM V.I. Blue Chip Fund 0.75%
AIM V.I. Capital Appreciation Fund 0.61%
AIM V.I. Capital Development Fund 0.75%
AIM V.I. Core Equity Fund 0.61%
AIM V.I. Dent Demographic Trends Fund 0.72%
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 0.63%
AIM V.I. High Yield Fund 0.62%
AIM V.I. International Growth Fund 0.74%
AIM V.I. Mid Cap Core Equity Fund 0.73%
AIM V.I. Money Market Fund 0.40%
AIM V.I. New Technology Fund 0.59%
AIM V.I. Premier Equity 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 each fund's portfolio are as follows:
AIM V.I. AGGRESSIVE GROWTH FUND
- Robert M. Kippes (lead manager), 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.
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1998. From 1992 to 1998, he worked as a pension actuary for William M. Mercer, Inc.
- 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 for Prudential Securities.
They are assisted by the Mid Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. BALANCED FUND
(Co-Managed)
- 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.
- Scot W. Johnson, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
- 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.
They are assisted by the Balanced Team and Investment Grade Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. BASIC VALUE FUND
- Bret W. Stanley (lead manager), Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and portfolio manager for Van Kampen American Capital Asset Management, Inc.
- R. Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was a full-time student. From 1993 to 1997, he worked as a CPA for Deloitte & Touche.
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1995 to 1998, he was Portfolio Manager for American Indemnity Company.
- Michael J. Simon, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager for Luther King Capital Management.
They are assisted by the Basic Value Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. BLUE CHIP FUND
(Co-Managed)
- 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.
- Kirk L. Anderson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. CAPITAL APPRECIATION FUND
- Kenneth A. Zschappel (lead manager), 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.
- Christian A. Costanzo, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1995.
- Robert J. Lloyd, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he was a trader with American Electric Power.
They are assisted by the Multi Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. CAPITAL DEVELOPMENT FUND
- Paul J. Rasplicka (lead manager), 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.
- Michael Chapman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1999 to 2001, he was an equity analyst with Chase Manhattan Bank. During part of 1999, he was a securities analyst with Gulf Investment Management. From 1995 to 1999, he was a portfolio manager with US Global Investors, Inc.
- James C. Gassman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1998 to 2000, he was an equity analyst with Southwest Securities, Inc.
They are assisted by the Small/Mid Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. CORE EQUITY FUND
- Ronald S. Sloan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- David W. Pointer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was a full-time student.
They are assisted by the Mid/Large Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
- Lanny H. Sachnowitz (lead manager), 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.
- Kirk L. Anderson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
- James G. Birdsall, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. DIVERSIFIED INCOME FUND
(Co-Managed)
- 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.
- 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.
- Scot W. Johnson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
They are assisted by the Investment Grade Team and High Yield Taxable Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. GLOBAL UTILITIES FUND
(Co-Managed)
- 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.
- 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.
They are assisted by the Balanced Team and Investment Grade Team. More Information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. GOVERNMENT SECURITIES FUND
- Scot W. Johnson (lead manager), 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.
- Clint W. 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.
More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. GROWTH FUND
- Lanny H. Sachnowitz (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
- James G. Birdsall, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
- 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.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. HIGH YIELD FUND
(Co-Managed)
- 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.
- 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.
They are assisted by the High Yield Taxable Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. INTERNATIONAL GROWTH FUND
- Clas G. Olsson (lead manager), 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 (lead manager), Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990.
- Shuxin Cao, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
- 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.
They are assisted by the Asian Pacific Team and Europe/Canada Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. MID CAP CORE EQUITY FUND
- Ronald S. Sloan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- David W. Pointer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was a full-time student.
They are assisted by the Mid/Large Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. NEW TECHNOLOGY FUND
- Abel Garcia (lead manager), 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.
- Warren Tennant, Analyst, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1998 to 2000 he attended graduate school at the University of Texas where he earned his M.B.A. From 1993 to 1998, he worked as a lead auditor for Exxon.
More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. PREMIER EQUITY FUND
- Robert A. Shelton (lead manager), 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.
- Abel Garcia, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 2000. From 1984 to 2000, he was Senior Portfolio Manager for Waddell & Reed.
- Meggan M. Walsh, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1991.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
- Kellie K. Veazey, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1995.
They are assisted by the Premier Equity Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
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 offer 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. For example, violation of the federal tax laws by one separate account investing in a fund could cause owners of contracts and policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. 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, or any earlier NYSE closing time that day.
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 monthly. 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 will 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.
SHARE CLASSES
Each fund has two classes of shares, Series I shares and Series II shares. Each class is identical except that Series II shares has a distribution or "Rule 12b-1 Plan" that is described in the prospectus relating to the Series II shares.
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 the financial performance of each fund's Series I shares. 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.
MAY 1, 1998
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
-------- -------- -------- ------- ----------------
Net asset value, beginning of period $ 10.81 $ 14.62 $ 14.25 $ 9.85 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.10)(a) (0.10)(a) (0.04)(a) 0.04
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (2.37) (3.71) 0.47 4.44 (0.14)
=================================================================================================================================
Total from investment operations (2.45) (3.81) 0.37 4.40 (0.10)
=================================================================================================================================
Less distributions from net investment income -- -- -- -- (0.05)
=================================================================================================================================
Net asset value, end of period $ 8.36 $ 10.81 $ 14.62 $ 14.25 $ 9.85
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (22.66)% (26.06)% 2.60% 44.67% (0.94)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $103,611 $121,889 $103,181 $17,326 $4,399
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.16%(c) 1.21% 1.16% 1.19% 1.16%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.16%(c) 1.21% 1.26% 2.42% 4.62%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.87)%(c) (0.88)% (0.59)% (0.41)% 0.96%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 85% 90% 65% 89% 30%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $117,050,654.
(d) Annualized.
MAY 1, 1998
(DATE
OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
------- -------- ------- ------- -------------
Net asset value, beginning of period $ 10.84 $ 12.46 $ 13.04 $ 11.14 $ 10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18(a) 0.27(a)(b) 0.37(a) 0.31(a) 0.12
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.02) (1.70) (0.93) 1.83 1.18
=================================================================================================================================
Total from investment operations (1.84) (1.43) (0.56) 2.14 1.30
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.25) (0.19) (0.02) (0.17) (0.14)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.07) (0.02)
=================================================================================================================================
Total distributions (0.25) (0.19) (0.02) (0.24) (0.16)
=================================================================================================================================
Net asset value, end of period $ 8.75 $ 10.84 $ 12.46 $ 13.04 $ 11.14
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (17.02)% (11.43)% (4.28)% 19.31% 13.02%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $82,866 $105,395 $85,693 $48,307 $10,343
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.17%(d) 1.12% 1.10% 1.21% 1.18%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.17%(d) 1.12% 1.10% 1.31% 2.83%(e)
=================================================================================================================================
Ratio of net investment income to average net assets 1.90%(d) 2.37%(b) 2.80% 2.66% 3.71%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 90% 55% 49% 57% 9%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premiums on debt securities. Had the Fund not amortized premiums on debt securities, the net investment income per share would have been $0.29 and the ratio of net investment income to average net assets would have been 2.52%. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(d) Ratios are based on average daily net assets of $94,009,578.
(e) Annualized.
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $ 10.25 $ 10.00
-------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a) 0.01
-------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.29) 0.25
===============================================================================
Total from investment operations (2.27) 0.26
===============================================================================
Less distributions from net investment
income (0.00) (0.01)
===============================================================================
Net asset value, end of period $ 7.98 $ 10.25
_______________________________________________________________________________
===============================================================================
Total return(b) (22.15)% 2.63%
_______________________________________________________________________________
===============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 97,916 $19,638
_______________________________________________________________________________
===============================================================================
Ratio of expenses to average net assets:
With fee waivers and expense
reimbursements 1.16%(c) 1.27%(d)
-------------------------------------------------------------------------------
Without fee waivers and expense
reimbursements 1.16%(c) 2.61%(d)
===============================================================================
Ratio of net investment income to average
net assets 0.18%(c) 0.28%(d)
_______________________________________________________________________________
===============================================================================
Portfolio turnover rate 22% 4%
_______________________________________________________________________________
===============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $59,788,335.
(d) Annualized.
DECEMBER 29, 1999
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
-------------------------------- DECEMBER 31,
2002 2001 2000 1999
------- ------- ------- -----------------
Net asset value, beginning of period $ 7.11 $ 9.18 $ 10.00 $10.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.00(a) (0.01) 0.02(a) 0.00
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86) (2.06) (0.84) 0.00
===================================================================================================================
Total from investment operations (1.86) (2.07) (0.82) 0.00
===================================================================================================================
Net asset value, end of period $ 5.25 $ 7.11 $ 9.18 $10.00
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) (26.16)% (22.54)% (8.18)% 0.00
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $65,490 $60,129 $29,787 $1,000
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.18%(c) 1.26% 1.31% 1.30%(d)
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.18%(c) 1.26% 2.13% 12.49%(d)
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.03)%(c) (0.17)% 0.07% 3.07%(d)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 38% 19% 15% --
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total return for the period shown.
(c) Ratios are based on average daily net assets of $64,837,979.
(d) Annualized.
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
2002 2001 2000 1999 1998
-------- ---------- ---------- ---------- --------
Net asset value, beginning of period $ 21.72 $ 30.84 $ 35.58 $ 25.20 $ 21.75
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.05)(a) (0.05) (0.02) 0.02
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.24) (7.17) (3.79) 11.17 4.12
===============================================================================================================================
Total from investment operations (5.29) (7.22) (3.84) 11.15 4.14
===============================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.02) (0.04)
-------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.90) (0.90) (0.75) (0.65)
===============================================================================================================================
Total distributions -- (1.90) (0.90) (0.77) (0.69)
===============================================================================================================================
Net asset value, end of period $ 16.43 $ 21.72 $ 30.84 $ 35.58 $ 25.20
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) (24.35)% (23.28)% (10.91)% 44.61% 19.30%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $763,038 $1,160,236 $1,534,209 $1,131,217 $647,248
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 0.85%(c) 0.85% 0.82% 0.73% 0.67%
===============================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.27)%(c) (0.22)% (0.17)% (0.06)% 0.11%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 67% 65% 98% 65% 83%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $948,502,072.
MAY 1, 1998
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
------- ------- ------- ------- -----------------
Net asset value, beginning of period $ 11.94 $ 12.99 $ 11.89 $ 9.21 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.02) (0.01)(a) (0.03)(a) 0.03(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.54) (1.03) 1.11 2.71 (0.78)
=================================================================================================================================
Total from investment operations (2.55) (1.05) 1.10 2.68 (0.75)
=================================================================================================================================
Less distributions from net investment income -- -- -- -- (0.04)
=================================================================================================================================
Net asset value, end of period $ 9.39 $ 11.94 $ 12.99 $ 11.89 $ 9.21
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (21.36)% (8.08)% 9.25% 29.10% (7.51)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,018 $92,732 $74,874 $11,035 $3,172
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.14%(c) 1.16% 1.19% 1.23% 1.21%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.14%(c) 1.16% 1.38% 3.42% 5.80%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.08)%(c) (0.16)% (0.07)% (0.32)% 0.62%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 121% 125% 110% 132% 45%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $85,219,471.
(d) Annualized.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 20.20 $ 26.19 $ 31.59 $ 23.75 $ 18.87
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.12(a) 0.03(b) 0.01(a) 0.06(a) 0.26(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (3.27) (6.01) (4.56) 8.05 4.95
=================================================================================================================================
Total from investment operations (3.15) (5.98) (4.55) 8.11 5.21
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.06) (0.01) (0.04) (0.16) (0.09)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.81) (0.11) (0.24)
=================================================================================================================================
Total distributions (0.06) (0.01) (0.85) (0.27) (0.33)
=================================================================================================================================
Net asset value, end of period $ 16.99 $ 20.20 $ 26.19 $ 31.59 $ 23.75
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (15.58)% (22.83)% (14.56)% 34.25% 27.68%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,385,050 $1,916,875 $2,514,262 $2,443,264 $1,262,059
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 0.78%(d) 0.82% 0.84% 0.77% 0.65%
=================================================================================================================================
Ratio of net investment income to average net
assets 0.67%(d) 0.12% 0.04% 0.22% 1.34%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 113% 73% 75% 93% 140%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premiums on debt securities. Had the Fund not amortized premiums on debt securities, the net investment income per share would have been remained unchanged and the ratio of net investment income to average net assets would have been 0.13%. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(d) Ratios are based on average daily net assets of $1,642,287,403.
DECEMBER 29, 1999
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED)
------------------------------------- TO DECEMBER 31,
2002 2001 2000 1999
------------ ------- ------- ----------------------
Net asset value, beginning of period $ 5.59 $ 8.21 $ 10.00 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.05)(a) (0.07)(a) 0.00
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.77) (2.57) (1.72) 0.00
=================================================================================================================================
Total from investment operations (1.80) (2.62) (1.79) 0.00
=================================================================================================================================
Net asset value, end of period $ 3.79 $ 5.59 $ 8.21 $10.00
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (32.20)% (31.91)% (17.90)% 0.00%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,747 $39,226 $41,300 $1,000
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(c) 1.38% 1.40% 1.40%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.43%(c) 1.44% 1.63% 12.58%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.67)%(c) (0.79)% (0.69)% 2.96%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 208% 144% 92% --
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $32,315,602.
(d) Annualized.
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
2002 2001 2000 1999 1998
------- ------- -------- ------- -------
Net asset value, beginning of period $ 9.13 $ 9.49 $ 10.06 $ 10.94 $ 11.29
---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.55(a) 0.67(a)(b) 0.76(a) 0.64 0.75
---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.35) (0.35) (0.69) (0.85) (0.35)
===========================================================================================================================
Total from investment operations 0.20 0.32 0.07 (0.21) 0.40
===========================================================================================================================
Less distributions:
Dividends from net investment income (0.73) (0.68) (0.64) (0.67) (0.57)
---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- (0.18)
===========================================================================================================================
Total distributions (0.73) (0.68) (0.64) (0.67) (0.75)
===========================================================================================================================
Net asset value, end of period $ 8.60 $ 9.13 $ 9.49 $ 10.06 $ 10.94
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(c) 2.30% 3.48% 0.80% (1.92)% 3.58%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,642 $79,875 $83,722 $99,509 $96,445
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 0.94%(d) 0.93% 0.90% 0.83% 0.77%
===========================================================================================================================
Ratio of net investment income to average net assets 6.15%(d) 6.87%(b) 7.84% 7.20% 6.99%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate 86% 79% 74% 83% 50%
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investments Companies and began amortizing premiums on debt securities. Had the fund not amortized premiums on debt securities, the net investment income per share would have been $0.70 and the ratio of net investment income to average net assets would have been 7.19%. In accordance with the AICPA Audit Guide for Investment Companies, per share and ratios prior to January 1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(d) Ratios are based on average daily net assets of $74,380,010.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2002 2001 2000 1999 1998
------- ------- ------- ------- -------
Net asset value, beginning of period $ 13.55 $ 21.16 $ 22.80 $ 17.36 $ 15.26
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.31(a) 0.29(a)(b) 0.29(a) 0.32(a) 0.35
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.78) (6.25) (0.80) 5.49 2.15
============================================================================================================================
Total from investment operations (3.47) (5.96) (0.51) 5.81 2.50
============================================================================================================================
Less distributions:
Dividends from net investment income (0.35) (0.22) (0.23) (0.37) (0.28)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.43) (0.90) -- (0.12)
============================================================================================================================
Total distributions (0.35) (1.65) (1.13) (0.37) (0.40)
============================================================================================================================
Net asset value, end of period $ 9.73 $ 13.55 $ 21.16 $ 22.80 $ 17.36
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) (25.53)% (27.93)% (2.28)% 33.56% 16.49%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,923 $36,829 $49,536 $39,772 $28,134
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.22%(d) 1.07% 1.10% 1.14% 1.11%
============================================================================================================================
Ratio of net investment income to average net assets 2.75%(d) 1.59%(b) 1.23% 1.72% 2.46%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 54% 32% 50% 45% 32%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premiums on debt securities. Had the Fund not amortized premiums on debt securities, the net investment income per share would have been $0.30 and the ratio of net investment income to average net assets would have been 1.63%. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(d) Ratios are based on average daily net assets of $27,745,269.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- ------- ------- -------
Net asset value, beginning of period $ 11.53 $ 11.16 $ 10.63 $ 11.18 $ 10.67
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.49(a) 0.59(a)(b) 0.66(a) 0.63(a) 0.63(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.61 0.12 0.41 (0.78) 0.20
=================================================================================================================================
Total from investment operations 1.10 0.71 1.07 (0.15) 0.83
=================================================================================================================================
Less dividends from net investment income (0.23) (0.34) (0.54) (0.40) (0.32)
=================================================================================================================================
Net asset value, end of period $ 12.40 $ 11.53 $ 11.16 $ 10.63 $ 11.18
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 9.59% 6.41% 10.12% (1.32)% 7.73%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $428,322 $150,660 $84,002 $70,761 $58,185
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including interest
expense) 0.81%(d) 1.08% 0.97% 0.90% 0.76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense) 0.80%(d) 0.80% 0.85% 0.80% 0.76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income to average net assets 4.01%(d) 5.09%(b) 6.03% 5.75% 5.70%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of interest expense to average net assets 0.01%(d) 0.28% 0.12% 0.10% --
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 170% 199% 87% 41% 78%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began recording paydown gains and losses as adjustments to interest income. Had the Fund not recorded paydown gains and losses as adjustments to interest income, the net investment income per share would have been $0.62 and the ratio of investment income to average net assets would have been 5.40%. Per share and ratios for periods prior to January 1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and does not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(d) Ratios are based on average daily net assets of $255,007,238.
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 16.37 $ 24.81 $ 32.25 $ 24.80 $ 19.83
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.03)(a) 0.03 0.01(a) 0.08
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.04) (8.37) (6.60) 8.63 6.57
===============================================================================================================================
Total from investment operations (5.07) (8.40) (6.57) 8.64 6.65
===============================================================================================================================
Less distributions:
Dividends from net investment income -- (0.04) 0.00 (0.06) (0.09)
-------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.87) (1.13) (1.59)
===============================================================================================================================
Total distributions -- (0.04) (0.87) (1.19) (1.68)
===============================================================================================================================
Net asset value, end of period $ 11.30 $ 16.37 $ 24.81 $ 32.25 $ 24.80
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) (30.97)% (33.86)% (20.49)% 35.24% 34.12%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $361,259 $601,648 $879,182 $704,096 $371,915
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 0.91%(c) 0.88% 0.83% 0.73% 0.72%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.21)%(c) (0.17)% 0.11% 0.04% 0.41%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 195% 239% 162% 101% 133%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $468,319,600.
MAY 1, 1998
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
------- ------- ------- ------- -----------------
Net asset value, beginning of period $ 5.31 $ 6.35 $ 9.02 $ 8.84 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.51(a) 0.70(b) 0.91 1.03(a) 0.39
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.82) (1.01) (2.64) (0.10) (1.15)
=================================================================================================================================
Total from investment operations (0.31) (0.31) (1.73) 0.93 (0.76)
=================================================================================================================================
Less dividends from net investment income -- (0.73) (0.94) (0.75) (0.40)
=================================================================================================================================
Net asset value, end of period $ 5.00 $ 5.31 $ 6.35 $ 9.02 $ 8.84
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (5.84)% (4.85)% (19.14)% 10.52% (7.61)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,984 $28,799 $26,151 $25,268 $7,966
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(d) 1.21% 1.13% 1.14% 1.13%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.30%(d) 1.29% 1.19% 1.42% 2.50%(e)
=================================================================================================================================
Ratio of net investment income to average net assets 10.20%(d) 11.39%(b) 11.44% 11.07% 9.75%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 74% 64% 72% 127% 39%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium on debt securities. Had the Fund not amortized premiums on debt securities, the net investment income per share would have been $0.71 and the ratio of net investment income to average net assets would have been 11.44%. In accordance with the AICPA Audit and Accounting Guide for Investment Companies, per share and ratios prior to January 1, 2001 have not been restated to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(d) Ratios are based on average daily net assets of $26,729,639.
(e) Annualized.
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- -------- -------- --------
Net asset value, beginning of period $ 14.91 $ 20.12 $ 29.29 $ 19.62 $ 17.13
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06(a) 0.08(a) 0.18 0.08(a) 0.15
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.40) (4.83) (7.88) 10.59 2.50
===============================================================================================================================
Total from investment operations (2.34) (4.75) (7.70) 10.67 2.65
===============================================================================================================================
Less distributions:
Dividends from net investment income (0.08) (0.05) (0.06) (0.19) (0.16)
-------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.41) (1.41) (0.81) --
===============================================================================================================================
Total distributions (0.08) (0.46) (1.47) (1.00) (0.16)
===============================================================================================================================
Net asset value, end of period $ 12.49 $ 14.91 $ 20.12 $ 29.29 $ 19.62
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) (15.67)% (23.53)% (26.40)% 55.04% 15.49%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $247,580 $347,528 $437,336 $454,060 $240,314
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 1.09%(c) 1.05% 1.02% 0.97% 0.91%
===============================================================================================================================
Ratio of net investment income to average net assets 0.41%(c) 0.46% 0.83% 0.38% 0.80%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 71% 109% 88% 97% 76%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $316,794,532.
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $ 10.72 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) 0.00
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.17) 0.74
=================================================================================================================================
Total from investment operations (1.19) 0.74
=================================================================================================================================
Less distributions from net investment income -- (0.02)
=================================================================================================================================
Net asset value, end of period $ 9.53 $10.72
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (11.10)% 7.37%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $68,271 $9,500
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(c) 1.27%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.30%(c) 5.16%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(c) (0.08)%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 36% 20%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $34,195,267.
(d) Annualized.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2002 2001 2000 1999 1998
-------- -------- ------- ------- -------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.04 0.06 0.05 0.05
========================================================================================================================
Less distributions from net investment income (0.01) (0.04) (0.06) (0.05) (0.05)
========================================================================================================================
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(a) 1.19% 3.61% 5.83% 4.66% 5.06%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $119,536 $128,277 $73,864 $95,152 $64,090
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 0.67%(b) 0.64% 0.71% 0.60% 0.58%
========================================================================================================================
Ratio of net investment income to average net assets 1.18%(b) 3.36% 5.66% 4.59% 4.94%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(b) Ratios are based on average daily net assets of $123,828,132.
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2002 2001 2000 1999 1998
------- ------- ------- -------- -------
Net asset value, beginning of period $ 4.21 $ 18.53 $ 32.96 $ 20.66 $ 18.40
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.05) 0.20 (0.14) (0.01)
---------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86) (8.79) (11.05) 18.46 3.99
=====================================================================================================================
Total from investment operations (1.90) (8.84) (10.85) 18.32 3.98
=====================================================================================================================
Less distributions:
Dividends from net investment income -- (0.21) -- -- --
---------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (5.27) (3.58) (6.02) (1.72)
=====================================================================================================================
Total distributions -- (5.48) (3.58) (6.02) (1.72)
=====================================================================================================================
Net asset value, end of period $ 2.31 $ 4.21 $ 18.53 $ 32.96 $ 20.66
_____________________________________________________________________________________________________________________
=====================================================================================================================
Total return(b) (45.13)% (47.47)% (36.29)% 106.52% 22.11%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,634 $34,614 $69,310 $108,428 $69,459
_____________________________________________________________________________________________________________________
=====================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(c) 1.36% 1.31% 1.27% 1.17%
---------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.71%(c) 1.49% 1.31% 1.27% 1.18%
=====================================================================================================================
Ratio of net investment income (loss) to average net assets (1.22)%(c) (1.14)% 0.74% (0.62)% (0.04)%
_____________________________________________________________________________________________________________________
=====================================================================================================================
Portfolio turnover rate 144% 289% 131% 124% 73%
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $21,617,213.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 23.35 $ 27.30 $ 33.50 $ 26.25 $ 20.83
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05(a) 0.06(a) 0.04(a) 0.06(a) 0.09
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (7.11) (3.50) (4.94) 7.76 6.59
=================================================================================================================================
Total from investment operations (7.06) (3.44) (4.90) 7.82 6.68
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.07) (0.03) (0.04) (0.09) (0.13)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.48) (1.26) (0.48) (1.13)
=================================================================================================================================
Total distributions (0.07) (0.51) (1.30) (0.57) (1.26)
=================================================================================================================================
Net asset value, end of period $ 16.22 $ 23.35 $ 27.30 $ 33.50 $ 26.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (30.26)% (12.53)% (14.68)% 29.90% 32.41%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,519,525 $2,558,120 $2,746,161 $2,383,367 $1,221,384
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 0.85%(c) 0.85% 0.84% 0.76% 0.66%
=================================================================================================================================
Ratio of net investment income to average net
assets 0.24%(c) 0.24% 0.12% 0.20% 0.68%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 46% 40% 62% 62% 100%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $1,986,230,999.
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.
AIMinvestments.com VI-PRO-1
AIM VARIABLE INSURANCE FUNDS
May 1, 2003
Prospectus
SERIES II SHARES
AIM V.I. Aggressive Growth Fund AIM V.I. Global Utilities Fund AIM V.I. Balanced Fund AIM V.I. Government Securities Fund AIM V.I. Basic Value Fund AIM V.I. Growth Fund AIM V.I. Blue Chip Fund AIM V.I. High Yield Fund AIM V.I. Capital Appreciation Fund AIM V.I. International Growth Fund AIM V.I. Capital Development Fund AIM V.I. Mid Cap Core Equity Fund AIM V.I. Core Equity Fund AIM V.I. Money Market Fund AIM V.I. Dent Demographic Trends Fund AIM V.I. New Technology Fund AIM V.I. Diversified Income Fund AIM V.I. Premier Equity Fund |
Shares of the funds are currently offered only to insurance company separate accounts. The investment objective(s) of each fund are described under the heading "Investment Objectives and Strategies."
This prospectus contains important information about the Series II class shares ("Series II shares") of each fund. 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.
YOUR GOALS. OUR SOLUTIONS. [AIM INVESTMENTS LOGO APPEARS HERE]
--Servicemark-- --Servicemark--
|
----------------------------
|
INVESTMENT OBJECTIVES AND STRATEGIES 1 ------------------------------------------------------ PRINCIPAL RISKS OF INVESTING IN THE FUNDS 6 ------------------------------------------------------ PERFORMANCE INFORMATION 10 ------------------------------------------------------ Annual Total Returns 10 Performance Tables 26 FEE TABLE AND EXPENSE EXAMPLE 35 ------------------------------------------------------ Fees and Expenses of the Funds 35 Expense Example 36 FUND MANAGEMENT 37 ------------------------------------------------------ The Advisors 37 Advisor Compensation 37 Portfolio Managers 37 OTHER INFORMATION 41 ------------------------------------------------------ Purchase and Redemption of Shares 41 Pricing of Shares 41 Taxes 41 Dividends and Distributions 41 Share Classes 41 Distribution Plan 41 Future Fund Closure 42 FINANCIAL HIGHLIGHTS 43 ------------------------------------------------------ OBTAINING ADDITIONAL INFORMATION Back Cover ------------------------------------------------------ |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM Lifetime America, 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, AIM Internet Connect, AIM Private Asset Management, AIM Private Asset Management and Design, AIM stylized and/or Design, AIM Alternative Assets and Design, AIM Investments, AIM Investments and Design, myaim.com, The AIM College Savings Plan, AIM Solo 401(k) and Your goals. Our solutions. 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) and policies 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 these 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 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 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 the security no longer has that potential.
AIM V.I. BASIC VALUE FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 65% of its net assets in equity securities of U.S. issuers that have market capitalizations of greater than $500 million and that the portfolio managers believe to be undervalued in relation to long-term earning power or other factors.
The fund may also invest up to 35% of its total assets in equity securities of U.S. issuers that have market capitalizations of less than $500 million and in investment-grade non-convertible debt securities, U.S. government securities and high-quality money market instruments, all of which are issued by U.S. issuers. The fund may also invest up to 25% of its total assets in foreign securities.
In selecting investments, the portfolio managers seek to identify those companies whose prospects and growth potential are undervalued by investors and that provide the potential for attractive returns. The portfolio managers allocate investments among fixed-income securities based on their views as to the best values then available in the marketplace. The portfolio managers consider whether to sell a particular security when any of these factors materially changes.
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, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of blue chip companies. In complying with this 80% investment requirement, the fund may invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers blue chip companies to be 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) with leading market positions and which possess the following characteristics:
- Market characteristics--Companies that 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 (i) superior growth prospects compared with other companies in the same industry; (ii) possession of proprietary technology with the potential to bring about major changes within an industry; and/or (iii) leading sales within an industry, or the potential to become a market leader.
- Financial characteristics--Companies that possess at least one of the
following attributes: (i) faster earnings growth than its competitors and the
market in general; (ii) higher profit margins relative to its competitors;
(iii) strong cash flow relative to its competitors; and/or (iv) a balance
sheet with relatively low debt and a high return on equity relative to its
competitors.
The portfolio managers consider whether to sell a particular security when they believe the issuer of the security is no longer a market leader, and/or it no longer has the characteristics described above. When the portfolio managers believe securities other than marketable equity securities offer the opportunity for long-term growth and current income, the fund may invest in United States government securities and high-quality debt securities. 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 these 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. CORE EQUITY FUND
The fund's investment objective is growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, including convertible 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. In complying with this 80% investment requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund may also invest up to 25% of its total assets in foreign securities. For risk management or cash-management purposes, the fund may also hold a portion of its assets in cash or shares of affiliated money market funds.
A larger position in cash or cash equivalents could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
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.
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. 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. Developing countries are those countries that are in the initial stages of their industrial cycles. 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 these 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 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of domestic and foreign public utility companies. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, and debt securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. 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 a significant amount of its assets in the securities of U.S. issuers. 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 non-diversified, which means it can invest a greater percentage of its assets in any one issuer than can a diversified fund. With respect to 50% of its total assets, a non-diversified fund, 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 they believe the security no longer has that prospect.
In anticipation of or in response to adverse market conditions the fund may invest 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, normally, at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in
debt securities issued, guaranteed or otherwise backed by the U.S. Government.
In complying with this 80% investment requirement, the fund's investments may
include investments in synthetic instruments. Synthetic instruments are
investments that have economic characteristics similar to the fund's direct
investments, and may include futures and options. 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 30 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 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. 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 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. 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, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in non-investment grade debt securities, i.e.,
"junk bonds". In complying with this 80% investment requirement, the fund's investments may include investments in synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include futures and options. The fund considers a bond to be a junk bond if it is rated Ba or lower by Moody's Investors Service, Inc. or BB or lower by Standard & Poor's Ratings. The fund will invest principally in junk bonds rated B or above by Moody's Investors Services, Inc. or Standard & Poor's Ratings or deemed by the portfolio managers to be of comparable quality. 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 these factors materially changes.
AIM V.I. INTERNATIONAL GROWTH 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 focuses its investments in marketable equity
securities of foreign companies that are listed on a recognized foreign or U.S.
securities exchange or traded in a foreign or U.S. over-the-counter market. The
fund will normally invest in companies located in at least four countries
outside of the U.S., 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 these factors materially changes.
AIM V.I. MID CAP CORE EQUITY FUND
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its assets in equity securities, including convertible securities, of mid-capitalization companies. In complying with this 80% investment requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. The fund considers a company to be a mid-capitalization company if it has a market capitalization, at the time of purchase, within the range of the largest and smallest capitalized companies included in the Russell Midcap--Trademark-- Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month. The Russell Midcap--Trademark-- Index measures the performance of the 800 companies with the lowest market capitalization in the Russell 1000--Registered Trademark-- Index. The Russell 1000--Registered Trademark-- Index is a widely recognized, unmanaged index of common stocks of the 1000 largest companies in the Russel 3000--Registered Trademark--Index, which measures the performance of the 3000 largest U.S. companies based on total market capitalization. The companies in the Russell Midcap--Trademark-- Index are considered representative of medium-sized companies.
The fund may invest up to 20% of its net assets in equity securities of companies in other market capitalization ranges or in investment-grade debt securities. The fund may also invest up to 25% of its total assets in foreign securities. For risk management or cash management purposes, the fund may also hold a portion of its assets in cash or cash equivalents, including shares of affiliated money market funds.
In selecting investments, the portfolio managers seek to identify those
companies that are, in their view, undervalued relative to current or projected
earnings, or the current market value of assets owned by the company. The
primary emphasis of the portfolio managers' search for undervalued equity
securities is in four categories: (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 which are not yet reflected in the value of the
companies' equity securities; and (4) companies whose equity securities are
selling at prices that do not yet reflect the current market value of their
assets. The portfolio managers consider whether to sell a particular security
when any of these factors materially changes.
A larger position in cash or cash equivalents could detract from achieving the fund's objective, but could also reduce the fund's exposure in the event of a market downturn.
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
The fund's investment objective is long-term growth of capital.
The fund seeks to meet its objective by investing, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in securities of technology and science companies that the portfolio managers believe are likely to benefit from new or innovative products, services or processes. In complying with this 80% investment requirement, the fund will invest primarily in marketable equity securities, including convertible securities, but its investments may include other securities, such as synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, which may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. Technology and science 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. 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. PREMIER EQUITY 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, normally, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, including convertible securities. In complying with this 80% investment requirement, the fund's investments may include synthetic instruments. Synthetic instruments are investments that have economic characteristics similar to the fund's direct investments, and may include warrants, futures, options, exchange-traded funds and American Depositary Receipts. 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 or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, each fund may temporarily hold all or a portion of its assets in cash, cash equivalents or high-quality debt instruments. As a result, a fund may not achieve its investments objective(s). For cash management purposes, each fund may also hold a portion of its assets in cash or cash equivalents, including shares of affiliated money market funds.
A larger position in cash or cash equivalents could detract from the achievement of the funds' objective(s), but could also reduce the funds' exposure in the event of a market downturn.
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. BASIC VALUE FUND
There is a risk 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 values 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. 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. CORE EQUITY 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. 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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
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. 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 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.
AIM V.I. MID CAP CORE 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
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.
The fund may participate in the initial public offering (IPO) market in some cycles. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly affect the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the fund's total return.
AIM V.I. PREMIER EQUITY 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.
To the extent a fund holds cash or cash equivalents rather than equity or long-term fixed income securities for risk management, the fund may not achieve its investment objective(s).
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.
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. All performance shown assumes the reinvestment of dividends and capital gains. 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.
Performance shown for periods prior to the inception date of the Series II shares are since the inception date of the Series I shares, adjusted to reflect the impact that the Rule 12b-1 plan of Series II shares would have had if the Series II shares had then existed. Series I shares are not offered by this prospectus. The Series I and Series II shares invest in the same portfolio of securities and will have substantially similar performance, except to the extent that the expenses borne by each share class differ. Series II shares have higher expenses (and therefore lower performance) resulting from its Rule 12b-1 plan, which provides for a maximum fee equal to an annual rate of 0.25% (expressed as a percentage of average daily net assets of each fund).
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 44.31%
2000................................................................... 2.34%
2001................................................................... -26.25%
2002*.................................................................. -22.80%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is March 26, 2002.
During the periods shown in the bar chart, the highest quarterly return was 29.47% (quarter ended December 31, 1999) and the lowest quarterly return was -24.59% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 19.01%
2000................................................................... -4.44%
2001................................................................... -11.65%
2002*.................................................................. -17.30%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is January 24, 2002.
During the periods shown in the bar chart, the highest quarterly return was 15.60% (quarter ended December 31, 1999) and the lowest quarterly return was -12.03% (quarter ended September 30, 2001).
AIM V.I. BASIC VALUE FUND
The following bar chart shows the performance of the fund's shares.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2002................................................................... -22.34%
|
During the period shown in the bar chart, the highest quarterly return was 7.57% (quarter ended December 31, 2002) and the lowest quarterly return was -20.09% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... -8.41%
2001................................................................... -22.73%
2002*.................................................................. -26.34%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is March 13, 2002.
During the period shown in the bar chart, the highest quarterly return was 12.45% (quarter ended December 31, 2001) and the lowest quarterly return was -19.88% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... 2.24%
1995................................................................... 35.35%
1996................................................................... 17.29%
1997................................................................... 13.22%
1998................................................................... 19.01%
1999................................................................... 44.26%
2000................................................................... -11.13%
2001................................................................... -23.47%
2002*.................................................................. -24.52%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is August 21, 2001.
During the periods shown in the bar chart, the highest quarterly return was 35.69% (quarter ended December 31, 1999) and the lowest quarterly return was -23.11% (quarter ended September 30, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 28.78%
2000................................................................... 8.98%
2001................................................................... -8.23%
2002*.................................................................. -21.61%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is August 21, 2001.
During the periods shown in the bar chart, the highest quarterly return was 29.58% (quarter ended December 31, 1999) and the lowest quarterly return was -21.25% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995................................................................... 33.53%
1996................................................................... 19.65%
1997................................................................... 25.41%
1998................................................................... 27.36%
1999................................................................... 33.91%
2000................................................................... -14.77%
2001................................................................... -23.03%
2002*.................................................................. -15.79%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is October 24, 2001.
During the periods shown in the bar chart, the highest quarterly return was 26.40% (quarter ended December 31, 1998) and the lowest quarterly return was -21.59% (quarter ended September 30, 2001). Effective September 30, 2002 the AIM V.I. Core Equity Fund changed its investment objective. Performance shown for the fund reflects the investment objective of the fund in effect during the periods shown.
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2000................................................................... -18.11%
2001................................................................... -32.18%
2002*.................................................................. -32.26%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is November 7, 2001.
During the periods shown in the bar chart, the highest quarterly return was 23.42% (quarter ended December 31, 2001) and the lowest quarterly return was -31.59% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... -5.31%
1995................................................................... 18.72%
1996................................................................... 9.92%
1997................................................................... 9.12%
1998................................................................... 3.32%
1999................................................................... -2.16%
2000................................................................... 0.44%
2001................................................................... 3.33%
2002*.................................................................. 2.03%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is March 14, 2002.
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 -3.22% (quarter ended March 31, 1994).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1995................................................................... 26.43%
1996................................................................... 11.80%
1997................................................................... 21.33%
1998................................................................... 16.20%
1999................................................................... 33.23%
2000................................................................... -2.53%
2001................................................................... -28.11%
2002*.................................................................. -25.65%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is March 26, 2002.
During the periods shown in the bar chart, the highest quarterly return was 25.80% (quarter ended December 31, 1999) and the lowest quarterly return was -20.21% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... -3.97%
1995................................................................... 15.28%
1996................................................................... 2.03%
1997................................................................... 7.89%
1998................................................................... 7.46%
1999................................................................... -1.56%
2000................................................................... 9.85%
2001................................................................... 6.13%
2002*.................................................................. 9.25%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is September 19, 2001.
During the periods shown in the bar chart, the highest quarterly return was 5.41% (quarter ended June 30, 1995) and the lowest quarterly return was -2.88% (quarter ended March 31, 1994).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... -2.72%
1995................................................................... 34.43%
1996................................................................... 17.79%
1997................................................................... 26.55%
1998................................................................... 33.79%
1999................................................................... 34.91%
2000................................................................... -20.69%
2001................................................................... -34.05%
2002*.................................................................. -31.11%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is September 19, 2001.
During the periods shown in the bar chart, the highest quarterly return was 27.73% (quarter ended December 31, 1998) and the lowest quarterly return was -27.48% (quarter ended March 31, 2001).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1999................................................................... 10.25%
2000................................................................... -19.21%
2001................................................................... -5.23%
2002*.................................................................. -6.08%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is March 26, 2002.
During the periods shown in the bar chart, the highest quarterly return was 7.07% (quarter ended December 31, 2001) and the lowest quarterly return was -14.11% (quarter ended December 31, 2000).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... -1.86%
1995................................................................... 16.95%
1996................................................................... 19.76%
1997................................................................... 6.67%
1998................................................................... 15.20%
1999................................................................... 54.67%
2000................................................................... -26.59%
2001................................................................... -23.72%
2002*.................................................................. -15.89%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is September 19, 2001.
During the periods shown in the bar chart, the highest quarterly return was 41.80% (quarter ended December 31, 1999) and the lowest quarterly return was -19.89% (quarter ended September 30, 2002).
AIM V.I. MID CAP CORE EQUITY FUND
The following bar chart shows the performance of the fund's shares.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
2002................................................................... -11.20%
|
During the period shown in the bar chart, the highest quarterly return was 5.90% (quarter ended December 31, 2002) and the lowest quarterly return was -14.48% (quarter ended September 30, 2002).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... 3.39%
1995................................................................... 5.44%
1996................................................................... 4.69%
1997................................................................... 4.87%
1998................................................................... 4.80%
1999................................................................... 4.40%
2000................................................................... 5.57%
2001................................................................... 3.36%
2002*.................................................................. 0.93%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is December 16, 2001.
During the periods shown in the bar chart, the highest quarterly return was 1.43% (quarter ended December 31, 2000) and the lowest quarterly return was 0.19% (quarter ended December 31, 2002).
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... 6.88%
1995................................................................... 23.36%
1996................................................................... 19.05%
1997................................................................... 14.23%
1998................................................................... 21.81%
1999................................................................... 106.02%
2000................................................................... -36.46%
2001................................................................... -47.60%
2002*.................................................................. -45.17%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is April 2, 2002.
During the periods shown in the bar chart, the highest quarterly return was 63.00% (quarter ended December 31, 1999) and the lowest quarterly return was -50.06% (quarter ended March 31, 2001). 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. Also for periods prior to May 1, 2001, the performance shown above relates to the fund before changing its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
The following bar chart shows changes in the performance of the fund's shares from year to year.
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
----------- -------
1994................................................................... 3.78%
1995................................................................... 35.91%
1996................................................................... 14.74%
1997................................................................... 23.38%
1998................................................................... 32.08%
1999................................................................... 29.57%
2000................................................................... -14.86%
2001................................................................... -12.76%
2002*.................................................................. -30.44%
|
* The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date of the fund's Series II shares is September 19, 2001.
During the periods shown in the bar chart, the highest quarterly return was 26.96% (quarter ended December 31, 1998) and the lowest quarterly return was -18.46% (quarter ended June 30, 2002).
The following performance tables compare the funds' Series II share's performance to those of unmanaged broad-based securities market indices, style-specific indices and peer-group indices. The AIM V.I. Money Market Fund's Series II share's performance table reflects the fund's performance over the periods indicated.
AIM V.I. AGGRESSIVE GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund (22.80)% (3.87)% 05/01/98(1)
Standard & Poor's 500 Index(2) (22.09)% (3.57)%(3) 04/30/98(3)
Russell 2500--Trademark-- Index(4) (17.80)% (0.50)%(3) 04/30/98(3)
Russell 2500--Trademark-- Growth
Index(5) (29.09)% (5.76)%(3) 04/30/98(3)
Lipper Mid-Cap Growth Index(6) (28.47)% (4.04)%(3) 04/30/98(3)
--------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is March 26, 2002.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 2500--Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund has also included the Russell 2500 Growth--Trademark-- Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Mid-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Russell 2500--Trademark-- 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.
(5) The Russell 2500--Trademark-- Growth Index measures the performance of those Russell 2500--Trademark-- Index companies with higher price-to-book ratios and higher forecasted growth values.
(6) The Lipper Mid-Cap Growth Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Mid-Cap Growth category. These funds typically invest in stocks with market capitalizations between $1 and $5 billion at the time of purchase and have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P MidCap 400 Index.
AIM V.I. BALANCED FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. Balanced Fund (17.30)% (1.37)% 05/01/98(1)
Standard & Poor's 500 Index(2) (22.09)% (3.57)%(3) 04/30/98(3)
Custom Balanced Index(4) (9.47)% 1.30%(3) 04/30/98(3)
Lipper Balanced Fund Index(5) (10.69)% 0.45%(3) 04/30/98(3)
--------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is January 24, 2002.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the "Custom Balanced" 60% Russell 3000/40% Lehman Brothers U.S. Aggregate Bond Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Balanced Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the inception date closest to the inception date of the fund's Series I shares.
(4) The Custom Balanced Index is an index created by A I M Advisors, Inc. to benchmark the fund. This index consists of 60% Russell 3000--Registered Trademark-- Index and 40% Lehman Brothers U.S. Aggregate Bond Index. The Russell 3000--Registered Trademark-- Index is a widely recognized index of common stocks that measures the performance of the 3,000 largest U.S. companies based on total market capitalization. The Lehman Brothers U.S. Aggregate Bond Index is an index generally considered representative of treasury issues, agency issues, corporate bond issues and mortgage-backed securities.
(5) The Lipper Balanced Fund Index is an equally weighted representation of the 30 largest funds in the Lipper balanced category. These funds invest to conserve principal by maintaining at all times a balanced portfolio of stocks and bonds. Typically the stock/bond ratio is approximately 60/40.
AIM V.I. BASIC VALUE FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES II
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. Basic Value Fund (22.34)% (15.97)% 09/10/01
Standard & Poor's 500 Index(1) (22.09)% (15.99)%(2) 08/31/01(2)
Russell 1000--Registered Trademark--
Index(3) (21.65)% (15.67)%(2) 08/31/01(2)
Russell 1000--Registered Trademark--
Value Index(4) (15.52)% (12.01)%(2) 08/31/01(2)
Lipper Large-Cap Value Fund Index(5) (19.68)% (15.00)%(2) 08/31/01(2)
--------------------------------------------------------------------------------
|
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 1000--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark-- Value Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Large-Cap Value Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell 1000--Registered Trademark-- Index is a widely recognized 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.
(4) The Russell 1000--Registered Trademark-- Value Index measures the performance of those Russell 1000--Registered Trademark-- Index companies with lower price-to-book ratios and lower forecasted growth values.
(5) The Lipper Large-Cap Value Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Large Cap Value category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have a below-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. BLUE CHIP FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. Blue Chip Fund (26.34)% (19.49)% 12/29/99(1)
Standard & Poor's 500 Index(2) (22.09)% (14.54)%(3) 12/31/99(3)
Russell 1000--Registered Trademark--
Index(4) (21.65)% (14.16)%(3) 12/31/99(3)
Lipper Large-Cap Core Index(5) (21.23)% (14.00)%(3) 12/31/99(3)
--------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is March 13, 2002.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 1000--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. In addition, the Lipper Large-Cap Core Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Russell 1000--Registered Trademark-- Index is a widely recognized 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.
(5) The Lipper Large-Cap Core Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Core category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. CAPITAL APPRECIATION FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. Capital Appreciation
Fund (24.52)% (2.49)% 7.06% 05/05/93(1)
Standard & Poor's 500
Index(2) (22.09)% (0.58)% 9.47%(3) 04/30/93(3)
Russell 1000--Registered
Trademark-- Growth Index(4) (27.88)% (3.84)% 7.49%(3) 04/30/93(3)
Lipper Multi-Cap Growth Fund
Index(5) (29.82)% (3.34)% 6.51%(3) 04/30/93(3)
-------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is August 21, 2001.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark--Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Multi-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Russell 1000--Registered Trademark-- Growth Index measures the performance of those securities in the Russell 1000--Registered Trademark-- Index with a greater than average growth orientation. The Russell 1000--Registered Trademark-- Index 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.
(5) The Lipper Multi-Cap Growth Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Multi-Cap Growth category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index.
AIM V.I. CAPITAL DEVELOPMENT FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. Capital Development Fund (21.61)% (1.49)% 05/01/98(1)
Standard & Poor's 500 Index(2) (22.09)% (3.57)%(3) 04/30/98(3)
Russell 2500--Trademark-- Index(4) (17.80)% (0.50)%(3) 04/30/98(3)
Lipper Mid-Cap Core Fund Index(5) (17.37)% 0.43%(3) 04/30/98(3)
--------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is August 21, 2001.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 2500--Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund will continue to include the Russell 2500 Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Mid-Cap Core Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Russell 2500--Trademark-- 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.
(5) The Lipper Mid-Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Mid-Cap Core category. These funds typically invest in stocks with market capitalizations between $1 and $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P MidCap 400 Index.
AIM V.I. CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. Core Equity Fund (15.79)% (1.18)% 7.59% 05/02/94
Standard & Poor's 500
Index(2) (22.09)% (0.58)% 9.96%(3) 04/30/94(3)
Russell 1000--Registered
Trademark-- Index(4) (21.65)% (0.58)% 9.80%(3) 04/30/94(3)
Lipper Large-Cap Core Fund
Index(5) (21.23)% (0.74)% 8.29%(3) 04/30/94(3)
-------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is October 24, 2001.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark--Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Large-Cap Core Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Russell 1000--Registered Trademark-- Index is a widely recognized 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.
(5) The Lipper Large-Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Core category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. Dent Demographic Trends Fund (32.26)% (27.77)% 12/29/99(1)
Standard & Poor's 500 Index(2) (22.09)% (14.54)%(3) 12/31/99(3)
Russell 3000--Registered Trademark--
Index(4) (21.54)% (13.69)%(3) 12/31/99(3)
Russell 3000--Registered Trademark--
Growth Index(5) (28.03)% (23.44)%(3) 12/31/99(3)
Lipper Multi-Cap Growth Fund Index(6) (29.82)% (22.70)%(3) 12/31/99(3)
--------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is November 7, 2001.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to use the S&P 500 Index as its broad-based index rather than the Russell 3000--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund has also included the Russell 3000--Registered Trademark-- Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Multi-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Russell 3000--Registered Trademark-- Index is a widely recognized index of common stocks that measures the performance of the 3,000 largest U.S. companies based on total market capitalization.
(5) The Russell 3000--Registered Trademark-- Growth Index measures the performance of those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are members of either the Russell 1000--Registered Trademark-- Growth or Russell 2000--Registered Trademark-- Growth indices.
(6) The Lipper Multi-Cap Growth Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Multi-Cap Growth category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index.
AIM V.I. DIVERSIFIED INCOME FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. Diversified Income
Fund 2.03% 1.37% 4.49% 05/05/93(1)
Lehman Brothers U.S.
Aggregate Bond Index(2) 10.25% 7.55% 7.26%(3) 04/30/93(3)
Lipper BBB Rated Fund
Index(4) 7.20% 5.42% 6.43%(3) 04/30/93(3)
-------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is March 14, 2002.
(2) The Lehman Brothers U.S. Aggregate Bond Index is an index generally considered representative of treasury issues, agency issues, corporate bond issues and mortgage-backed securities.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Lipper BBB Rated Fund Index is an equally weighted representation of the 30 largest funds in the Lipper BBB rated funds category. The funds invest at least 65% of assets in corporate and government debt issues rated in the top four grades.
AIM V.I. GLOBAL UTILITIES FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. Global Utilities
Fund (25.65)% (4.21)% 3.44% 05/02/94(1)
Standard & Poor's 500
Index(2) (22.09)% (0.58)% 9.96%(3) 04/30/94(3)
Lipper Utility Fund Index(4) (22.70)% (2.19)% 4.79%(3) 04/30/94(3)
-------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is March 26, 2002.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. In addition, the Lipper Utility Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Lipper Utility Fund Index measures the performance of the 30 largest utility funds charted by Lipper Inc., an independent mutual funds performance monitor.
AIM V.I. GOVERNMENT SECURITIES FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. Government
Securities Fund 9.25% 6.15% 5.63% 05/05/93(1)
Lehman Brothers Intermediate
U.S. Government Bond
Index(2) 9.64% 7.44% 6.67%(3) 04/30/93(3)
Lehman Brothers U.S.
Aggregate Bond Index(4) 10.25% 7.55% 7.26%(3) 04/30/93(3)
Lehman Brothers Intermediate
U.S. Government and
Mortgage Index(5) 9.11% 7.39% N/A 04/30/93(3)
Lipper Intermediate U.S.
Government Fund Index(6) 10.00% 7.01% 6.35%(3) 04/30/93(3)
-------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is September 19, 2001.
(2) The Lehman Brothers Intermediate U.S. Government Bond Index is a 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. The fund has also included the Lehman Brothers Intermediate U.S. Government and Mortgage Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Intermediate U.S. Government Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Lehman Brothers U.S. Aggregate Bond Index is an index generally considered representative of treasury issues, agency issues, corporate issues and mortgage-backed securities.
(5) The Lehman Brothers Intermediate U.S. Government and Mortgage Index is a market weighted combination of the Lehman Brothers Intermediate U.S. Government Index and the Lehman Brothers Mortgage Index. The index contains securities with maturities ranging from one to ten years.
(6) The Lipper Intermediate U.S. Government Fund Index measures the performance of the largest government securities funds. It is compiled by Lipper Analytical Services, Inc., an independent mutual funds performance monitor. Results shown reflect reinvestment of dividends.
AIM V.I. GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
------------------------------------------------------------------------------------
AIM V.I. Growth Fund (31.11)% (8.24)% 3.55% 05/05/93(1)
Standard & Poor's 500 Index(2) (22.09)% (0.58)% 9.47%(3) 04/30/93(3)
Russell 1000--Registered
Trademark-- Growth Index(4) (27.88)% (3.84)% 7.49%(3) 04/30/93(3)
Lipper Large-Cap Growth Fund
Index(5) (28.11)% (4.16)% 6.68%(3) 04/30/93(3)
------------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is September 19, 2001.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the Russell 1000--Registered Trademark--Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Large-Cap Growth Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Russell 1000--Registered Trademark-- Growth Index measures the performance of those securities in the Russell 1000--Registered Trademark-- Index with a greater than average growth orientation. The Russell 1000--Registered Trademark-- Index 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.
(5) The Lipper Large-Cap Growth Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Growth category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an above-average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
AIM V.I. HIGH YIELD FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. High Yield Fund (6.08)% (6.49)% 05/01/98(1)
Lehman Brothers U.S. Aggregate Bond
Index(2) 10.25% 7.63%(3) 04/30/98(3)
Lehman Brothers High Yield Index(4) (1.41)% (0.38)%(3) 04/30/98(3)
Lipper High Yield Bond Fund Index(5) (2.41)% (2.90)%(3) 04/30/98(3)
--------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is March 26, 2002.
(2) The Lehman Brothers U.S. Aggregate Bond Index is an index which represents the U.S. investment-grade fixed-rate bond market (including government and corporate securities and asset-backed securities). The fund has elected to use the Lehman Brothers U.S. Aggregate Bond Index as its broad-based index rather than the Lehman Brothers High Yield Index since the Lehman Brothers U.S. Aggregate Bond Index is such a widely recognized gauge of U.S. stock market performance. The fund will continue to include the Lehman Brothers High Yield Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper High Yield Bond Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Lehman Brothers 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 million, and at least one year to maturity.
(5) The Lipper High Yield Bond Fund Index is an equally weighted representation of the 30 largest funds within the Lipper High Yield Funds category. The funds have no credit rating restriction, but tend to invest in fixed-income securities with lower credit ratings.
AIM V.I. INTERNATIONAL GROWTH FUND
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-----------------------------------------------------------------------------
AIM V.I. International
Growth Fund (15.89)% (3.44)% 4.00% 05/05/93(1)
Morgan Stanley Capital
International--Registered
Trademark-- EAFE Index(2) (15.94)% (2.89)% 1.97%(3) 04/30/93(3)
Morgan Stanley Capital
International--Registered
Trademark-- EAFE Growth
Index(4) (16.02)% (5.43)% (0.14)%(3) 04/30/93(3)
Lipper International Fund
Index(5) (13.83)% (1.64)% 4.31%(3) 04/30/93(3)
-----------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is September 19, 2001.
(2) The Morgan Stanley Capital International--Registered Trademark-- Europe, Australasia and Far East Index measures performance of global stock markets in 20 developed countries. The fund has also included the Morgan Stanley Capital International--Registered Trademark-- EAFE Growth Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper International Fund Index (which may or may not include the Fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Morgan Stanley Capital International--Registered Trademark-- EAFE Growth Index is recognized as the pre-eminent benchmark in the U.S. to measure international "growth" equity performance (high P/BV securities). It includes securities from 21 countries, representing the developed markets outside North America, Europe, Australasia, and the Far East.
(5) The Lipper International Fund Index is an equally weighted representation of the 30 largest funds in the Lipper International category. These funds invest in securities with primary trading outside of the U.S. and may own U.S. securities as well.
AIM V.I. MID CAP CORE EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
SERIES II
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
AIM V.I. Mid Cap Core Equity Fund (11.20)% (3.69)% 09/10/01
Standard & Poor's 500 Index(1) (22.09)% (15.99)%(2) 08/31/01(2)
Russell Midcap--Registered Trademark--
Index(3) (16.19)% (10.40)%(2) 08/31/01(2)
Lipper Mid-Cap Core Index(4) (17.37)% (11.43)%(2) 08/31/01(2)
--------------------------------------------------------------------------------
|
(1) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has elected to the use the S&P 500 Index as its broad-based index rather than the Russell Midcap--Registered Trademark-- Index since the S&P 500 Index is such a widely recognized gauge of U.S. stock market performance. The fund will continue to include the Russell Midcap--Registered Trademark-- Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Mid-Cap Core Index (which may or may not include the fund) is included for comparison to a peer-group.
(2) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(3) The Russell Midcap--Registered Trademark-- Index represents the performance of the stocks of domestic mid-capitalization companies.
(4) The Lipper Mid-Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Mid-Cap Core category. These funds typically invest in stocks with market capitalizations between $1 and $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P MidCap 400 Index.
AIM V.I. MONEY MARKET FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. Money Market Fund 0.93% 3.80% 4.01% 12/16/01(1)
-------------------------------------------------------------------------------
|
The AIM V.I. Money Market Fund's seven day yield on December 31, 2002 was 0.57%. For the current seven day yield, call (800) 347-4246.
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is December 16, 2001.
AIM V.I. NEW TECHNOLOGY FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. New Technology
Fund(1) (45.17)% (14.45)% (1.20)% 10/18/93(2)
Standard & Poor's 500
Index(3) (22.09)% (0.58)% 9.11%(4) 10/31/93(4)
PSE Technology Index(5) (33.33)% 9.54% 17.05%(4) 10/31/93(4)
Lipper Science & Technology
Index(6) (41.38)% (3.46)% 5.32%(4) 10/31/93(4)
-------------------------------------------------------------------------------
|
(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. Also, for the periods prior to May 1, 2001, the performance shown above relates to the fund before changing its investment strategy to increase its emphasis on the technology industry and decrease its emphasis on the telecommunications industry.
(2) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is April 2, 2002.
(3) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. The fund has also included the PSE Technology Index, which the fund believes more closely reflects the performance of the securities in which the fund invests. In addition, the Lipper Science & Technology Fund Index (which may or may not include the fund) is included for comparison to a peer-group.
(4) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(5) The PSE Technology Index is a price-weighted index of the top 100 technology stocks listed on the Pacific Stock Exchange.
(6) The Lipper Science & Technology Fund Index is an equally weighted representation of the 30 largest funds that make up the Lipper Science & Technology category. These funds invest more than 65% of their portfolios in science and technology stocks.
AIM V.I. PREMIER EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
SERIES I
SHARES
(for the periods ended SINCE INCEPTION
December 31, 2002) 1 YEAR 5 YEARS INCEPTION DATE
-------------------------------------------------------------------------------
AIM V.I. Premier Equity Fund (30.44)% (2.43)% 7.57% 05/05/93(1)
Standard & Poor's 500
Index(2) (22.09)% (0.58)% 9.47%(3) 04/30/93(3)
Lipper Large-Cap Core
Index(4) (21.23)% (0.74)% 8.07%(3) 04/30/93(3)
-------------------------------------------------------------------------------
|
(1) The returns shown for these periods are the blended returns of the historical performance of the fund's Series II shares since their inception and the restated historical performance of the fund's Series I shares (for periods prior to inception of the Series II shares) adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. The inception date shown in the table is that of the fund's Series I shares. The inception date of the fund's Series II shares is September 19, 2001.
(2) The Standard & Poor's 500 Index is an index of common stocks frequently used as a general measure of U.S. stock market performance. In addition, the Lipper Large-Cap Core Index (which may or may not include the fund) is included for comparison to a peer-group.
(3) The average annual total return given is since the date closest to the inception date of the fund's Series I shares.
(4) The Lipper Large-Cap Core Fund Index is an equally weighted representation of the 30 largest funds in the Lipper Large-Cap Core category. These funds typically invest in stocks with market capitalizations greater than $5 billion at the time of purchase and have an average price-to-earnings ratio, price-to-book ratio, and a three year sales-per-share growth value, compared to the S&P 500 Index.
FEES AND EXPENSES OF THE FUNDS
The following table describes the fees and expenses that are incurred, directly or indirectly, when a variable contract owner buys, holds, or redeems interest in a separate account that invests in the Series II shares of the funds but does not represent the effect of any fees or other expenses of any variable annuity or variable life insurance product.
SHAREHOLDER FEES --------------------------------------------------------------------------------- (fees paid directly from SERIES II your investment) SHARES --------------------------------------------------------------------------------- Maximum Sales Charge (Load) None Maximum Deferred Sales Charge (Load) None --------------------------------------------------------------------------------- |
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES)(1)
-----------------------------------------------------------------------------------------------------------------
TOTAL
ANNUAL
FUND FEE WAIVER AND
(expenses that are deducted from MANAGEMENT RULE 12B-1 OTHER OPERATING EXPENSE NET
Series II share assets) FEES FEES EXPENSES EXPENSES REIMBURSEMENTS EXPENSES
-----------------------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund 0.80% 0.25% 0.36% 1.41% 0.00% 1.41%(2)
AIM V.I. Balanced Fund 0.75 0.25 0.42 1.42 0.00 1.42
AIM V.I. Basic Value Fund 0.73 0.25 0.43 1.41 0.00 1.41
AIM V.I. Blue Chip Fund 0.75 0.25 0.43 1.43 0.00 1.43(3)
AIM V.I. Capital Appreciation Fund 0.61 0.25 0.24 1.10 0.00 1.10
AIM V.I. Capital Development Fund 0.75 0.25 0.39 1.39 0.00 1.39
AIM V.I. Core Equity Fund 0.61 0.25 0.17 1.03 0.00 1.03
AIM V.I. Dent Demographic Trends Fund 0.85 0.25 0.58 1.68 0.23 1.45(3)
AIM V.I. Diversified Income Fund 0.60 0.25 0.34 1.19 0.00 1.19
AIM V.I. Global Utilities Fund 0.65 0.25 0.57 1.47 0.02 1.45(2)(4)
AIM V.I. Government Securities Fund 0.50 0.25 0.31 1.06 0.00 1.06
AIM V.I. Growth Fund 0.63 0.25 0.28 1.16 0.00 1.16
AIM V.I. High Yield Fund 0.62 0.25 0.68 1.55 0.10 1.45(3)
AIM V.I. International Growth Fund 0.74 0.25 0.35 1.34 0.00 1.34(2)
AIM V.I. Mid Cap Core Equity Fund 0.73 0.25 0.57 1.55 0.10 1.45(3)
AIM V.I. Money Market Fund 0.40 0.25 0.27 0.92 0.00 0.92
AIM V.I. New Technology Fund 1.00 0.25 0.71 1.96 0.51 1.45(3)
AIM V.I. Premier Equity Fund 0.61 0.25 0.24 1.10 0.00 1.10
-----------------------------------------------------------------------------------------------------------------
|
(1) Except as otherwise noted, figures shown in the table are for the year ended December 31, 2002 and are expressed as a percentage of fund average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table.
(2) Expenses have been restated to reflect current agreement.
(3) The fund's advisor has contractually agreed to waive advisory fees or reimburse expenses of Series II shares to the extent necessary to limit total annual fund operating expenses (excluding Rule 12b-1 Plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) to 1.30%. Further the fund's distributor has agreed to reimburse Rule 12b-1 Distribution Plan fees to the extent necessary to limit Series II total annual fund operating expenses to 1.45%.
(4) The fund's advisor has agreed to waive advisory fees or reimburse expenses of Series II shares to the extent necessary to limit total annual fund operating expenses (excluding Rule 12b-1 Plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) to 1.45%. This agreement may be terminated at any time.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the Series II shares of the funds with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in a fund's Series II shares for the time periods indicated. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. The examples do not assume that any fund expense waivers or reimbursement arrangements are in effect for the periods indicated. To the extent fees are waived and/or expenses are reimbursed, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
SERIES II SHARES
----------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund $144 $446 $771 $1,691
AIM V.I. Balanced Fund 145 449 776 1,702
AIM V.I. Basic Value Fund 144 446 771 1,691
AIM V.I. Blue Chip Fund 146 452 782 1,713
AIM V.I. Capital Appreciation Fund 112 350 606 1,340
AIM V.I. Capital Development Fund 142 440 761 1,669
AIM V.I. Core Equity Fund 105 328 569 1,259
AIM V.I. Dent Demographic Trends Fund 171 530 913 1,987
AIM V.I. Diversified Income Fund 121 378 654 1,443
AIM V.I. Global Utilities Fund 150 465 803 1,757
AIM V.I. Government Securities Fund 108 337 585 1,294
AIM V.I. Growth Fund 118 368 638 1,409
AIM V.I. High Yield Fund 158 490 845 1,845
AIM V.I. International Growth Fund 136 425 734 1,613
AIM V.I. Mid Cap Core Equity Fund 158 490 845 1,845
AIM V.I. Money Market Fund 94 293 509 1,131
AIM V.I. New Technology Fund 199 615 1,057 2,285
AIM V.I. Premier Equity Fund 112 350 606 1,340
----------------------------------------------------------------------------
|
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.
The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 190 investment portfolios, including the funds, encompassing a broad range of investment objectives.
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 for AIM V.I. Dent Demographic Trends Fund since 1999.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 2002, 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 0.80%
AIM V.I. Balanced Fund 0.75%
AIM V.I. Basic Value Fund 0.73%
AIM V.I. Blue Chip Fund 0.75%
AIM V.I. Capital Appreciation Fund 0.61%
AIM V.I. Capital Development Fund 0.75%
AIM V.I. Core Equity Fund 0.61%
AIM V.I. Dent Demographic Trends Fund 0.72%
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 0.63%
AIM V.I. High Yield Fund 0.62%
AIM V.I. International Growth Fund 0.74%
AIM V.I. Mid Cap Core Equity Fund 0.73%
AIM V.I. Money Market Fund 0.40%
AIM V.I. New Technology Fund 0.59%
AIM V.I. Premier Equity 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 each fund's portfolio are as follows:
AIM V.I. AGGRESSIVE GROWTH FUND
- Robert M. Kippes (lead manager), 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.
- Karl Farmer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1998. From 1992 to 1998, he worked as a pension actuary for William M. Mercer, Inc.
- 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 for Prudential Securities.
They are assisted by the Mid Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. BALANCED FUND
(Co-Managed)
- 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.
- Scot W. Johnson, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1994.
- 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.
They are assisted by the Balanced Team and Investment Grade Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. BASIC VALUE FUND
- Bret W. Stanley (lead manager), Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1994 to 1998, he was Vice President and portfolio manager for Van Kampen American Capital Asset Management, Inc.
- R. Canon Coleman II, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was a full-time student. From 1993 to 1997, he worked as a CPA for Deloitte & Touche.
- Matthew W. Seinsheimer, Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998.
- Michael J. Simon, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1996 to 2001, he was equity analyst and portfolio manager for Luther King Capital Management.
They are assisted by the Basic Value Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. BLUE CHIP FUND
(Co-Managed)
- 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.
- Kirk L. Anderson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. CAPITAL APPRECIATION FUND
- Kenneth A. Zschappel (lead manager), 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.
- Christian A. Costanzo, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1995.
- Robert J. Lloyd, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 2000. From 1997 to 2000, he was a trader with American Electric Power.
They are assisted by the Multi Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. CAPITAL DEVELOPMENT FUND
- Paul J. Rasplicka (lead manager), 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.
- Michael Chapman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2001. From 1999 to 2001, he was an equity analyst with Chase Manhattan Bank. During part of 1999, he was a securities analyst with Gulf Investment Management. From 1995 to 1999, he was a portfolio manager with US Global Investors, Inc.
- James C. Gassman, Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1998 to 2000, he was an equity analyst with Southwest Securities, Inc.
They are assisted by the Small/Mid Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. CORE EQUITY FUND
- Ronald S. Sloan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- David W. Pointer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999 he was a full-time student.
They are assisted by the Mid/Large Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
- Lanny H. Sachnowitz (lead manager), 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.
- Kirk L. Anderson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
- James G. Birdsall, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. DIVERSIFIED INCOME FUND
(Co-Managed)
- 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.
- 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.
- Scot W. Johnson, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
They are assisted by the Investment Grade Team and High Yield Taxable Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. GLOBAL UTILITIES FUND
(Co-Managed)
- 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.
- 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.
They are assisted by the Balanced Team and Investment Grade Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. GOVERNMENT SECURITIES FUND
- Scot W. Johnson (lead manager), 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.
- Clint W. 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.
More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. GROWTH FUND
- Lanny H. Sachnowitz (lead-manager), Senior Portfolio Manager, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 1987.
- James G. Birdsall, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
- 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.
They are assisted by the Large Cap Growth Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. HIGH YIELD FUND
(Co-Managed)
- 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.
- 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.
They are assisted by the High Yield Taxable Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. INTERNATIONAL GROWTH FUND
- Clas G. Olsson (lead manager), 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 (lead manager), Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990.
- Shuxin Cao, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1997.
- 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.
They are assisted by the Asian Pacific Team and Europe/Canada Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. MID CAP CORE EQUITY FUND
- Ronald S. Sloan (lead manager), Senior Portfolio Manager, who has been responsible for the fund since its inception in 2001 and has been associated with the advisor and/or its affiliates since 1998. From 1993 to 1998, he was President of Verissimo Research & Management, Inc.
- David W. Pointer, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was a full-time student.
They are assisted by the Mid/Large Cap Core Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. NEW TECHNOLOGY FUND
- Abel Garcia (lead manager), 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.
- Warren Tennant, Analyst, who has been responsible for the fund since 2002 and has been associated with the advisor and/or its affiliates since 2000. From 1998 to 2000 he attended graduate school at the University of Texas where he earned his M.B.A. From 1993 to 1998, he worked as a lead auditor for Exxon.
More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
AIM V.I. PREMIER EQUITY FUND
- Robert A. Shelton (lead manager), 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.
- Abel Garcia, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 2000. From 1984 to 2000, he was Senior Portfolio Manager for Waddell & Reed.
- Meggan M. Walsh, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1991.
- Michael Yellen, Senior Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1994.
- Kellie K. Veazey, Portfolio Manager, who has been responsible for the fund since 2003 and has been associated with the advisor and/or its affiliates since 1995.
They are assisted by the Premier Equity Team. More information on the fund's management team may be found on our website (http://www.aiminvestments.com).
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 offer 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. For example, violation of the federal tax laws by one separate account investing in a fund could cause owners of contracts and policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. 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, or any earlier NYSE closing time that day.
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 monthly. 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 will 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.
SHARE CLASSES
Each fund has two classes of shares, Series I shares and Series II shares. Each class is identical except that Series II shares has a distribution or "Rule 12b-1 Plan" which is described in this prospectus.
DISTRIBUTION PLAN
The funds have adopted a distribution or "Rule 12b-1" plan for their Series II shares. The plan allows the funds to pay distribution fees to life insurance companies and others to promote the sale and distribution of Series II shares. The plan provides for a maximum fee equal to an annual rate of 0.25% (expressed as a percentage of average daily net assets of the funds). Because the funds pay these fees out of their assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
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. Also during those periods the fund will continue to pay Rule 12b-1 fees.
The financial highlights table is intended to help you understand the financial performance of each fund's Series II shares. Certain information reflects financial results for a single Series II 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.
AIM V.I. AGGRESSIVE GROWTH FUND
MARCH 26, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
--------------
Net asset value, beginning of period $ 10.70
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)
------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.25)
==============================================================================
Total from investment operations (2.35)
==============================================================================
Net asset value, end of period $ 8.35
______________________________________________________________________________
==============================================================================
Total return(a) (21.96)%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 436
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.32%(b)
------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.41%(b)
==============================================================================
Ratio of net investment income (loss) to average net assets (1.03)%
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 85%
______________________________________________________________________________
==============================================================================
|
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total return does not reflect charges at the separate account level which if included would reduce the total return for the period shown.
(b) Ratios are annualized and based on average daily net assets of $663,940.
AIM V.I. BALANCED FUND
JANUARY 24, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
----------------
Net asset value, beginning of period $ 10.70
------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.14(a)
------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86)
==============================================================================
Total from investment operations (1.72)
==============================================================================
Less distributions from net investment income (0.25)
==============================================================================
Net asset value, end of period $ 8.73
______________________________________________________________________________
==============================================================================
Total return(b) (16.12)%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 733
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets: 1.42%(c)
==============================================================================
Ratio of net investment income to average net assets 1.65%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 90%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are annualized and based on average daily net assets of $273,650.
AIM V.I. BASIC VALUE FUND
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $ 10.25 $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) 0.00
--------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.28) 0.26
================================================================================
Total from investment operations (2.29) 0.26
================================================================================
Less distributions from net investment
income (0.00) (0.01)
================================================================================
Net asset value, end of period $ 7.96 $10.25
________________________________________________________________________________
================================================================================
Total return(b) (22.34)% 2.58%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $104,597 $ 513
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense
reimbursements 1.41%(c) 1.44%(d)
--------------------------------------------------------------------------------
Without fee waivers and expense
reimbursements 1.41%(c) 2.88%(d)
================================================================================
Ratio of net investment income (loss) to
average net assets (0.07)%(c) 0.12%(d)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 22% 4%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $32,051,622.
(d) Annualized.
AIM V.I. BLUE CHIP FUND
MARCH 13, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
--------------
Net asset value, beginning of period $ 7.00
----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a)
----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.75)
============================================================================
Total from investment operations (1.76)
============================================================================
Net asset value, end of period $ 5.24
____________________________________________________________________________
============================================================================
Total return(b) (25.14)%
____________________________________________________________________________
============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 273
____________________________________________________________________________
============================================================================
Ratio of expenses to average net assets 1.43%(c)
============================================================================
Ratio of net investment income (loss) to average net assets (0.28)%(c)
____________________________________________________________________________
============================================================================
Portfolio turnover rate 38%
____________________________________________________________________________
============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total return for the period shown.
(c) Ratios are annualized and based on average daily net assets of $104,902.
AIM V.I. CAPITAL APPRECIATION FUND
AUGUST 21, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ---------------
Net asset value, beginning of period $ 21.70 $23.19
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.04)(a)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.23) 0.45
================================================================================================
Total from investment operations (5.32) 0.41
================================================================================================
Less distributions from net realized gains -- (1.90)
================================================================================================
Net asset value, end of period $ 16.38 $21.70
________________________________________________________________________________________________
================================================================================================
Total return(b) (24.52)% 1.94%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $23,893 $3,527
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets 1.10%(c) 1.09%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.52)%(c) (0.46)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 67% 65%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $11,909,687.
(d) Annualized.
AIM V.I. CAPITAL DEVELOPMENT FUND
AUGUST 21, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ---------------
Net asset value, beginning of period $ 11.94 $11.88
-----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.01)
-----------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.55) 0.07
===============================================================================================
Total from investment operations (2.58) 0.06
===============================================================================================
Net asset value, end of period $ 9.36 $11.94
_______________________________________________________________________________________________
===============================================================================================
Total return(b) (21.61)% 0.50%
_______________________________________________________________________________________________
===============================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,969 $2,767
_______________________________________________________________________________________________
===============================================================================================
Ratio of expenses to average net assets 1.39%(c) 1.41%(d)
===============================================================================================
Ratio of net investment income (loss) to average net assets (0.33)%(c) (0.41)%(d)
_______________________________________________________________________________________________
===============================================================================================
Portfolio turnover rate 121% 125%
_______________________________________________________________________________________________
===============================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $8,582,831.
(d) Annualized.
AIM V.I. CORE EQUITY FUND
OCTOBER 24, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ----------------
Net asset value, beginning of period $ 20.19 $18.97
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.07(a) 0.00
-------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.26) 1.23
=================================================================================================
Total from investment operations (3.19) 1.23
=================================================================================================
Less dividends from net investment income (0.06) (0.01)
=================================================================================================
Net asset value, end of period $ 16.94 $20.19
_________________________________________________________________________________________________
=================================================================================================
Total return(b) (15.79)% 6.49%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,949 $ 400
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets 1.03%(c) 1.03%(d)
=================================================================================================
Ratio of net investment income (loss) to average net assets 0.42%(c) (0.10)%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate 113% 73%
_________________________________________________________________________________________________
=================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total return for all periods shown.
(c) Ratios are based on average daily net assets of $1,223,417.
(d) Annualized.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
NOVEMBER 7, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ----------------
Net asset value, beginning of period $ 5.58 $ 5.33
---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.01)(a)
---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.76) 0.26
===================================================================================================
Total from investment operations (1.80) 0.25
===================================================================================================
Net asset value, end of period $ 3.78 $ 5.58
___________________________________________________________________________________________________
===================================================================================================
Total return(b) (32.26)% 4.69%
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,498 $3,552
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.45%(c) 1.45%(d)
---------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.68%(c) 1.61%(d)
===================================================================================================
Ratio of net investment income (loss) to average net assets (0.82)%(c) (0.85)%(d)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 208% 144%
___________________________________________________________________________________________________
===================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $8,399,195.
(d) Annualized.
AIM V.I. DIVERSIFIED INCOME FUND
MARCH 14, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
--------------
Net asset value, beginning of period $ 8.97
----------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.42(a)
----------------------------------------------------------------------------
Net income (losses) on securities (both realized and
unrealized) (0.08)
============================================================================
Total from investment operations 0.34
============================================================================
Less dividends from net investment income (0.73)
============================================================================
Net asset value, end of period $ 8.58
____________________________________________________________________________
============================================================================
Total return(b) 3.90%
____________________________________________________________________________
============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 124
____________________________________________________________________________
============================================================================
Ratio of expenses to average net assets 1.19%(c)
============================================================================
Ratio of net investment income to average net assets 5.90%(c)
____________________________________________________________________________
============================================================================
Portfolio turnover rate 86%
____________________________________________________________________________
============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total return for period shown.
(c) Ratios are annualized and based on average daily net assets of $40,338.
AIM V.I. GLOBAL UTILITIES FUND
MARCH 26, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
--------------
Net asset value, beginning of period $ 13.54
------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.19(a)
------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.66)
==============================================================================
Total from investment operations (3.47)
==============================================================================
Less distributions from net investment income (0.35)
==============================================================================
Net asset value, end of period $ 9.72
______________________________________________________________________________
==============================================================================
Total return(b) (25.55)%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 111
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.45%(c)
------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 1.51%(c)
==============================================================================
Ratio of net investment income to average net assets 2.52%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 54%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total return for the period shown.
(c) Ratios are annualized and based on average daily net assets of $29,138.
AIM V.I. GOVERNMENT SECURITIES FUND
SEPTEMBER 19, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $ 11.52 $11.84
---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.46(a) 0.16(a)
---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.60 (0.14)
===================================================================================================
Total from investment operations 1.06 0.02
===================================================================================================
Less dividends from net investment income (0.23) (0.34)
===================================================================================================
Net asset value, end of period $ 12.35 $11.52
___________________________________________________________________________________________________
===================================================================================================
Total return(b) 9.25% 0.22%
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,926 $ 946
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets (including interest
expense) 1.06%(c) 1.41%(d)
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets (excluding interest
expense) 1.05%(c) 1.13%(d)
___________________________________________________________________________________________________
===================================================================================================
Ratio of net investment income to average net assets 3.76%(c) 4.76%(d)
___________________________________________________________________________________________________
===================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.28%(d)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 170% 199%
___________________________________________________________________________________________________
===================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for the periods shown.
(c) Ratios are based on average daily net assets of $5,853,778.
(d) Annualized.
AIM V.I. GROWTH FUND
SEPTEMBER 19, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $16.36 $14.67
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.02)(a)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.03) 1.75
================================================================================================
Total from investment operations (5.09) 1.73
================================================================================================
Less dividends from net investment income -- (0.04)
================================================================================================
Net asset value, end of period $11.27 $16.36
________________________________________________________________________________________________
================================================================================================
Total return(b) (31.11)% 11.79%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,733 $ 604
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets 1.16%(c) 1.17%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.46)%(c) (0.46)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 195% 239%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $1,606,748.
(d) Annualized.
AIM V.I. HIGH YIELD FUND
MARCH 26, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
--------------
Net asset value, beginning of period $ 5.27
----------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.38(a)
----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.66)
============================================================================
Total from investment operations (0.28)
============================================================================
Net asset value, end of period $ 4.99
____________________________________________________________________________
============================================================================
Total return(b) (5.31)%
____________________________________________________________________________
============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 142
____________________________________________________________________________
============================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.45%(c)
----------------------------------------------------------------------------
Without fee waivers and expense reimbursements 1.55%(c)
============================================================================
Ratio of net investment income to average net assets 10.05%(c)
____________________________________________________________________________
============================================================================
Portfolio turnover rate 74%
____________________________________________________________________________
============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are annualized and based on average daily net assets of $59,371.
AIM V.I. INTERNATIONAL GROWTH FUND
SEPTEMBER 19, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $ 14.90 $14.42
---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03(a) 0.01(a)
---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.40) 0.93
===================================================================================================
Total from investment operations (2.37) 0.94
===================================================================================================
Less distributions:
Dividends from net investment income (0.08) (0.05)
---------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.41)
===================================================================================================
Total distributions (0.08) (0.46)
===================================================================================================
Net asset value, end of period $ 12.45 $14.90
___________________________________________________________________________________________________
===================================================================================================
Total return(b) (15.89)% 6.63%
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 4,751 $ 374
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.31%(c) 1.30%(d)
---------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.34%(c) 1.30%(d)
===================================================================================================
Ratio of net investment income to average net assets 0.19%(c) 0.22%(d)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 71% 109%
___________________________________________________________________________________________________
===================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $8,541,502.
(d) Annualized.
AIM V.I. MID CAP CORE EQUITY FUND
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $ 10.71 $10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.01)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.16) 0.73
================================================================================================
Total from investment operations (1.20) 0.72
================================================================================================
Less distributions from net investment income -- (0.01)
================================================================================================
Net asset value, end of period $ 9.51 $10.71
________________________________________________________________________________________________
================================================================================================
Total return(b) (11.20)% 7.22%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,214 $ 536
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.45%(c) 1.44%(d)
------------------------------------------------------------------------------------------------
Without fee waivers 1.55%(c) 5.44%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.37)%(c) (0.25)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 36% 20%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(c) Ratios are based on average daily net assets of $815,346.
(d) Annualized.
AIM V.I. MONEY MARKET FUND
DECEMBER 16, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ -----------------
Net asset value, beginning of period $ 1.00 $1.00
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.00
=================================================================================================
Less distributions from net investment income (0.01) 0.00
=================================================================================================
Net asset value, end of period $ 1.00 $1.00
_________________________________________________________________________________________________
=================================================================================================
Total return(a) 0.93% 0.05%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $7,831 $ 997
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets 0.92%(b) 0.89%(c)
=================================================================================================
Ratio of net investment income to average net assets 0.93%(b) 3.11%(c)
_________________________________________________________________________________________________
=================================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total returns for all periods shown.
(b) Ratios are based on average daily net assets of $3,473,175.
(c) Annualized.
AIM V.I. NEW TECHNOLOGY FUND
APRIL 2, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
-------------
Net asset value, beginning of period $ 3.69
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.35)
================================================================================
Total from investment operations (1.38)
================================================================================
Net asset value, end of period $ 2.31
________________________________________________________________________________
================================================================================
Total return(b) (37.40)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 13
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.45%(c)
--------------------------------------------------------------------------------
Without fee waivers 1.96%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (1.37)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 144%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total return does not reflect charges at the separate account level which if included would reduce total return for the period shown.
(c) Ratios are annualized and based on average daily net assets of $21,275.
AIM V.I. PREMIER EQUITY FUND
SEPTEMBER 19, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------ ------------------
Net asset value, beginning of period $ 23.34 $21.00
---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00(a) 0.00(a)
---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.10) 2.85
===================================================================================================
Total from investment operations (7.10) 2.85
===================================================================================================
Less distributions:
Dividends from net investment income (0.07) (0.03)
---------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.48)
===================================================================================================
Total distributions (0.07) (0.51)
===================================================================================================
Net asset value, end of period $ 16.17 $23.34
___________________________________________________________________________________________________
===================================================================================================
Total return(b) (30.44)% 13.66%
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $10,834 $ 687
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets 1.10%(c) 1.10%(d)
===================================================================================================
Ratio of net investment income (loss) to average net assets (0.01)%(c) (0.01)%(d)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 46% 40%
___________________________________________________________________________________________________
===================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and is not annualized for periods less than one year. Total returns do not reflect charges at the separate account level which if included would reduce total return for all periods shown.
(c) Ratios are based on average daily net assets of $5,410,029.
(d) Annualized.
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.
AIMinvestments.com VI-PRO-2
STATEMENT OF
ADDITIONAL INFORMATION
AIM VARIABLE INSURANCE FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO EACH PORTFOLIO (EACH A "FUND", COLLECTIVELY, THE "FUNDS") OF AIM VARIABLE INSURANCE FUNDS LISTED BELOW. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUSES FOR THE FUNDS LISTED BELOW. YOU MAY OBTAIN A COPY OF ANY PROSPECTUS FOR ANY FUND LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
A I M FUND SERVICES, INC.
P.O. BOX 4739
HOUSTON, TEXAS 77210-4739
OR BY CALLING (800) 347-4246
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1, 2003, RELATES TO THE FOLLOWING PROSPECTUSES DATED MAY 1, 2003, FOR THE SERIES I AND SERIES II SHARES OF EACH OF THE FOLLOWING FUNDS:
FUND DATED
---- -----
AIM V.I. AGGRESSIVE GROWTH FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. BALANCED FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V. I. BASIC VALUE FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. BLUE CHIP FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. CAPITAL APPRECIATION FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. CAPITAL DEVELOPMENT FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. CORE EQUITY FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. DIVERSIFIED INCOME FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. GLOBAL UTILITIES FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. GOVERNMENT SECURITIES FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. GROWTH FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. HIGH YIELD FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. INTERNATIONAL GROWTH FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. MID CAP CORE EQUITY FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. MONEY MARKET FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. NEW TECHNOLOGY FUND
SERIES I 5/1/03
SERIES II 5/1/03
AIM V.I. PREMIER EQUITY FUND
SERIES I 5/1/03
SERIES II 5/1/03
|
AIM VARIABLE INSURANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION ABOUT THE TRUST...............................................................................1
FUND HISTORY.............................................................................................1
SHARES OF BENEFICIAL INTEREST............................................................................1
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS..........................................................3
CLASSIFICATION...........................................................................................3
INVESTMENT STRATEGIES AND RISKS..........................................................................3
Equity Investments..............................................................................7
Foreign Investments.............................................................................7
Debt Investments for Equity Funds...............................................................9
Debt Investments for Fixed Income Funds and Money Market Fund..................................10
Other Investments..............................................................................14
Investment Techniques..........................................................................16
Derivatives....................................................................................20
Additional Securities or Investment Techniques.................................................27
DIVERSIFICATION REQUIREMENTS - AIM V.I. MONEY MARKET FUND...............................................27
FUND POLICIES...........................................................................................27
TEMPORARY DEFENSIVE POSITIONS...........................................................................29
PORTFOLIO TURNOVER......................................................................................30
TEMPORARY DEFENSIVE POSITIONS...........................................................................30
MANAGEMENT OF THE TRUST..........................................................................................30
BOARD OF TRUSTEES.......................................................................................30
MANAGEMENT INFORMATION..................................................................................30
TRUSTEE OWNERSHIP OF FUND SHARES........................................................................31
FACTORS CONSIDERED IN RENEWING INVESTMENT ADVISORY AGREEMENT............................................31
COMPENSATION............................................................................................32
Retirement Plan For Trustees...................................................................32
Deferred Compensation Agreements...............................................................32
CODES OF ETHICS.........................................................................................33
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..............................................................33
INVESTMENT ADVISORY AND OTHER SERVICES...........................................................................33
INVESTMENT ADVISOR......................................................................................33
INVESTMENT SUB-ADVISOR..................................................................................35
SERVICE AGREEMENTS......................................................................................36
OTHER SERVICE PROVIDERS.................................................................................37
BROKERAGE ALLOCATION AND OTHER PRACTICES.........................................................................37
BROKERAGE TRANSACTIONS..................................................................................37
COMMISSIONS.............................................................................................38
BROKERAGE SELECTION.....................................................................................38
DIRECTED BROKERAGE (RESEARCH SERVICES)..................................................................39
REGULAR BROKERS OR DEALERS..............................................................................39
ALLOCATION OF PORTFOLIO TRANSACTIONS....................................................................40
ALLOCATION OF INITIAL PUBLIC OFFERING ("IPO") TRANSACTIONS..............................................40
PURCHASE AND REDEMPTION OF SHARES................................................................................41
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................44
TAX MATTERS.............................................................................................45
|
DISTRIBUTION OF SECURITIES.......................................................................................46
DISTRIBUTION PLAN.......................................................................................46
DISTRIBUTOR.............................................................................................48
CALCULATION OF PERFORMANCE DATA..................................................................................48
APPENDICES:
RATINGS OF DEBT SECURITIES......................................................................................A-1
TRUSTEES AND OFFICERS...........................................................................................B-1
TRUSTEE COMPENSATION TABLE......................................................................................C-1
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.............................................................D-1
MANAGEMENT FEES.................................................................................................E-1
ADMINISTRATIVE SERVICES FEES....................................................................................F-1
BROKERAGE COMMISSIONS...........................................................................................G-1
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES OF REGULAR BROKERS OR DEALERS ...............H-1
AMOUNTS PAID TO AIM DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTIONS PLAN...........................................I-1
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLANS...................................................J-1
PERFORMANCE DATA................................................................................................K-1
FINANCIAL STATEMENTS.............................................................................................FS
|
GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Variable Insurance Funds (the "Trust") is a Delaware statutory 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 consists of eighteen separate portfolios: AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Basic Value Fund, AIM V.I. Blue Chip Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Core Equity 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. High Yield Fund, AIM V.I. International Growth Fund, AIM V.I. Mid Cap Core Equity Fund, AIM V.I. Money Market Fund, AIM V.I. New Technology Fund and AIM V.I. Premier Equity Fund (each a "Fund" and collectively, the "Funds"). Under the Agreement and Declaration of Trust, dated May 15, 2002, (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.
The Trust was originally organized on January 22, 1993 as a Maryland corporation. On October 15, 1999, the following Funds acquired all the assets and assumed all the liabilities of the series portfolios of G.T. Global Variable Investment Trust and G.T. Global Variable Investment Series: AIM V.I. Global Growth and Income Fund (which later merged into AIM V.I. Growth Fund on September 18, 2000), AIM V.I. Capital Appreciation Fund, AIM V.I. International Equity Fund, AIM V.I. Telecommunications Fund, AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund. The Trust reorganized as a Delaware business trust on May 1, 2000. All of the Funds, except AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Core Equity Fund, were included in the reorganization. All historical financial and other information contained in this Statement of Additional Information for periods prior to May 1, 2000 relating to these Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Core Equity Fund commenced operations as a series of the Trust. Prior to May 1, 2000 the AIM V.I. New Technology Fund was known as AIM V.I. Telecommunications Fund, and prior to May 1, 2001, such Fund was known as AIM V.I. Telecommunications and Technology Fund. AIM V.I. Core Equity Fund was knows as AIM V.I. Growth and Income Fund, AIM V.I. International Growth Fund was known as AIM V.I. International Equity Fund, AIM V.I. Mid Cap Core Equity Fund was known as AIM V.I. Mid Cap Equity Fund and AIM V.I. Premier Equity Fund was known as AIM V.I. Value Fund.
SHARES OF BENEFICIAL INTEREST
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.
The Trust allocates moneys and other property it receives from the issue or sale of shares of each of its series of shares, and all income, earnings and profits from such issuance and sales, subject only to the rights of creditors, to the appropriate Fund. These assets constitute the underlying assets of each Fund, are segregated on the Trust's books of account, and are charged with the expenses of such Fund and its respective classes. The Trust allocates any general expenses of the Trust not readily identifiable as belonging to a particular Fund by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors.
Each Fund offers Series I and Series II shares. 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. Each Fund offers two separate classes of shares: Series I shares and Series II shares. Each such class represents interests in the same portfolio of investments. Differing expenses will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for distribution after satisfaction of outstanding liabilities of the Fund allocable to such class.
The Trust is not required to hold annual or regular meetings of shareholders. Meetings of shareholders of a Fund or Series 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 owners of insurance company separate accounts ("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.
Each share of a Fund has generally the same voting, dividend, liquidation and other rights, however, each class of shares of a Fund is subject to different class-specific expenses. Only shareholders of a specific class may vote on matters relating to that class' distribution plan.
Except as specifically noted above, 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 or class of shares, a separate vote of shareholders of that Fund or class is required. Shareholders of a Fund or class are not entitled to vote on any matter which does not affect that Fund or class but that requires a separate vote of another Fund or class. An example of a matter that would be voted on separately by shareholders of each Fund is the approval of the advisory agreement with A I M Advisors, Inc. ("AIM"), and an example of a matter that would be voted on separately by shareholders of each class of shares is approval of the distribution plans. When issued, shares of each Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are freely transferable. There are no conversion rights. 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.
Under Delaware law, shareholders of a Delaware statutory trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations. There is a remote possibility, however, 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. 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 is unable to meet its obligations and the complaining party is not held to be bound by the disclaimer.
The trustees and officers of the Trust will not be liable for any act, omission or obligation of the Trust or any Trustee or officer; however, a trustee or officer is not protected 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 or her office with the Trust ("Disabling Conduct"). The Trust Agreement provides for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, provided that such persons
have not engaged in Disabling Conduct. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers.
SHARE CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates, although the Trust in its sole discretion may issue them.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. Each of the Funds other than AIM V.I. Global Utilities Fund is "diversified" for purposes of the 1940 Act.
INVESTMENT STRATEGIES AND RISKS
The tables on the following pages identifies various securities and investment techniques used by AIM in managing the Funds. The tables have been marked to indicate those securities and investment techniques that AIM may use to manage a Fund. A Fund might not use all of these techniques at any one time. A Fund's transactions in a particular security or use of a particular technique is subject to limitations imposed by a Fund's investment objective, policies and restrictions described in that Fund's Prospectus and/or this Statement of Additional Information, as well as federal securities laws. The Funds' investment objectives, policies, strategies and practices are non-fundamental unless otherwise indicated. A more detailed description of the securities and investment techniques, as well as the risks associated with those securities and investment techniques that the Funds utilize, follows the table. The descriptions of the securities and investment techniques in this section supplement the discussion of principal investment strategies contained in each Fund's Prospectus; where a particular type of security or investment technique is not discussed in a Fund's Prospectus, that security or investment technique is not a principal investment strategy.
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 becomes effective.
AIM VARIABLE INSURANCE FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
FUND EQUITY FUNDS
---- ---------------------------------------------------------------------------------------------------------
AIM AIM AIM AIM AIM V.I. AIM
V.I. V.I. V.I. AIM V.I. AIM V.I. V.I. DENT V.I. AIM AIM V.I.
SECURITY AGGRESSIVE BASIC BLUE CAPITAL CAPITAL CORE DEMOGRAPHIC GLOBAL V.I. INTERNATIONAL
INVESTMENT GROWTH VALUE CHIP APPRECIATION DEVELOPMENT EQUITY TRENDS UTILITIES GROWTH GROWTH
TECHNIQUE FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ----- ---- ------------ ----------- ------ ----------- --------- ------ -------------
EQUITY INVESTMENTS
Common Stock X X X X X X X X X X
Preferred Stock X X X X X X X X X X
Convertible
Securities X X X X X X X X X X
Alternative
Entity Securities X X X X X X X X X X
FOREIGN INVESTMENTS
Foreign Securities X X X X X X X X X X
Foreign Government
Obligations X
Foreign Exchange
Transactions X X X X X X X X X X
DEBT INVESTMENTS FOR EQUITY FUNDS
U.S. Government
Obligations
Investment Grade
Corporate
Obligations X X X X X X X X X X
Liquid Assets X X X X X X X X X X
Junk Bonds X
DEBT INVESTMENTS FOR FIXED INCOME FUNDS AND MONEY MARKET FUND
U.S. Government
Obligations
Rule 2a-7
Requirements
Foreign Bank
Obligations
Mortgage-Backed
and Asset-Backed
Securities
Collateralized
Mortgage
Obligations
Bank Instruments
Commercial
Instruments
Participation
Interests
FIXED INCOME FUNDS AND
FUND EQUITY FUNDS MONEY MARKET FUND
---- ------------------ --------------------------------------------------
AIM
V.I.
MID AIM AIM AIM AIM
CAP AIM V.I. V.I. AIM V.I. AIM V.I. V.I. V.I.
SECURITY CORE NEW PREMIER V.I. DIVERSIFIED GOVERNMENT HIGH MONEY
INVESTMENT EQUITY TECHNOLOGY EQUITY BALANCED INCOME SECURITIES YIELD MARKET
TECHNIQUE FUND FUND FUND FUND FUND FUND FUND FUND
---------- ------ ---------- -------- -------- ----------- ---------- ----- ------
EQUITY INVESTMENTS
Common Stock X X X X X
Preferred Stock X X X X X X
Convertible
Securities X X X X X X
Alternative
Entity Securities X X X X X X
FOREIGN INVESTMENTS
Foreign Securities X X X X X X X X
Foreign Government
Obligations X X X X X
Foreign Exchange
Transactions X X X X X X X
DEBT INVESTMENTS FOR EQUITY FUNDS
U.S. Government
Obligations
Investment Grade
Corporate
Obligations X X X
Liquid Assets X X X
Junk Bonds
DEBT INVESTMENTS FOR FIXED INCOME FUNDS AND MONEY MARKET FUND
U.S. Government
Obligations X X X X X
Rule 2a-7
Requirements X X X X X
Foreign Bank
Obligations X X X X
Mortgage-Backed
and Asset-Backed
Securities X X X X
Collateralized
Mortgage
Obligations X
Bank Instruments X X X
Commercial
Instruments X X X X
Participation
Interests X
|
AIM VARIABLE INSURANCE FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
FUND EQUITY FUNDS
---- ---------------------------------------------------------------------------------------------------------
AIM AIM AIM AIM AIM V.I. AIM
V.I. V.I. V.I. AIM V.I. AIM V.I. V.I. DENT V.I. AIM AIM V.I.
SECURITY AGGRESSIVE BASIC BLUE CAPITAL CAPITAL CORE DEMOGRAPHIC GLOBAL V.I. INTERNATIONAL
INVESTMENT GROWTH VALUE CHIP APPRECIATION DEVELOPMENT EQUITY TRENDS UTILITIES GROWTH GROWTH
TECHNIQUE FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ----- ---- ------------ ----------- ------ ----------- --------- ------ -------------
Municipal Lease
Obligations
Investment Grade
Corporate Debt
Obligations
Junk Bonds
OTHER INVESTMENTS
REITs X X X X X X X X X X
Other Investment
Companies X X X X X X X X X X
Defaulted
Securities
Municipal Forward
Contracts
Variable or
Floating Rate
Instruments
Indexed Securities
Zero-Coupon and
Pay-in-Kind
Securities
Synthetic
Municipal
Instruments
INVESTMENT TECHNIQUES
Delayed Delivery
Transactions X X X X X X X X X X
When-Issued
Securities X X X X X X X X X X
Short Sales X X X X X X X X X X
Margin Transactions
Swap Agreements X X X X X X X X X X
Interfund Loans X X X X X X X X X X
Borrowing X X X X X X X X X X
Lending Portfolio
Securities X X X X X X X X X X
Repurchase
Agreements X X X X X X X X X X
FIXED INCOME FUNDS AND
FUND EQUITY FUNDS MONEY MARKET FUND
---- ------------------ --------------------------------------------------
AIM
V.I.
MID AIM AIM AIM AIM
CAP AIM V.I. V.I. AIM V.I. AIM V.I. V.I. V.I.
SECURITY CORE NEW PREMIER V.I. DIVERSIFIED GOVERNMENT HIGH MONEY
INVESTMENT EQUITY TECHNOLOGY EQUITY BALANCED INCOME SECURITIES YIELD MARKET
TECHNIQUE FUND FUND FUND FUND FUND FUND FUND FUND
---------- ------ ---------- -------- -------- ----------- ---------- ----- ------
Municipal Lease
Obligations X
Investment Grade
Corporate Debt
Obligations X X X X
Junk Bonds X X
OTHER INVESTMENTS
REITs X X X X X X X X
Other Investment
Companies X X X X X X X X
Defaulted
Securities X
Municipal Forward
Contracts
Variable or
Floating Rate
Instruments X X X X
Indexed Securities
Zero-Coupon and
Pay-in-Kind
Securities X X X
Synthetic
Municipal
Instruments
INVESTMENT TECHNIQUES
Delayed Delivery
Transactions X X X X X X X X
When-Issued
Securities X X X X X X X X
Short Sales X X X X X X X
Margin Transactions
Swap Agreements X X X X X
Interfund Loans X X X X X X X X
Borrowing X X X X X X X X
Lending Portfolio
Securities X X X X X X X X
Repurchase
Agreements X X X X X X X X
|
AIM VARIABLE INSURANCE FUNDS
SUMMARY OF SECURITIES AND INVESTMENT TECHNIQUES
FUND EQUITY FUNDS
---- ---------------------------------------------------------------------------------------------------------
AIM AIM AIM AIM AIM V.I. AIM
V.I. V.I. V.I. AIM V.I. AIM V.I. V.I. DENT V.I. AIM AIM V.I.
SECURITY AGGRESSIVE BASIC BLUE CAPITAL CAPITAL CORE DEMOGRAPHIC GLOBAL V.I. INTERNATIONAL
INVESTMENT GROWTH VALUE CHIP APPRECIATION DEVELOPMENT EQUITY TRENDS UTILITIES GROWTH GROWTH
TECHNIQUE FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ----- ---- ------------ ----------- ------ ----------- --------- ------ -------------
Reverse Repurchase
Agreements X X X X X X X X X X
Dollar Rolls
Illiquid Securities X X X X X X X X X X
Rule 144A
Securities X X X X X X X X X X
Unseasoned
Securities X X X X X X X X X X
Portfolio
Transactions
Sale of Money
Market Securities
Standby Commitments
DERIVATIVES
Equity-Linked
Derivatives X X X X X X X X X X
Put Options X X X X X X X X X X
Call Options X X X X X X X X X X
Straddles X X X X X X X X X X
Warrants X X X X X X X X X X
Futures Contracts
and Options on
Futures Contracts X X X X X X X X X X
Forward Currency
Contracts X X X X X X X X X X
Cover X X X X X X X X X X
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
Special Situations X
Taxable Municipal
Securities
FIXED INCOME FUNDS AND
FUND EQUITY FUNDS MONEY MARKET FUND
---- ------------------ --------------------------------------------------
AIM
V.I.
MID AIM AIM AIM AIM
CAP AIM V.I. V.I. AIM V.I. AIM V.I. V.I. V.I.
SECURITY CORE NEW PREMIER V.I. DIVERSIFIED GOVERNMENT HIGH MONEY
INVESTMENT EQUITY TECHNOLOGY EQUITY BALANCED INCOME SECURITIES YIELD MARKET
TECHNIQUE FUND FUND FUND FUND FUND FUND FUND FUND
---------- ------ ---------- -------- -------- ----------- ---------- ----- ------
Reverse Repurchase
Agreements X X X X X X X X
Dollar Rolls X X X
Illiquid Securities X X X X X X X X
Rule 144A
Securities X X X X X X X X
Unseasoned
Securities X X X X X X X
Portfolio
Transactions
Sale of Money
Market Securities
Standby Commitments
DERIVATIVES
Equity-Linked
Derivatives X X X X
Put Options X X X X X X X
Call Options X X X X X X X
Straddles X X X X X X X
Warrants X X X X X X
Futures Contracts
and Options on
Futures Contracts X X X X X X X
Forward Currency
Contracts X X X X X X
Cover X X X X X X X
ADDITIONAL SECURITIES OR INVESTMENT TECHNIQUES
Special Situations
Taxable Municipal
Securities X X
|
Equity Investments
COMMON STOCK. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. A Fund participates in the success or failure of any company in which it holds stock. 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.
PREFERRED STOCK. Preferred stock, unlike common stock, often offers a stated dividend rate payable from a corporation's earnings. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, a negative feature when interest rates decline. Dividends on some preferred stock may be "cumulative," requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer's common stock. Preferred stock also generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation, and may be "participating," which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means that the interest to be paid is set by auction and will often be reset at stated intervals. The rights of preferred stocks on the distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.
CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures, notes, preferred stocks and other securities that may be converted into a prescribed amount of common stock or other equity securities at a specified price and time. The holder of convertible securities is entitled to receive interest paid or accrued on debt, or dividends paid or accrued on preferred stock, until the security matures or is converted.
The value of a convertible security depends on interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuer's capital structure. Convertible securities may be illiquid, and may be required to convert at a time and at a price that is unfavorable to the Fund. AIM V.I. Blue Chip Fund does not intend to invest more than 10% of its total assets in convertible securities.
The Funds will invest in a convertible debt security based primarily on the characteristics of the equity security into which it converts, and without regard to the credit rating of the convertible security (even if the credit rating is below investment grade). To the extent that a Fund invests in convertible debt securities with credit ratings below investment grade, such securities may have a higher likelihood of default, although this may be somewhat offset by the convertibility feature. See also "Junk Bonds" below.
ALTERNATIVE ENTITY SECURITIES. Companies that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate entities may issue equity securities that are similar to common or preferred stock of corporations.
Foreign Investments
FOREIGN SECURITIES. Foreign securities are equity or debt securities issued by entities outside the United States. For all Funds except AIM V.I. International Growth Fund, the term "foreign securities" includes securities in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers. Depositary Receipts are typically issued by a bank or trust company and evidence ownership of underlying securities issued by foreign corporations.
Each Fund may invest in foreign securities as described in the Prospectus. Investments by a Fund in foreign securities, whether denominated in U.S. dollars or foreign currencies, may entail all of the
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 Funds' foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in which the Funds may invest may not be 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 Funds' investments.
Regulatory Risk. Foreign companies are not registered with the Securities and Exchange Commission ("SEC") and 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, corporate governance practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the Funds invest will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (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.
On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. Each participating country (currently, Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain) has replaced its local currency with the euro effective July 1, 2002.
Risks of Developing Countries. Each Fund (excluding AIM V.I. Money Market Fund) may invest 5%, except that AIM V.I. Dent Demographic Trends Fund may invest 10% and AIM V.I. International Growth Fund may invest 20%, of their respective total assets in securities of companies located in developing countries. Investments in developing countries present risks greater than, and in addition to, those presented by investments in foreign issuers in general. A number of developing countries restrict, to varying degrees, foreign investment in stocks. Repatriation of investment income, capital, and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing countries. A number of the currencies of developing countries have experienced significant declines against the U.S. dollar in recent years, and devaluation may occur subsequent to investments in these currencies by a Fund. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative effects on the economies and securities markets of certain emerging market countries. Many of the developing securities markets are relatively small, are less diverse, have low trading volumes, suffer periods of relative illiquidity, and are characterized by significant price volatility. There is a risk in developing countries that a future economic or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies, any of which may have a detrimental effect on a Fund's investments.
FOREIGN GOVERNMENT OBLIGATIONS. Debt securities issued by foreign governments are often, but not always, supported by the full faith and credit of the foreign governments, or their subdivisions, agencies or instrumentalities, that issue them. These securities involve the risks discussed above with respect to foreign securities. Additionally, the issuer of the debt or the governmental authorities that control repayment of the debt may be unwilling or unable to pay interest or repay principal when due. Political or economic changes or the balance of trade may affect a country's willingness or ability to service its debt obligations. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt obligations, especially debt obligations issued by the governments of developing countries. Foreign government obligations of developing countries, and some structures of emerging market debt securities, both of which are generally below investment grade, are sometimes referred to as "Brady Bonds".
FOREIGN EXCHANGE TRANSACTIONS. Foreign exchange transactions include direct purchases of futures contracts with respect to foreign currency, and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange traded futures contracts.
Each Fund (except AIM V.I. Money Market Fund) has authority to deal in foreign exchange between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rates between those currencies. A Fund may commit the same percentage of its total assets to foreign exchange hedges as it can invest in foreign securities.
The Funds may utilize either specific transactions ("transaction hedging") or portfolio positions ("position hedging") to hedge foreign currency exposure through foreign exchange transactions. Transaction hedging is the purchase or sale of foreign currency with respect to specific receivables or payables of a Fund accruing in connection with the purchase or sale of its portfolio securities, the sale and redemption of shares of the Fund, or the payment of dividends and distributions by the Fund. Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions (or underlying portfolio security positions, such as in an ADR) denominated or quoted in a foreign currency. Additionally, foreign exchange transactions may involve some of the risks of investments in foreign securities.
Debt Investments for Equity Funds
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. Each Fund may invest in U.S. dollar-denominated debt obligations issued or guaranteed by U.S. corporations or U.S. commercial banks, U.S. dollar-denominated obligations of foreign issuers and debt obligations of foreign issuers denominated in foreign currencies. Such debt obligations include, among others, bonds, notes, debentures and variable rate demand notes. In choosing corporate debt securities on behalf of a Fund, its investment adviser may consider (i) general economic and financial conditions; (ii) the specific issuer's (a) business and management, (b) cash flow, (c) earnings coverage of interest and dividends, (d) ability to operate under adverse economic conditions, (e) fair market value of assets, and (f) in the case of foreign issuers, unique political, economic or social conditions applicable to such issuer's country; and, (iii) other considerations deemed appropriate.
LIQUID ASSETS. For cash management purposes, the Funds may hold a portion of their assets in cash or cash equivalents, including shares of affiliated money market funds. Cash equivalents include money market instruments (such as certificates of deposit, time deposits, banker's acceptances from U.S. or foreign banks, and repurchase agreements), shares of affiliated money market funds or high-quality debt obligations (such as U.S. Government obligations, commercial paper, master notes and other short-term corporate instruments, participation interests in corporate loans, and municipal obligations).
JUNK BONDS. Junk bonds are lower-rated or non-rated debt securities. Junk bonds are considered speculative with respect to their capacity to pay interest and repay principal in accordance
with the terms of the obligation. While generally providing greater income and opportunity for gain, non-investment grade debt securities are subject to greater risks than higher-rated securities.
Companies that issue junk bonds are often highly leveraged, and may not have more traditional methods of financing available to them. During an economic downturn or recession, highly leveraged issuers of high yield securities may experience financial stress, and may not have sufficient revenues to meet their interest payment obligations. Economic downturns tend to disrupt the market for junk bonds, lowering their values, and increasing their price volatility. The risk of issuer default is higher with respect to junk bonds because such issues are generally unsecured and are often subordinated to other creditors of the issuer.
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. The lower the rating of a junk bond, the more speculative its characteristics.
To the extent that a Fund has the ability to invest in junk bonds, a Fund may have difficulty selling certain junk bonds because they may have a thin trading market. The lack of a liquid secondary market may have an adverse effect on the market price and each Fund's ability to dispose of particular issues and may also make it more difficult for each Fund to obtain accurate market quotations of valuing these assets. In the event a Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds at an unfavorable price. 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.
Descriptions of debt securities ratings are found in Appendix A.
Debt Investments for Fixed Income Funds and Money Market Fund
U.S. GOVERNMENT OBLIGATIONS. Obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities include bills, notes and bonds issued by the U.S. Treasury, as well as "stripped" or "zero coupon" U.S. Treasury obligations representing future interest or principal payments on U.S. Treasury notes or bonds. Stripped securities are sold at a discount to their "face value," and may exhibit greater price volatility than interest-bearing securities since investors receive no payment until maturity. Obligations of certain agencies and instrumentalities of the U.S. Government, such as the Government National Mortgage Association ("GNMA"), are supported by the full faith and credit of the U.S. Treasury; others, such as those of the Federal National Mortgage Association ("FNMA"), are supported by the right of the issuer to borrow from the Treasury; others, such as those of the Student Loan Marketing Association ("SLMA"), are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations; still others, though issued by an instrumentality chartered by the U.S. Government, like the Federal Farm Credit Bureau ("FFCB"), are supported only by the credit of the instrumentality. The U.S. Government may choose not to provide financial support to U.S. Government-sponsored agencies or instrumentalities if it is not legally obligated to do so.
RULE 2a-7 REQUIREMENTS. Money market instruments in which the Fund will invest will be "Eligible Securities" as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. An Eligible Security is generally a rated security with a remaining maturity of 397 calendar days or less that has been rated by the Requisite NRSROs (as defined below) in one of the two highest short-term rating categories, or a security issued by an issuer that has received a rating by the Requisite NRSROs in one of the two highest short-term rating categories with respect to a class of debt obligations (or any debt obligation within that class). Eligible Securities may also include unrated securities determined by AIM (under the supervision of and pursuant to guidelines established by the Board of Trustees) to be of comparable quality to such rated securities. If an unrated security is subject to a guarantee, to be an Eligible Security, the guarantee generally must have received a rating from an NRSRO in one of the two highest short-term rating categories or be issued by a guarantor that has received a rating from an NRSRO in one of the two highest short-term rating categories with respect to a class of debt obligations (or any debt obligation within that class). The term "Requisite NRSRO" means
(a) any two nationally recognized statistical rating organizations (NRSROs) that have issued a rating with respect to a security or class of debt obligations of an issuer, or (b) if only one NRSRO has issued a rating with respect to such security or issuer at the time a Fund acquires the security, that NRSRO.
AIM V.I. Money Market Fund will attempt to maintain a constant net asset value per share of $1.00 and, to this end, values its assets by the amortized cost method and rounds the per share net asset value of its shares in compliance with applicable rules and regulations. Accordingly, the Fund invests only in securities having remaining maturities of 397 days or less and maintains a dollar weighted average portfolio maturity of 90 days or less. The maturity of a security held by the Fund is determined in compliance with applicable rules and regulations. Certain securities bearing interest at rates that are adjusted prior to the stated maturity of the instrument or that are subject to redemption or repurchase agreements are deemed to have maturities shorter than their stated maturities.
FOREIGN BANK OBLIGATIONS. To the extent that a Fund has the ability to invest in foreign Bank Obligations, the Fund 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. AIM V.I. 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.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Mortgage-backed securities are mortgage-related securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, or issued by nongovernment entities. Mortgage-related securities represent pools of mortgage loans assembled for sale to investors by various government agencies such as GNMA and government-related organizations such as FNMA and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by nongovernment issuers such as commercial banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed by a third party or otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured.
There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities they issue. Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest. That guarantee is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly owned by the U.S. Government within the Department of Housing and Urban Development. Mortgage-related securities issued by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") and are guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with the U.S. Treasury. FNMA is a government-sponsored entity wholly owned by public stockholders. Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as "Freddie Macs") guaranteed as to payment of principal and interest by FHLMC itself and backed by a line of credit with the U.S. Treasury. FHLMC is a government-sponsored entity wholly owned by public stockholders.
Other asset-backed securities are structured like mortgage-backed securities, but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements. Regular payments received in respect of such
securities include both interest and principal. Asset-backed securities typically have no U.S. Government backing. Additionally, the ability of an issuer of asset-backed securities to enforce its security interest in the underlying assets may be limited.
If a Fund purchases a mortgage-backed or other asset-backed security at a premium, that portion may be lost if there is a decline in the market value of the security whether resulting from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. However, though the value of a mortgage-backed or other asset-backed security may decline when interest rates rise, the converse is not necessarily true, since in periods of declining interest rates the mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average life of the security and shortening the period of time over which income at the higher rate is received. When interest rates are rising, though, the rate of prepayment tends to decrease, thereby lengthening the period of time over which income at the lower rate is received. For these and other reasons, a mortgage-backed or other asset-backed security's average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore, it is not possible to predict accurately the security's return.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). AIM V.I. Balanced Fund may invest in CMOs. The Fund can also invest in mortgage-backed bonds and asset-backed securities. A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. Similar to a bond, interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes receive principal only after the first class has been retired. An investor is partially guarded against a sooner than desired return of principal because of the sequential payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates ("Collateral"). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest. Interest on Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. When the Series A, B, and C Bonds are paid in full, interest and principal on the Series Z Bond begins to be paid currently. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or savings and loan associations) to borrow against their loan portfolios.
CMOs that are issued or guaranteed by the U.S. government or by any of its agencies or instrumentalities will be considered U.S. government securities by the Funds, while other CMOs, even if collateralized by U.S. government securities, will have the same status as other privately issued securities for purposes of applying a Fund's diversification tests.
FHLMC CMOs. FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Unlike FHLMC Participation Certificates, payments of principal and interest on the CMOs are made semiannually, as opposed to monthly. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC's mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment experience applied to the mortgage collateral pool. All sinking fund payments in the CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the
collateral pool in excess of the amount of FHLMC's minimum sinking fund obligation for any payment date are paid to the holders of the CMOs as additional sinking fund payments. Because of the "pass-through" nature of all principal payments received on the collateral pool in excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date.
If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC's minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.
Risks of Mortgage-Related Securities. Investment in mortgage-backed securities poses several risks, including prepayment, market, and credit risk. Prepayment risk reflects the risk that borrowers may prepay their mortgages faster than expected, thereby affecting the investment's average life and perhaps its yield. Whether or not a mortgage loan is prepaid is almost entirely controlled by the borrower. Borrowers are most likely to exercise prepayment options at the time when it is least advantageous to investors, generally prepaying mortgages as interest rates fall, and slowing payments as interest rates rise. Besides the effect of prevailing interest rates, the rate of prepayment and refinancing of mortgages may also be affected by home value appreciation, ease of the refinancing process and local economic conditions.
Market risk reflects the risk that the price of the security may fluctuate over time. The price of mortgage-backed securities may be particularly sensitive to prevailing interest rates, the length of time the security is expected to be outstanding, and the liquidity of the issue. In a period of unstable interest rates, there may be decreased demand for certain types of mortgage-backed securities, and a Fund invested in such securities wishing to sell them may find it difficult to find a buyer, which may in turn decrease the price at which they may be sold.
Credit risk reflects the risk that a Fund may not receive all or part of its principal because the issuer or credit enhancer has defaulted on its obligations. Obligations issued by U.S. government-related entities are guaranteed as to the payment of principal and interest, but are not backed by the full faith and credit of the U.S. government. The performance of private label mortgage-backed securities, issued by private institutions, is based on the financial health of those institutions. With respect to GNMA certificates, although GNMA guarantees timely payment even if homeowners delay or default, tracking the "pass-through" payments may, at times, be difficult.
BANK INSTRUMENTS. Each Fund may invest in certificates of deposits, time deposits, and bankers' acceptances from U.S. or foreign banks. A bankers' acceptance is a bill of exchange or time draft drawn on and accepted by a commercial bank. A certificate of deposit is 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. A time deposit is 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.
COMMERCIAL INSTRUMENTS. Each Fund may invest in commercial instruments, including commercial paper, master notes and other short-term corporate instruments, that are denominated in U.S. dollars. Commercial paper consists of short-term promissory notes issued by corporations. Commercial paper may be traded in the secondary market after its issuance. Master notes are demand notes that permit the investment of fluctuating amounts of money at varying rates of interest pursuant to arrangements with issuers who meet the quality criteria of the Fund. The interest rate on a master note may fluctuate based upon changes in specified interest rates or be reset periodically according to a prescribed formula or may be a set rate. Although there is no secondary market in master demand notes, if such notes have a demand feature, the payee may demand payment of the principal amount of the note upon relatively short notice. 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 applicable quality criteria. The interest rate on a variable rate master demand note
is periodically redetermined according to a prescribed formula. All variable rate master demand notes acquired by AIM V.I. Money Market Fund will be payable within a prescribed notice period not to exceed seven days.
PARTICIPATION INTERESTS. AIM V.I. Money Market Fund may purchase participations in corporate loans. Participation loan interests generally will be acquired from a commercial bank or other financial institution (a "Lender") or from other holders of a participation interest (a "Participant"). The purchase of a participation interest either from a Lender or a Participant will not result in any direct contractual relationship with the borrowing company ("the Borrower"). Instead, the Fund will be required to rely on the Lender or the Participant that sold the participation loan interest both for the enforcement of the Fund's rights against the Borrower and for the receipt and processing of payments due to the Fund under the loans. The Fund is thus subject to the credit risk of both the Borrower and a Participant. Participation interests are generally subject to restrictions on resale. The Fund considers participation interests to be illiquid and therefore subject to the Fund's percentage limitation for investments in illiquid securities.
MUNICIPAL LEASE OBLIGATIONS. Municipal lease obligations may take the form of a lease, an installment purchase or a conditional sales contract. Municipal lease obligations are issued by state and local governments and authorities to acquire land, equipment and facilities such as state and municipal vehicles, telecommunications and computer equipment, and other capital assets. Interest payments on qualifying municipal leases for exempt from federal income taxes. Consistent with its investment objective, a Fund may purchase these obligations directly, or they may purchase participation interests in such obligations. Municipal leases are generally subject to greater risks than general obligation or revenue bonds. State laws set forth requirements that states or municipalities must meet in order to issue municipal obligations, and such obligations may contain a covenant by the issuer to budget for, appropriate, and make payments due under the obligation. However, certain municipal lease obligations may contain "non-appropriation" clauses which provide that the issuer is not obligated to make payments on the obligation in future years unless funds have been appropriated for this purpose each year. Accordingly, such obligations are subject to "non-appropriation" risk. While municipal leases are secured by the underlying capital asset, it may be difficult to dispose of such assets in the event of non-appropriation or other default. All direct investments by the Fund in municipal lease obligations shall be deemed illiquid and shall be valued according to the Fund's Procedures for Valuing Securities current at the time of such valuation.
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. See "Debt Investments for
Equity Funds - Investment Grade Corporate Debt" on page 9.
JUNK BONDS. See "Debt Investments for Equity Funds - Junk Bonds" on page 10.
Other Investments
REAL ESTATE INVESTMENT TRUSTS ("REITS"). REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interests 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 consistent with its investment objective, a Fund may invest up to 15% of its total assets in equity and/or debt securities issued by REITs.
To the extent that a 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. A 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, environmental liability risks, 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 an 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.
OTHER INVESTMENT COMPANIES. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds (defined below), 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 in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of the investing Fund.
The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds: (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.
DEFAULTED SECURITIES. AIM V.I. High Yield Fund may invest in defaulted securities. In order to enforce its rights in defaulted securities, the Fund may be required to participate in various legal proceedings or take possession of and manage assets securing the issuer's obligations on the defaulted securities. This could increase a Fund's operating expenses and adversely affect its net asset value. Any investments by a Fund in defaulted securities will also be considered illiquid securities subject to the limitations described herein, unless AIM determines that such defaulted securities are liquid under guidelines adopted by the Board of Trustees.
VARIABLE OR FLOATING RATE INSTRUMENTS. The Funds may invest in Municipal Securities which have variable or floating interest rates which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a specified interest rate change occurs in the case of a floating rate instrument. Variable or floating interest rates generally reduce changes in the market price of Municipal Securities from their original purchase price because, upon readjustment, such rates approximate market rates. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable or floating rate Municipal Securities than for fixed rate obligations. Many Municipal Securities with variable or floating interest rates purchased by a Fund are subject to payment of principal and accrued interest (usually within seven days) on the Fund's demand. The terms of such demand instruments require payment of principal and accrued interest by the issuer, a guarantor, and/or a liquidity provider. All variable or floating rate instruments will meet the applicable quality standards of a Fund. AIM will monitor the pricing, quality and liquidity of the variable or floating rate Municipal Securities held by the Funds.
To the extent a Fund has the ability to invest in Variable or Floating Rate Instruments, the Fund may invest in inverse floating rate obligations or residual interest bonds, or other obligations or certificates related to such securities which have similar features. These types of obligations generally have floating or variable interest rates that move in the opposite direction of short-term interest rates, and generally increase or decrease in value in response to changes in short-term interest rates at a rate which is a multiple (typically two) of the rate at which long-term fixed rate tax-exempt securities increase or decrease in response to such changes. As a result, such obligations have the effect of providing investment leverage and may be more volatile than long-term fixed rate tax-exempt securities.
ZERO-COUPON AND PAY-IN-KIND SECURITIES. To the extent consistent with its investment objective, each Fund may invest in zero-coupon or pay-in-kind securities. These securities are debt securities that do not make regular cash interest payments. Zero-coupon securities are sold at a deep discount to their face value. Pay-in-kind securities pay interest through the issuance of additional securities. Because zero-coupon and pay-in-kind securities do not pay current cash income, the price of these securities can be volatile when interest rates fluctuate. While these securities do not pay current cash income, federal tax law requires the holders of zero-coupon and pay-in-kind securities to include in income each year the portion of the original issue discount (or deemed discount) and other non-cash income on such securities accrued during that year. In order to qualify as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code") and to avoid certain excise taxes, the Fund may be required to distribute a portion of such discount and income, and may be required to dispose of other portfolio securities, which could occur during periods of adverse market prices, in order to generate sufficient cash to meet these distribution requirements.
Investment Techniques
DELAYED DELIVERY TRANSACTIONS. Delayed delivery transactions involve commitments by a Fund to dealers or issuers to acquire or sell securities at a specified future date beyond the customary settlement for such securities. These commitments may fix the payment price and interest rate to be received or paid on the investment. A Fund may purchase securities on a delayed delivery basis to the extent it can anticipate having available cash on settlement date. Delayed delivery transactions will not be used as a speculative or leverage technique.
Investment in securities on a delayed delivery basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a delayed delivery commitment. Until the settlement date, a Fund will segregate liquid assets of a dollar value sufficient at all times to make payment for the delayed delivery transactions. Such segregated liquid assets will be marked-to-market daily, and the amount segregated will be increased if necessary to maintain adequate coverage of the delayed delivery commitments. No additional delayed delivery agreements or when-issued commitments (as described below) will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of a Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of a Fund until settlement. Absent extraordinary circumstances, a Fund will not sell or otherwise transfer the delayed delivery basis securities prior to settlement.
AIM V.I. Government Securities Fund may enter into 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.
WHEN-ISSUED SECURITIES. Purchasing securities on a "when-issued" basis means that 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. The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. A Fund will only make commitments to purchase such securities with the intention of actually acquiring such securities, but the Fund may sell these securities before the settlement date if it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in a Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if 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 liquid assets, by 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 Fund's payment obligation).
Investment in securities on a when-issued basis may increase a Fund's exposure to market fluctuation and may increase the possibility that the Fund will incur short-term gains subject to federal taxation or short-term losses if the Fund must engage in portfolio transactions in order to honor a when-issued commitment. A Fund will employ techniques designed to reduce such risks. If a Fund purchases a when-issued security, the Fund's custodian bank will segregate liquid assets in an amount equal to the when-issued commitment. If the market value of such segregated assets declines, additional liquid assets will be segregated on a daily basis so that the market value of the segregated assets will equal the amount of the Fund's when-issued commitments. No additional delayed delivery agreements (as described above) or when-issued commitments will be made by a Fund if, as a result, more than 25% of the Fund's total assets would become so committed.
SHORT SALES. In a short sale, a Fund does not immediately deliver the securities sold and does not receive the proceeds from the sale. A Fund is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. A Fund will make a short sale, as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Fund or a security convertible into or exchangeable for such security, or when the Fund does not want to sell the security it owns, because it wishes to defer recognition of gain or loss for federal income tax purposes. In such case, any future losses in a Fund's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount a Fund owns, either directly or indirectly, and, in the case where the Fund owns convertible securities, changes in the conversion premium. In determining the number of shares to be sold short against a Fund's position in a convertible security, the anticipated fluctuation in the conversion premium is considered. A Fund may also make short sales to generate additional income from the investment of the cash proceeds of short sales.
A Fund will only make short sales "against the box," meaning that 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 in an amount to, the securities sold short. To secure its obligation to deliver the securities sold short, a Fund will segregate with its custodian an equal amount to the securities sold short or securities convertible into or exchangeable for such securities. A Fund may pledge no more than 10% of its total assets as collateral for short sales against the box.
MARGIN TRANSACTIONS. None of the Funds will purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin.
SWAP AGREEMENTS. To the extent that a Fund has the ability to enter into Swap Agreements, a Fund has the ability to enter into interest rate, index and currency exchange rate swap agreements for purposes of attempting to obtain a particular desired return at a lower cost to the Fund than if it had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Commonly used swap agreements include interest rate caps, under which, in return for
a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified level, or "floor"; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels.
The "notional amount" of the swap agreement is only a fictive basis on which to calculate the obligations which the parties to a swap agreement have agreed to exchange. Most swap agreements entered into by a Fund would calculate the obligations of the parties to the agreement on a "net basis." Consequently, a Fund's obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). Obligations under a swap agreement will be accrued daily (offset against amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by segregating liquid assets, to avoid any potential leveraging of the Fund. A Fund will not enter into a swap agreement with any single party if the net amount owned to or to be received under existing contracts with that party would exceed 5% of the Fund's total assets. For a discussion of the tax considerations relating to swap agreements, see "Dividends, Distributions and Tax Matters - Swap Agreements."
INTERFUND LOANS. Each Fund may lend uninvested cash up to 15% of its net assets to other AIM Funds and each Fund may borrow from other AIM Funds to the extent permitted under such Fund's investment restrictions. During temporary or emergency periods, the percentage of a Fund's net assets that may be loaned to other AIM Funds may be increased as permitted by the SEC. If any interfund borrowings are outstanding, a Fund cannot make any additional investments. If a Fund has borrowed from other AIM Funds and has aggregate borrowings from all sources that exceed 10% of such Fund's total assets, such Fund will secure all of its loans from other AIM Funds. The ability of a Fund to lend its securities to other AIM Funds is subject to certain other terms and conditions.
BORROWING. Each Fund may borrow money to a limited extent for temporary or emergency purposes. If there are unusually heavy redemptions because of changes in interest rates or for any other reason, a Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling fund securities under these circumstances may result in a lower net asset value per share or decreased dividend income, or both. The Trust believes that, in the event of abnormally heavy redemption requests, a Fund's borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio securities less likely.
LENDING PORTFOLIO SECURITIES. Each Fund except AIM V.I. Money Market Fund may lend its portfolio securities (principally to broker-dealers) where such loans are callable at any time and are continuously secured by segregated collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Each Fund may lend portfolio securities to the extent of one-third of its total assets.
The Fund would continue to receive the income on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. A Fund will not have the right to vote securities while they are being lent, but it can call a loan in anticipation of an important vote. Any cash collateral pursuant to these loans would be invested in short-term money market instruments or Affiliated Money Market Funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned increases and the collateral is not increased accordingly or in the event of default by the borrower. The Fund could also experience delays and costs in gaining access to the collateral.
REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which a Fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a mutually agreed upon time and price (which is higher than the purchase price), thereby determining the yield during a Fund's holding period. A 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. Each of the Funds may engage in repurchase agreement transactions involving the types of securities in which it is permitted to invest.
If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, the Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying security and loss of income. The securities underlying a repurchase agreement will be marked-to-market every business day so that the value of such securities is at least equal to the investment value of the repurchase agreement, including any accrued interest thereon.
The Funds may invest their cash balances in joint accounts with other AIM Funds for the purpose of investing in repurchase agreements with maturities not to exceed 60 days, and in certain other money market instruments with remaining maturities not to exceed 90 days. Repurchase agreements are considered loans by a Fund under the 1940 Act.
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements are
agreements that involve the sale of securities held by a Fund to financial
institutions such as banks and broker-dealers, with an agreement that the Fund
will repurchase the securities at an agreed upon price and date. A 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; or
(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, and will subsequently continually monitor the
account to ensure that such equivalent value is maintained at all times. Reverse
repurchase agreements involve the risk that the market value of securities to be
purchased by the Fund may decline below the price at which it is obligated to
repurchase the securities, or that the other party may default on its
obligation, so that the Fund is delayed or prevented from completing the
transaction. Reverse repurchase agreements are considered borrowings by a Fund
under the 1940 Act.
DOLLAR ROLLS. A dollar roll involves the sale by a Fund of a mortgage security to a financial institution such as a broker-dealer or a bank, with an agreement to repurchase a substantially similar (i.e., same type, coupon and maturity) security at an agreed upon price and date. The mortgage securities that are repurchased will bear the same interest rate as those sold, but will generally be collateralized by different pools of mortgages with different prepayment 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. At the time the Fund enters into a dollar roll, it will segregate liquid assets having a dollar value equal to the repurchase price, and will monitor the account to ensure that such equivalent value is maintained. The Fund typically enters into dollar roll transactions to enhance the Fund's return either on an income or total return basis or to manage prepayment risk. Dollar rolls are considered borrowings by a Fund under the 1940 Act.
ILLIQUID SECURITIES. Illiquid securities are securities that cannot be disposed of within seven days in the normal course of business at the price at which they are valued. Illiquid securities may include
securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act"). Restricted securities may, in certain circumstances, be resold pursuant to Rule 144A, and thus may or may not constitute illiquid securities.
Each Fund, except AIM V.I. Money Market Fund, may invest up to 15% of its net assets in securities that are illiquid. AIM V.I. Money Market Fund may invest up to 10% of its net assets in securities that are illiquid. Limitations on the resale of restricted securities may have an adverse effect on their marketability, which may prevent a Fund from disposing of them promptly at reasonable prices. A Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations.
RULE 144A SECURITIES. Rule 144A securities are securities which, while
privately placed, are eligible for purchase and resale pursuant to Rule 144A
under the 1933 Act. This Rule permits certain qualified institutional buyers,
such as the Funds, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. AIM, under the supervision of
the Board of Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the Funds' restriction on investment in
illiquid securities. 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). AIM will also
monitor the liquidity of Rule 144A securities and, if as a result of changed
conditions, AIM determines that a Rule 144A security is no longer liquid, AIM
will review a Fund's holdings of illiquid securities to determine what, if any,
action is required to assure that such Fund complies with its restriction on
investment in illiquid securities. Investing in Rule 144A securities could
increase the amount of each Fund's investments in illiquid securities if
qualified institutional buyers are unwilling to purchase such securities.
UNSEASONED ISSUERS. Investments in the equity securities of companies having less than three years' continuous operations (including operations of any predecessor) involve more risk than investments in the securities of more established companies because unseasoned issuers have only a brief operating history and may have more limited markets and financial resources. As a result, securities of unseasoned issuers tend to be more volatile than securities of more established companies.
SALE OF MONEY MARKET SECURITIES. The Funds do not seek profits through short-term trading and will generally hold portfolio securities to maturity. However, AIM may seek to enhance the yield of the Fund by taking advantage of yield disparities that occur in the money markets. For example, market conditions frequently result in similar securities trading at different prices. AIM may dispose of any portfolio security prior to its maturity if such disposition and reinvestment of proceeds are expected to enhance yield consistent with AIM's judgment as to desirable portfolio maturity structure. AIM may also dispose of any portfolio security prior to maturity to meet redemption requests, and as a result of a revised credit evaluation of the issuer or other circumstances or considerations. The Fund's policy of investing in securities with maturities of 397 days or less will result in high portfolio turnover. Since brokerage commissions are not normally paid on investments of the type made by the Fund, the high turnover should not adversely affect the Fund's net income.
Derivatives
To the extent a Fund has the ability to invest in Derivatives, the Fund may invest in forward currency 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 the Fund's investments. The Fund may also invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. 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).
EQUITY-LINKED DERIVATIVES. Equity-Linked Derivatives are interests in a securities portfolio designed to replicate the composition and performance of a particular securities index. Equity-Linked Derivatives are exchange traded. The performance results of Equity-Linked Derivatives will not replicate exactly the performance of the pertinent index due to transaction and other expenses, including fees to service providers, borne by the Equity-Linked Derivatives. 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 Optimised 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, and therefore, a Fund may be subject to the same investment restrictions with Equity-Linked Derivatives as with other investment companies. See "Other Investment Companies."
PUT AND CALL OPTIONS. A call option gives the purchaser the right to buy the underlying security, futures contract or foreign currency at the stated exercise price at any time prior to the expiration of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, futures contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the call option, the writer of a call option is obligated to sell the underlying security, futures contract or foreign currency. A put option gives the purchaser the right to sell the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration date of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, futures contract or foreign currency, as the case may be at the time of exercise. If the purchaser exercises the put option, the writer of a put option is obligated to buy the underlying security, contract or foreign currency. The premium paid to the writer is consideration for undertaking the obligations under the option contract. Until an option expires or is offset, the option is said to be "open." When an option expires or is offset, the option is said to be "closed."
A Fund will not write (sell) 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 any time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets.
Pursuant to federal securities rules and regulations, a Fund's use of options may require that Fund to set aside assets to reduce the risks associated with using those options. This process is described in more detail below in the section "Cover."
Writing Options. Each Fund may write put and call options in an attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying security, futures contract, or foreign currency alone. A Fund may only write a call option on a security if it owns an equal amount of such security 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 subject to the call option. In return for the premium received for writing a call option, the Fund foregoes the opportunity for profit from a price increase in the underlying security, futures contract, or foreign currency above the exercise price so long as the option remains open, but retains the risk of loss should the price of the underling security, futures contract, or foreign currency decline.
A Fund may write a put option without owning the underlying security if it covers the option as described below in the section "Cover." A Fund may only write a put option on a security as part of an investment strategy, and not for speculative purposes. In return for the premium received for writing a put option, the Fund assumes the risk that the price of the underlying security, futures contract, or foreign
currency will decline below the exercise price, in which case the put would be exercised and the Fund would suffer a loss.
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 to the extent of the premium received. A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the lowest price it is willing to receive for the underlying security, contract or currency. The obligation imposed upon the writer of an option is terminated upon the expiration of the option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option (put or call as the case may be) identical to that previously sold.
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, futures 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 a Fund to write another call option on the underlying security, futures contract or currency with either a different exercise price or expiration date, or both.
Purchasing Options. Each Fund may purchase a call option for the purpose of acquiring the underlying security, futures contract or currency for its portfolio. The Fund is not required to own the underlying security in order to purchase a call option, and may only cover this transaction with cash, liquid assets and/or short-term debt securities. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, futures 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, futures contract or currency. If the market price does not exceed the exercise price, the Fund could purchase the security on the open market and 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, futures 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 strike 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."
A Fund may only purchase a put option on an underlying security, futures contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, futures 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, futures contract or currency is delivered upon the exercise of the put option. Conversely, if the underlying security, futures 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, futures 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, futures contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
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. Because purchased OTC options in certain cases may be difficult to dispose of in a timely manner, the Fund may be required to treat some or all of these options (i.e., the market value) as illiquid securities. 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.
Index Options. Index options (or options on securities indices) are similar in many respects to options on securities, except that an index option gives the holder the right to receive, upon exercise, cash instead of securities, if the closing level of the securities index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. 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.
Pursuant to federal securities rules and regulations, if a Fund writes index options it may be required to set aside assets to reduce the risks associated with writing those options. This process is described in more detail below in the section "Cover."
STRADDLES. Each Fund, for hedging purposes, may write straddles (combinations of put and call options on the same underlying security) to adjust the risk and return characteristics of the Fund's overall position. A possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.
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. 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 the warrant, the current market value of the underlying security, the life of the warrant and various other investment factors.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. 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 (collectively, "Futures Contracts"). A stock index Futures Contract 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 when a Futures Contract is outstanding.
A Fund will enter into Futures Contracts for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures Contracts 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. A Fund's hedging may include sales of Futures Contracts 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 Contracts as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices.
The Funds currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
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 Investments" in this Statement of Additional Information.
Closing out an open Futures Contract is effected by entering into an offsetting Futures Contract 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 Futures Contract 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 Futures Contract.
"Margin" with respect to Futures Contracts is the amount of funds that must be deposited by a Fund in order to initiate Futures Contracts trading and maintain its open positions in Futures Contracts. 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 Futures Contract is set by the exchange on which the Futures Contract 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 Contract more or less valuable, a process known as marking-to-market.
If a Fund were unable to liquidate a Futures Contract or an option on a Futures Contract 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 Futures Contract 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 Contract 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 Contract margin account. The Funds currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
Limitations on Futures Contracts and Options on Futures Contracts and on 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%.
Pursuant to federal securities rules and regulations, a Fund's use of Futures Contracts and options on Futures Contracts may require that Fund to set aside assets to reduce the risks associated with using Futures Contracts and options on Futures Contracts. This process is described in more detail below in the section "Cover."
FORWARD CURRENCY CONTRACTS. A forward currency 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 currency 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 currency 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 Fund may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward currency 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 currency 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 currency contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward currency 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 currency 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.
Pursuant to federal securities rules and regulations, a Fund's use of forward currency contracts may require that Fund to set aside assets to reduce the risks associated with using forward currency contracts. This process is described in more detail below in the section "Cover."
COVER. Transactions using forward currency 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, in addition to complying with all the restrictions noted in the disclosure
above, 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, a 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.
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 or option thereon or forward contract at any particular time.
(5) As described above, 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.
Additional Securities or Investment Techniques
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 things such as 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.
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.
Diversification Requirements - AIM V.I. Money Market Fund
As a money market fund, AIM V.I. Money Market Fund is subject to the diversification requirements of Rule 2a-7 under the 1940 Act. This Rule sets forth two different diversification requirements: one applicable to the issuer of securities (provided that such securities are not subject to a demand feature or a guarantee), and one applicable to securities with demand features or guarantees.
The issuer diversification requirement provides that the Fund may not invest in the securities of any issuer if, as a result, more than 5% of its total assets would be invested in securities issued by such issuer. If the securities are subject to a demand feature or guarantee, however, they are not subject to this requirement. Moreover, for purposes of this requirement, the issuer of a security is not always the nominal issuer. Instead, in certain circumstances, the underlying obligor of a security is deemed to be the issuer of the security. Such circumstances arise for example when another political subdivision agrees to be ultimately responsible for payments of principal of an interest on a security or when the assets and revenues of a non-governmental user of the facility financed with the securities secures repayment of such securities.
The diversification requirement applicable to securities subject to a demand feature or guarantee provides that, with respect to 75% of its total assets, the Fund may not invest more than 10% of its total assets in securities issued by or subject to demand features or guarantees from the same entity. A demand feature permits the Fund to sell a security at approximately its amortized cost value plus accrued interest at specified intervals upon no more than 30 days' notice. A guarantee includes a letter of credit, bond insurance and an unconditional demand feature (provided the demand feature is not provided by the issuer of the security.)
Fund Policies
FUNDAMENTAL RESTRICTIONS. Each Fund is subject to the following fundamental investment restrictions, except AIM V.I. 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 AIM V.I. Money Market Fund, 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.
AIM V.I. 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 each of the Funds have this flexibility, the Board of Trustees has adopted non-fundamental restrictions for the Funds relating to certain of these restrictions which AIM and AIM V.I. Dent Demographic Trends Fund's sub-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 AIM V.I. 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 AIM V.I. 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.
(6) Notwithstanding the fundamental restriction with regard to engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities, the Fund currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
For purposes of AIM V.I. 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.
Temporary Defensive Positions
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, each Fund, except AIM V.I. Money Market Fund may temporarily hold all or a portion of their assets in cash, cash equivalents or high-quality debt instruments. Each of the Funds may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes.
Portfolio Turnover
The portfolio turnover rate for each of the AIM V.I. Core Equity Fund and the AIM V.I. Dent Demographic Trends Fund increased significantly from the fiscal year ended December 31, 2001 to the fiscal year ended December 31, 2002 because of the economic downturn, and the efforts to reposition the Funds into areas of the market that would respond favorably to a recovering economy.
TEMPORARY DEFENSIVE POSITIONS
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, each Fund may temporarily hold all or a portion of their assets in cash, cash equivalents or high-quality debt instruments. Each of the Funds may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Funds and the Trust is vested in the Board of Trustees. The Board of Trustees approves all significant agreements between the Trust, on behalf of one or more of the Funds, and persons or companies furnishing services to the Funds. The day-to-day operations of each Fund are delegated to the officers of the Trust and to AIM, subject always to the objective(s), restrictions and policies of the applicable Fund and to the general supervision of the Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
MANAGEMENT INFORMATION
The trustees and officers of the Trust and their principal occupations during at least the last five years and certain other information concerning them are set forth in Appendix B.
The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee, the Valuation Committee and the Committee on Directors/Trustees.
The members of the Audit Committee are Frank S. Bayley, Bruce L. Crockett, Albert R. Dowden (Vice Chair), Edward K. Dunn, Jr. (Chair), Jack M. Fields, Lewis F. Pennock, Louis S. Sklar, Dr. Prema Mathai-Davis and Miss Ruth H. Quigley. The Audit Committee is responsible for: (i) the appointment compensation and oversight of any independent auditors employed by each Fund (including resolution of disagreements between Fund management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; (ii) overseeing the financial reporting process of each Fund; (iii) monitoring the process and the resulting financial statements prepared by Fund management to promote accuracy of financial reporting and asset valuation; and (iv) preapproving permissible non-auditor services that are provided to each Fund by its independent auditors. During the fiscal year ended December 31, 2002, the Audit Committee held six meetings.
The members of the Investments Committee are Messrs. Bayley, Crockett, Dowden, Dunn, Fields, Carl Frischling, Pennock and Sklar (Chair), Dr. Mathai-Davis (Vice Chair) and Miss Quigley. 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 policies and pricing matters. During the fiscal year ended December 31, 2002, the Investments Committee held four meetings.
The members of the Valuation Committee are Messrs. Dunn and Pennock, and Miss Quigley. The Valuation Committee is responsible for: (i) periodically reviewing AIM's Procedures for Valuing Securities ("Procedures"), and making any recommendations to AIM with respect thereto; (ii) reviewing proposed changes to the Procedures recommended by AIM from time to time; (iii) periodically reviewing information provided by AIM regarding industry developments in connection with valuation; (iv) periodically reviewing information from AIM regarding fair value and liquidity determinations made pursuant to the Procedures, and making recommendations to the full Board in connection therewith (whether such information is provided only to the Committee or to the Committee and the full Board simultaneously); and (v) if requested by AIM, assisting AIM's internal valuation committee and/or the full Board in resolving particular valuation anomalies. During the fiscal year ended December 31, 2002, the Valuation Committee held one meeting.
The members of the Committee on Directors/Trustees are Messrs. Bayley,
Crockett (Chair), Dowden, Dunn, Fields (Vice Chair), Pennock and Sklar, Dr.
Mathai-Davis and Miss Quigley. The Committee on Directors/Trustees is
responsible for: (i) nominating persons who are not interested persons of the
Fund for election or appointment (a) as additions to the Board, (b) to fill
vacancies which, from time to time, may occur in the Board and (c) for election
by shareholders of the Fund at meetings called for the election of trustees;
(ii) nominating persons who are not interested persons of the Fund for selection
as, members of each committee of the Board, including without limitation, the
Audit Committee, the Committee on Directors/Trustees, the Investments Committee
and the Valuation Committee, and to nominate persons for selection as chair and
vice chair of each such committee; (iii) reviewing from time to time the
compensation payable to the independent trustees and making recommendations to
the Board regarding compensation; (iv) reviewing and evaluating from time to
time the functioning of the Board and the various committees of the Board; (v)
selecting independent legal counsel to the independent trustees and approving
the compensation paid to independent legal counsel; and (vi) approving the
compensation paid to independent counsel and other advisers, if any, to the
Audit Committee of the Fund. During the fiscal year ended December 31, 2002, the
Committee on Directors/Trustees held five meetings.
The Committee on Directors/Trustees will consider nominees recommended
by a shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Committee on Directors/Trustees or the Board, as applicable, shall
make the final determination of persons to be nominated.
TRUSTEE OWNERSHIP OF FUND SHARES
The dollar range of equity securities beneficially owned by each trustee (i) in the Funds and (ii) on an aggregate basis, in all registered investment companies overseen by the trustees in all AIM Funds is set forth in Appendix B.
FACTORS CONSIDERED IN RENEWING INVESTMENT ADVISORY AGREEMENT
The advisory agreement with AIM was re-approved for each Fund by the Trust's Board at a meeting held on May 14-15, 2002. In evaluating the fairness and reasonableness of the advisory agreement, the Board of Trustees considered a variety of factors for each Fund, including: the requirements of each Fund for investment supervisory and administrative services; the quality of the AIM's services, including a review of each Fund's investment performance and AIM's investment personnel; the size of the fees in relationship to the extent and quality of the investment advisory services rendered; fees charged to AIM's other clients; fees charged by competitive investment advisors; the size of the fees in light of services provided other than investment advisory services; the expenses borne by each Fund as a percentage of their assets and relationship to contractual limitations; any fee waivers (or payments of fund expenses) by AIM; AIM's profitability; the benefits received by AIM from its relationship to each Fund, including soft dollar arrangements, and the extent to which each Fund shares in those benefits; the organizational capabilities and financial condition of AIM and conditions and trends prevailing in the economy, the securities markets and the mutual fund industry; and the historical relationship between each Fund and AIM.
In considering the above factors, the Board also took into account the fact that uninvested cash and cash collateral from securities lending arrangements (collectively, "cash balances") of each Fund may be invested in money market funds advised by AIM pursuant to the terms of an exemptive order. The Board found that each Fund may realize certain benefits upon investing cash balances in AIM advised money market funds, including a higher net return, increased liquidity, increased diversification or decreased transaction costs. The Board also found that each Fund will not receive reduced services if it invests its cash balances in such money market funds. The Board further determined that the proposed securities lending program and related procedures with respect to each of the lending Funds is in the best interests of each lending Fund and their respective shareholders. The Board therefore concluded that the investment of cash collateral received in connection with the securities lending program in the money market funds according to the procedures is in the best interests of each lending Fund and its respective shareholders.
After consideration of these factors, the Board found that: (i) the services provided to each Fund and its shareholders were adequate; (ii) the agreements were fair and reasonable under the circumstances; and (iii) the fees payable under the agreements would have been obtained through arm's length negotiations. The Board therefore concluded that each Fund's advisory agreement was in the best interests of such Fund and its shareholders and continued the agreement for an additional year.
COMPENSATION
Each trustee who is not affiliated with AIM 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 other AIM Funds. 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.
Information regarding compensation paid or accrued for each trustee of the Trust who is not affiliated with AIM during the year ended December 31, 2002 is found in Appendix C.
Retirement Plan For Trustees
The Trustees have adopted a retirement plan for the Trustees of the Trust who are not affiliated with AIM. The retirement plan includes a retirement policy as well as retirement benefits for the non-AIM-affiliated trustees.
The retirement policy permits each non-AIM-affiliated trustee to serve until December 31 of the year in which the trustee turns 72. A majority of the Trustees may extend from time to time the retirement date of a trustee.
Annual retirement benefits are available to each non-AIM-affiliated
trustee of the Trust and/or the other AIM Funds (each, a "Covered Fund") who has
at least five years of credited service as a trustee (including service to a
predecessor fund) for a Covered Fund. The retirement benefits will equal 75% of
the trustee's annual retainer paid or accrued by any Covered Fund to such
trustee during the twelve-month period prior to retirement, including the amount
of any retainer deferred under a separate deferred compensation agreement
between the Covered Fund and the trustee. The annual retirement benefits are
payable in quarterly installments for a number of years equal to the lesser of
(i) ten or (ii) the number of such trustee's credited years of service. A death
benefit is also available under the plan that provides a surviving spouse with a
quarterly installment of 50% of a deceased trustee's retirement benefits for the
same length of time that the trustee would have received based on his or her
service. A trustee must have attained the age of 65 (55 in the event of death or
disability) to receive any retirement benefit.
Deferred Compensation Agreements
Messrs. 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 "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees have the option to elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the Deferring Trustees have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning on the date selected under the Compensation Agreement. 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 retirement benefits commence under the Plan. The Board, in its sole discretion, also 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. The Compensation 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.
CODES OF ETHICS
AIM, the Trust and A I M Distributors, Inc. ("AIM Distributors") and H.S. Dent Advisors, Inc. have each adopted a Code of Ethics governing, as applicable, personal trading activities of all directors/trustees, officers of the Trust, persons who, in connection with their regular functions, play a role in the recommendation of any purchase or sale of a security by any of the Funds or obtain information pertaining to such purchase or sale, and certain other employees. The Codes of Ethics are intended to prohibit conflicts of interest with the Trust that may arise from personal trading. Personal trading, including personal trading involving securities that may be purchased or held by a Fund, is permitted by persons covered under the relevant Codes subject to certain restrictions; however those persons are generally required to pre-clear all security transactions with the Compliance Officer or his designee and to report all transactions on a regular basis.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Information about the ownership of each class of each Fund's shares by certain beneficial or record owners of such Fund and by trustees and officers as a group is found in Appendix D. A shareholder who owns beneficially 25% or more of the outstanding shares of a Fund is presumed to "control" that Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
AIM, the Funds' investment advisor, was organized in 1976, and along with its subsidiaries, manages or advises over 190 investment portfolios encompassing a broad range of investment objectives. AIM is a direct, wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. AIM Management is an indirect, wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC and its subsidiaries are an independent global investment management group. Certain of the directors and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management Information" herein.
As investment advisor, AIM supervises all aspects of the Funds' operations and provides investment advisory services to the Funds. AIM obtains and evaluates economic, statistical and financial information to formulate and implement investment programs for the Funds. The Investment Advisory Agreement provides that, in fulfilling its responsibilities, AIM may engage the services of other investment
managers with respect to one or more of the Funds. The investment advisory services of AIM and the investment sub-advisory services of the sub-advisor to AIM V.I. Dent Demographic Trends Fund are not exclusive and AIM and the sub-advisor are free to render investment advisory services to others, including other investment companies.
AIM is also responsible for furnishing to the Funds, at the Advisor's expense, the services of persons believes to be competent to perform all supervisory and administrative services required by the Funds, in the judgment of the trustees, to conduct their respective businesses effectively, as well as the offices, equipment and other facilities necessary for their operations. Such functions include the maintenance of each Fund's accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Master Investment Advisory Agreement provides that the Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, 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 each Fund in connection with membership in investment company organizations, and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders.
AIM, at its own expense, furnishes to the Trust office space and facilities. AIM furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to its advisory agreement with the Trust, AIM receives a monthly fee from each Fund calculated at the following annual rates, based on the average daily net assets of each Fund during the year:
FUND NAME NET ASSETS ANNUAL RATE
--------- ---------- -----------
AIM V.I. Aggressive Growth Fund First $150 million 0.80%
Amount over $150 million 0.625%
AIM V.I. Balanced Fund First $150 million 0.75%
Amount over $150 million 0.50%
AIM V.I. Basic Value Fund First $500 million 0.725%
AIM V.I. Mid Cap Core Equity Fund Next $500 million 0.700%
Next $500 million 0.675%
Amount over $1.5 billion 0.65%
AIM V.I. Blue Chip Fund First $350 million 0.75%
AIM V.I. Capital Development Fund Amount over $350 million 0.625%
AIM V.I. Capital Appreciation Fund First $250 million 0.65%
AIM V.I. Core Equity Fund Amount over $250 million 0.60%
AIM V.I. Global Utilities Fund
AIM V.I. Growth Fund
AIM V.I. Premier Equity Fund
AIM V.I. Dent Demographic Trends Fund First $2 billion 0.85%
Amount over $2 billion 0.80%
|
FUND NAME NET ASSETS ANNUAL RATE
--------- ---------- -----------
AIM V.I. Diversified Income Fund First $250 million 0.60%
Amount over $250 million 0.55%
AIM V.I. Government Securities Fund First $250 million 0.50%
Amount over $250 million 0.45%
AIM V.I. High Yield Fund 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 Growth Fund First $250 million 0.75%
Amount over $250 million 0.70%
AIM V.I. Money Market Fund First $250 million 0.40%
Amount over $250 million 0.35%
AIM V.I. New Technology Fund All Assets 1.00%
|
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 Funds' detriment during the period stated in the agreement between AIM and the Fund.
AIM has voluntarily agreed, effective July 1, 2002, to waive a portion of advisory fees payable by each Fund. The amount of the waiver will equal 25% of the advisory fee AIM receives from the Affiliated Money Market Funds as a result of each Funds Investment of uninvested cash in an Affiliated Money Market Fund. See "Investment Strategies and Risks--Other Investments--Other Investment Companies."
AIM has contractually agreed, effective July 1, 2002 through July 1, 2003, to waive fees and/or reimburse expenses (excluding interest, taxes, dividends on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) for Series I shares of each of AIM V.I. Dent Demographic Trends Fund and AIM V.I. New Technology Fund to the extent necessary to limit the total operating expenses of each such series to 1.30%. Such contractual fee waivers or reductions may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund.
INVESTMENT SUB-ADVISOR
AIM has entered into a Sub-Advisory contract with H.S. Dent Advisors, Inc. ("Dent") (H.S. Dent Advisors, Inc. a "Sub-Advisor") to provide investment sub-advisory services to AIM V.I. Dent Demographic Trends Fund.
Dent is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Dent's responsibilities include providing the Fund's with macroeconomic and sector research, along with investment and market capitalization recommendations analyzing global economic trends
For the services to be rendered by Dent under its Sub-Advisory Contract, the Advisor will pay to Dent, a fee which will be computed daily and paid as of the last day of each month on the basis of the Fund's daily net asset value, using for each daily calculation the most recently determined net asset value
of the Fund. (See "Computation of Net Asset Value.") On an annual basis, the sub-advisory fee is equal to 0.13% of the first $1 billion of AIM V.I. Dent Demographic Trends Fund's average daily net assets, plus 0.10% of the Fund's average daily net assets in excess of $1 billion to and including $2 billion of the Fund's average daily net assets, plus 0.07% of the Fund's average daily net assets in excess of $2 billion.
The management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund for the last three fiscal years ended December 31 are found in Appendix E.
SECURITIES LENDING ARRANGEMENTS. 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.
SERVICE AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. AIM and the Trust have entered into a Master Administrative Services Agreement ("Administrative Services Agreement") pursuant to which AIM may perform or arrange for the provision of certain accounting and other administrative services to each Fund which are not required to be performed by AIM under the advisory agreement. The Administrative Services Agreement provides that it will remain in effect and continue from year to year only if such continuance is specifically approved at least annually by the Trust's Board of Trustees, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Administrative Services Agreement, AIM is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is reimbursed for the services of the Trust's principal financial officer and her staff, and any expenses related to fund accounting services. 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 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.
Administrative services fees paid to AIM by each Fund for the last three fiscal years ended December 31 are found in Appendix F.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. A I M Fund Services, Inc. ("AFS"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046, a registered transfer agent and wholly owned subsidiary of AIM, acts as transfer and dividend disbursing agent for the Funds.
The Transfer Agency and Service Agreement between the Trust and AFS provides that AFS will perform certain shareholder services for the Funds. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares; prepare and transmit payments for dividends and distributions declared by the Funds; maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts.
CUSTODIANS. State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds (except AIM V.I. Money Market Fund). The Bank of New York, 90 Washington Street, 11th Floor, New York, New York 10286, is custodian of all securities and cash of AIM V.I. Money Market Fund.
The Custodians are authorized to establish separate accounts in foreign countries and to cause foreign securities owned by the Funds to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and securities depositories. AIM is responsible for selecting eligible foreign securities depositories and for assessing the risks associated with investing in foreign countries, including the risk of using eligible foreign securities depositories in a country; the Custodian is responsible for monitoring eligible foreign securities depositories.
Under their contract with the Trust, the Custodians maintains the portfolio securities of the Funds, administers the purchases and sales of portfolio securities, collects interest and dividends and other distributions made on the securities held in the portfolios of the Funds and performs other ministerial duties. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets.
AUDITORS. The Funds' independent public accountants are responsible for auditing the financial statements of the Funds. The Board of Trustees has selected Tait, Weller & Baker, Eight Penn Center Plaza, Philadelphia, PA, 19103, as the independent public accountants to audit the financial statements of the Funds.
COUNSEL TO THE TRUST. Foley & Lardner, Washington, D.C., has advised the Trust on certain federal securities law matters.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The sub-advisor has adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, the Sub-Advisor's procedures do not materially differ from AIM's procedures as set forth below.
Since purchases and sales of portfolio securities by the AIM V.I. Money Market Fund are usually principal transactions, the Fund incurs little or no brokerage commissions.
BROKERAGE TRANSACTIONS
AIM or the subadvisor makes decisions to buy and sell securities for each Fund, selects broker-dealers, effects the Funds' investment portfolio transactions, allocates brokerage fees in such transactions and, where applicable, negotiates 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 seeks reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Brokerage Selection" below.
Purchases and sales of portfolio securities for AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund are generally transacted with the issuer or a primary market maker. In addition, some of the securities in which the Funds invest are traded in over-the-counter markets. Portfolio transactions placed in such markets may be effected at either net prices without commissions, but which include compensation to the broker-dealer in the form of a mark up or mark down, or on an agency basis, which involves the payment of negotiated brokerage commissions to the broker-dealer, including electronic communication networks.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
Brokerage commissions paid by each of the Funds during the last three fiscal years ended December 31, are found in Appendix G.
COMMISSIONS
During the last three fiscal years ended December 31, none of the Funds paid brokerage commissions to brokers affiliated with the Funds, AIM, AIM Distributors, or any affiliates of such entities.
The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, a Fund may purchase or sell a security from or to another AIM Fund or account (and may invest in Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards of Directors/Trustees of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
BROKERAGE SELECTION
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e)(1), 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 [AIM's] overall responsibilities with respect to the accounts as to which it exercises investment discretion." In addition, the services provided by a broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in any transaction, the Fund may pay a higher price than that available from another broker provided that the difference is justified by other aspects of the portfolio execution services provided.
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.
Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; 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. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of electronic communications of trade information, the providing of custody services, as well as the providing of equipment used to communicate research information and the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, 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 broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by subadvisers to accounts managed or advised by AIM. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fee paid by the Funds is not reduced because AIM receives such services. However, to the extent that AIM would have purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly.
AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be 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 interest in mutual funds in general and in the Funds and other mutual funds advised by AIM in particular, including sales of the Funds and of the other AIM Funds. In connection with (3) above, the Funds' trades may be executed directly by dealers that sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements, consistent with obtaining best execution. AIM will not use a specific formula in connection with any of these considerations to determine the target levels.
Foreign equity securities held by a Fund in the form of ADRs or 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.
DIRECTED BROKERAGE (RESEARCH SERVICES)
Directed brokerage (research services) paid by each of the Funds during the last fiscal year ended December 31, 2002 are found in Appendix H.
REGULAR BROKERS OR DEALERS
Information concerning the Funds' acquisition of securities of their regular brokers or dealers during the last fiscal year ended December 31, 2002 is found in Appendix H.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Often times, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase 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 the Fund(s) and one or more of these accounts, and 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, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect a Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM results in transactions which could have an adverse effect on the price or amount of securities available to a Fund. In making such allocations, AIM considers the 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. This procedure would apply to transactions in both equity and fixed income securities.
ALLOCATION OF INITIAL PUBLIC OFFERING ("IPO") TRANSACTIONS
Certain of the AIM Funds or other accounts managed by AIM may become interested in participating in IPOs. Purchases of IPO's by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. It shall be AIM's practice to specifically combine or otherwise bunch indications of interest for IPOs for all AIM Funds and accounts participating in purchase transactions for that IPO, 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 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 and 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 will be placed in one of four 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 four 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. In addition, Incubator Funds, as described in AIM's Incubator and New Fund Investment Policy, will each be limited to a 40 basis point allocation only. Such allocations will be allocated to the nearest share round lot that approximates 40 basis points.
When any AIM Funds and/or accounts with substantially identical investment objectives and policies participate in IPOs, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest participating 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 IPO transactions will be the same for each AIM Fund and account.
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 contractors 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.
Calculation of Net Asset Value
The net asset value per share (or share price) of each Series 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 Fund's net asset value per share is determined by dividing the value of a Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. 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 AIM V.I. Money Market Fund
Among other items, each 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 AIM V.I. Money Market Fund's Investments.
AIM V.I. 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.
For AIM V.I. 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 (excluding convertible bonds) 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 on the basis of prices furnished based upon quotes furnished by independent pricing services or market makers for such securities. Each security reported on the NASDAQ National Market System is valued at the NASDAQ Official Closing Price ("NOCP") or absent a NOCP, at the closing bid price on that day; option contracts are valued at the mean between the closing bid and asked prices on the exchange where the contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt securities (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 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 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 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 as of the close of the respective markets. 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.
Securities primarily traded in foreign markets may be traded in such markets on days which are not business days of the Fund. Because the net asset value per share of each Fund is determined only on business days of the Fund, the net asset value per share of a Fund may be significantly affected on days when an investor cannot exchange or redeem shares of the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
It is the present policy of the Funds to 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. Basic Value 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. Core Equity 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. High Yield Fund ....................................... annually annually
AIM V.I. International Growth Fund ............................. annually annually
AIM V.I. Mid Cap Core Equity Fund............................... annually annually
AIM V.I. Money Market Fund ..................................... daily monthly
AIM V.I. New Technology Fund.................................... annually annually
AIM V.I. Premier Equity Fund ................................... annually annually
|
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.
It is each Fund's intention to distribute substantially all of its net investment income and realized net capital gains by the end of each taxable year. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital losses, if any, carried forward from previous fiscal periods.
It is the present policy of each Fund to declare and pay annually net investment income dividends and capital gain distributions, except for AIM V.I. Money Market Fund. It is the Fund's intention to distribute substantially all of its net investment income and realized net capital gains by the end of each taxable year to separate accounts of participating life insurance companies. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital losses, if any carried forward from previous fiscal periods. At the election of participating life insurance companies, dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date.
AIM V.I. Money Market Fund declares net investment income dividends daily and pays net investment income dividends monthly and declares and pays annually any capital gain distributions. The Fund does not expect to realize any long-term capital gains and losses. The Fund may distribute net realized short-term gains, if any, more frequently.
A dividend or distribution paid by a Fund, other than daily dividends, have the effect of reducing the net asset value per share on the ex-dividend date by the amount of the dividend or distribution. Therefore, a dividend or distribution declared shortly after a purchase of shares by an investor would represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes.
Should the Trust incur or anticipate any unusual expense, loss or depreciation, which would adversely affect the net asset value per share of AIM V.I. Money Market Fund or the net income per
share of a class of the Fund for a particular period, the Board of Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in light of then prevailing circumstances. For example, if the net asset value per share of AIM V.I. Money Market Fund was reduced, or was anticipated to be reduced, below $1.00, the Board of Trustees might suspend further dividend payments on shares of the Fund until the net asset value returns to $1.00. Thus, such expense, loss or depreciation might result in a shareholder receiving no dividends for the period during which it held shares of the Fund and/or its receiving upon redemption a price per share lower than that which it paid.
TAX MATTERS
Each series of shares of each Fund 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). Distributions by a Fund made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gain of the taxable year and can therefore satisfy the distribution requirement.
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.
DISTRIBUTION OF SECURITIES
DISTRIBUTION PLAN
The Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Series II shares (the "Plan"). Each Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of average daily net assets of Series II shares.
The Plan compensates AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of shares of the Funds. Such activities include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Plan.
Amounts payable by a Fund under the Plan need not be directly related to the expenses actually incurred by AIM Distributors on behalf of each Fund. The Plan does not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Plan. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors at any
given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee.
AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Series II shares. 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 Distributors 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 Funds' detriment during the period stated in the agreement between AIM Distributors and the Fund.
Each Fund may pay a service fee of 0.25% of the average daily net assets of the Series II shares attributable to the customers of selected dealers and financial institutions to such dealers and financial institutions, including AIM Distributors, acting as principal, who furnish continuing personal shareholder services to their customers who purchase and own the applicable class of shares of the Fund. Under the terms of a shareholder service agreement, such personal shareholder services include responding to customer inquiries and providing customers with information about their investments. Any amounts not paid as a service fee under the Plan would constitute an asset-based sales charge.
Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rate specified in each agreement based on the average daily net asset value of the Funds' shares purchased or acquired through exchange. Fees shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which such Fund's shares are held.
Selected dealers and other institutions entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one particular class over another. Under the Plan, certain financial institutions which have entered into service agreements and which sell shares of the Funds on an agency basis, may receive payments from the Funds pursuant to the Plan. AIM Distributors does not act as principal, but rather as agent for the Funds, in making dealer incentive and shareholder servicing payments to dealers and other financial institutions under the Plan. These payments are an obligation of the Funds and not of AIM Distributors.
Payments pursuant to the Plan are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD").
See Appendix I for a list of the amounts paid by Series II shares to AIM Distributors pursuant to the Plan for the year, or period, ended December 31, 2002 and Appendix J for an estimate by category of the allocation of actual fees paid by Series II shares of each Fund pursuant to its respective distribution plan for the year or period ended December 31, 2002.
As required by Rule 12b-1, the Plan and related forms of Shareholder Service Agreements were approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan (the "Rule 12b-1 Trustees"). In approving the Plans in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plan would benefit each class of the Funds and its respective shareholders.
The anticipated benefits that may result from the Plan with respect to each Fund and/or the classes of each Fund and/or the classes of each Fund and its shareholders include but are not limited to the following: (1) rapid account access; (2) relatively predictable flow of cash; and (3) a well-developed, dependable network of shareholder service agents to help to curb sharp fluctuations in rates of
redemptions and sales, thereby reducing the chance that an unanticipated increase in net redemptions could adversely affect the performance of each Fund.
Unless terminated earlier in accordance with its terms, the Plan continues from year to year as long as such continuance is specifically approved, in person, at least annually by the Board of Trustees, including a majority of the Rule 12b-1 Trustees. A Plan may be terminated as to any Fund or class by the vote of a majority of the Rule 12b-1 Trustees or, with respect to a particular class, by the vote of a majority of the outstanding voting securities of that class.
Any change in the Plan that would increase materially the distribution expenses paid by the class requires shareholder approval; otherwise, the Plan may be amended by the trustees, including a majority of the Rule 12b-1 Trustees, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plan is in effect, the selection or nomination of the Independent Trustees is committed to the discretion of the Independent Trustees.
DISTRIBUTOR
The Trust has entered into a master distribution agreement relating to the Funds (the "Distribution Agreement") with AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of AIM, pursuant to which AIM Distributors acts as the distributor of shares of the Funds. The address of AIM Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the Trust are affiliated with AIM Distributors. See "Management of the Trust."
The Distribution Agreement provides AIM Distributors with the exclusive right to distribute shares of the Funds on a continuous basis.
The Trust (on behalf of any class of any Fund) or AIM Distributors may terminate the Distribution Agreement on sixty (60) days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its assignment.
CALCULATION OF PERFORMANCE DATA
Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund.
Average Annual Total Return Quotation
Certain Funds may use a restated or a blended performance calculation to derive certain performance data shown in this Statement of Additional Information and in the Funds' advertisements and other sales material. If the Funds' Series II shares were not offered to the public during the performance period covered, the performance data shown will be the restated historical performance of the Funds' Series I shares at net asset value, adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. If the Funds' Series II shares were offered to the public only during a portion of the performance period covered, the performance data shown will be the blended returns of the historical performance of the Funds' Series II shares since their inception and the restated historical performance of the Funds' Series I shares (for periods prior to inception of the Series II shares) at net asset value, adjusted to reflect the Rule 12b-1 fees applicable to the Series II shares. If the Funds' Series II shares were offered to the public during the entire performance period covered, the performance data shown will be the historical performance of the Funds' Series II shares.
A restated or blended performance calculation may be used to derive the following for all Funds, except AIM V.I. Money Market Fund: (i) standardized average annual total returns over one, five
and ten years (or since inception if less than ten years) and (ii) non-standardized cumulative total returns over a stated period.
A restated or blended performance calculation may be used to derive the following for AIM V.I. Money Market Fund: (i) non-standardized average annual total returns over a stated period, and (ii) non-standardized cumulative total returns over a stated period.
The standard formula for calculating average annual total return is as follows:
n P(1+T) =ERV
Where P = a hypothetical initial payment of $1,000;
T = average annual total return (assuming the
applicable maximum sales load is deducted at the
beginning of the 1, 5, or 10 year periods);
n = number of years; and
ERV = ending redeemable value of a hypothetical $1,000
payment at the end of the 1, 5, or 10 year periods
(or fractional portion of such period).
|
The cumulative total returns for each Fund, with respect to its Series I shares, for the one, five and ten year periods (or since inception if less than ten years) ended December 31 are found in Appendix K.
Yield Quotation
Income calculated for purposes of calculating a Fund's yield differs from income as determined for other accounting purposes. Because of the different accounting methods used, and because of the compounding assumed in yield calculations, the yield quoted for a Fund may differ from the rate of distributions from the Fund paid over the same period or the rate of income reported in the Fund's financial statements.
The standard formula for calculating yield for each Fund is as follows:
Where a = dividends and interest earned during a stated 30-day
period. For purposes of this calculation, dividends are
accrued rather than recorded on the ex-dividend date.
Interest earned under this formula must generally be
calculated based on the yield to maturity of each
obligation (or, if more appropriate, based on yield to
call date);
b = expenses accrued during period (net of reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of
the period.
|
The standard formula for calculating annualized yield for AIM V.I. Money Market Fund is as follows:
Y = (V - V ) x 365
1 2
--------- ---
V 7
2
Where Y = annualized yield;
|
V = the value of a hypothetical pre-existing account
0 in the Fund having a balance of one share at the
beginning of a stated seven-day period; and
V = the value of such an account at the end of the
1 stated period.
The standard formula for calculating effective annualized yield for the Fund is as follows:
365/7 EY = (Y + 1) - 1
Where EY = effective annualized yield; and
Y = annualized yield, as determined above.
Performance Information
All advertisements of the Funds will disclose the maximum sales charge (including deferred sales charges) imposed on purchases of a Fund's shares. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. Further information regarding each Fund's performance is contained in that Fund's annual report to shareholders, which is available upon request and without charge.
From time to time, AIM or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing that Fund's yield and total return.
Certain Funds may participate in the initial public offering (IPO) market in some market cycles. For a fund with a small asset base, any investment such Funds may make in IPOs may significantly affect these Funds' total returns. As the Funds' assets grow, the impact of IPO investments will decline, which may reduce the effect of IPO investments on the Funds' total returns.
The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results.
Total return and yield figures for the Funds are neither fixed nor guaranteed. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. The following is a list of such publications or media entities:
Advertising Age Forbes Nation's Business Barron's Fortune New York Times Best's Review Hartford Courant Pension World Broker World Inc. Pensions & Investments Business Week Institutional Investor Personal Investor Changing Times Insurance Forum Philadelphia Inquirer Christian Science Monitor Insurance Week USA Today Consumer Reports Investor's Daily U.S. News & World Report Economist Journal of the American Wall Street Journal FACS of the Week Society of CLU & ChFC Washington Post Financial Planning Kiplinger Letter CNN Financial Product News Money CNBC Financial Services Week Mutual Fund Forecaster PBS Financial World |
Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services:
Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper, Inc. |
Each Fund's performance may also be compared in advertising to the performance of comparative benchmarks such as the following:
Lipper Balanced Fund Index Russell 2000--Registered Trademark-- Index Lipper European Fund Index Russell 3000--Registered Trademark-- Index Lipper Global Fund Index Russell 3000 Growth Index Lipper Utilities Fund Index Lehman Aggregate Bond Index Lipper International Fund Index Dow Jones Global Utilities Index Lipper Multi Cap Core Fund Index MSCI All Country World Index Lipper Multi Cap Growth Fund Index MSCI EAFE Index Lipper Science & Technology Fund Index MSCI Europe Index Lipper Small Cap Core Fund Index PSE Tech 100 Index Lipper Small Cap Growth Fund Index Standard & Poor's 500 Index Lipper Large Cap Core Fund Index Wilshire 5000 Index Russell 1000 Index NASDAQ Index Russell 1000 Value Index |
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following:
10 year Treasury Notes
90 day Treasury Bills
Advertising for the Funds may from time to time include discussions of general economic conditions and interest rates. Advertising for such Funds may also include references to the use of those Funds as part of an individual's overall retirement investment program. From time to time, sales literature and/or advertisements for any of the Funds may disclose: (i) the largest holdings in the Fund's portfolio; (ii) certain selling group members; (iii) certain institutional shareholders; (iv) measurements of risk, including standard deviation, Beta and Sharpe ratios; and/or (v) capitalization and sector analyses of holdings in the Funds' portfolios.
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, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation.
From time to time, AIM V.I. Dent Demographic Trends Fund's 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.
APPENDIX A
RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's, S&P and Fitch:
MOODY'S BOND RATINGS
Moody's describes its ratings for corporate bonds 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. These 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 risk appear somewhat larger than the 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 both 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 Caa in its corporate bond rating system. The modifier 1 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.
MOODY'S MUNICIPAL BOND RATINGS
Aaa: Bonds 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 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 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 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 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 both good and bad times over the future. Uncertainty of position characterizes bonds in this class.
B: Bonds 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 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 rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds 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: Bonds in the Aa group which Moody's believes possess the strongest investment attributes are designated by the symbol Aa1.
Note: Also, Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to B. The modifier 1 indicates that the issue 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 category.
MOODY'S DUAL RATINGS
In the case of securities with a demand feature, two ratings are assigned: one representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the other representing an evaluation of the degree of risk associated with the demand feature.
MOODY'S SHORT-TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be designated Moody's Investment Grade or (MIG). Such ratings recognize the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term ratings, while other factors of major importance in bond risk, long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand feature variable rate demand obligation (VRDO). Such ratings will be designated as VMIG or, if the demand feature is not rated, as NR. Short-term ratings on issues with demand features are differentiated by the use of the VMIG symbol to reflect such characteristics as payment upon periodic demand rather than fixed maturity dates and payment relying on external liquidity. Additionally, investors should be alert to the fact that the source of payment may be limited to the external liquidity with no or limited legal recourse to the issuer in the event the demand is not met.
A VMIG rating may also be assigned to commercial paper programs. Such programs are characterized as having variable short-term maturities but having neither a variable rate nor demand feature.
Moody's short-term ratings are designated Moody's Investment Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4.
Gradations of investment quality are indicated by rating symbols, with each symbol representing a group in which the quality characteristics are broadly the same.
MIG 1/VMIG 1: This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3: This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
MIG 4/VMIG 4: This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk.
MOODY'S COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months.
PRIME-1: Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
leading market positions in well-established industries; high rates of return on
Funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal
cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity.
PRIME-2: Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.
PRIME-3: Issuers rated Prime-3 (or related supported institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.
Note: A Moody's commercial paper rating may also be assigned as an evaluation of the demand feature of a short-term or long-term security with a put option.
S&P BOND RATINGS
S&P describes its ratings for corporate bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. 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 a 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 rated categories.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the lowest degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or large exposure to adverse conditions.
S&P MUNICIPAL BOND RATINGS
An S&P municipal bond rating is a current assessment of the creditworthiness of an obligor with respect to a specific obligation. This assessment may take into consideration obligors such as guarantors, insurers, or lessees.
The ratings are based, in varying degrees, on the following considerations: likelihood of default - capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation; nature of and provisions of the obligation; and protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.
AAA
Debt rated AAA has the highest rating assigned by S&P. 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 a small degree.
Note: Ratings within the AA and A major rating categories may be modified by the addition of a plus (+) sign or minus (-) sign to show relative standing.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, AAA/A-1+). With short-term demand debt, the note rating symbols are used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P MUNICIPAL NOTE RATINGS
An S&P note rating reflects the liquidity factors and market-access risks unique to notes. Notes maturing in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment: amortization schedule (the larger the final maturity relative to other maturities, the more likely the issue will be treated as a note); and source of payment (the more the issue depends on the market for its refinancing, the more likely it is to be treated as a note).
Note rating symbols and definitions are as follows:
SP-1: Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3: Speculative capacity to pay principal and interest.
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
Rating categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
B: Issues with this rating are regarded as having only speculative capacity for timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D: Debt with this rating is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless it is believed that such payments will be made during such grace period.
FITCH INVESTMENT GRADE BOND RATINGS
Fitch investment grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings represent Fitch's assessment of the issuer's ability to meet the obligations of a specific debt issue in a timely manner.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Bonds carrying the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature of taxability of payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch believes to be reliable. Fitch does not audit or verify the truth or accuracy of such information. Ratings may be changed, suspended, or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
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.
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" category.
NR: Indicates that Fitch does not rate the specific issue.
CONDITIONAL: A conditional rating is premised on the successful completion of a project or the occurrence of a specific event.
SUSPENDED: A rating is suspended when Fitch deems the amount of information available from the issuer to be inadequate for rating purposes.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper and timely information.
FITCHALERT: Ratings are placed on FitchAlert to notify investors of an occurrence that is likely to result in a rating change and the likely direction of such change. These are designated as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or "Evolving," where ratings may be raised or lowered. FitchAlert is relatively short-term, and should be resolved within 12 months.
RATINGS OUTLOOK
An outlook is used to describe the most likely direction of any rating change over the intermediate term. It is described as "Positive" or "Negative." The absence of a designation indicates a stable outlook.
FITCH SPECULATIVE GRADE BOND RATINGS
Fitch speculative grade bond ratings provide a guide to investors in determining the credit risk associated with a particular security. The ratings ("BB" to "C") represent Fitch's assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an assessment of the ultimate recovery value through reorganization of liquidation.
The rating takes into consideration special features of the issue, its relationship to other obligations of the issuer or possible recovery value in bankruptcy, the current and prospective financial condition and operating performance of the issuer and any guarantor, as well as the economic and political environment that might affect the issuer's future financial strength.
Bonds that have the same rating are of similar but not necessarily identical credit quality since rating categories cannot fully reflect the differences in degrees of credit risk.
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 that, 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 "DDD," "DD," or "D" categories.
FITCH SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes.
The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner.
Fitch short-term ratings are as follows:
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+."
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could cause these securities to be rated below investment grade.
F-S: Weak Credit Quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.
D: Default. Issues assigned this rating are in actual or imminent payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of credit issued by a commercial bank.
APPENDIX B
TRUSTEES AND OFFICERS
As of January 1, 2003
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. Each trustee oversees 89 portfolios in the AIM Funds complex. Column two below includes length of time served with predecessor entities, if any.
TRUSTEE
AND/OR
NAME, YEAR OF BIRTH AND OFFICER OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
------------------------------- ------- ------------------------------------------- ---------------------
INTERESTED PERSONS
Robert H. Graham(1) -- 1946 1993 Director and Chairman, A I M Management Group None
Trustee, Chairman and Inc. (financial services holding company); and
President Director and Vice Chairman, AMVESCAP PLC (parent
of AIM and a global investment management firm);
Formerly; President and Chief Executive Officer,
A I M Management Group Inc.; Director, Chairman
and President, A I M Advisors, Inc. (registered
investment advisor); Director and Chairman, A I
M Capital Management, Inc. (registered
investment advisor); A I M Distributors, Inc.
(registered broker dealer), A I M Fund Services,
Inc. (registered transfer agent), and Fund
Management Company (registered broker dealer)
Mark H. Williamson(2) -- 1951 2003 Director, President and Chief Executive Officer, Director, Chairman,
Trustee and Executive Vice A I M Management Group Inc. (financial services President and Chief
President holding company); Director, Chairman and Executive Officer,
President, A I M Advisors, Inc. (registered INVESCO Bond Funds,
investment advisor); Director, A I M Capital Inc.; INVESCO
Management Inc. (registered investment advisor) Combination Stock &
and A I M Distributors, Inc. (registered broker Bond Funds, Inc.;
dealer), Director and Chairman, A I M Fund INVESCO Counselor
Services, Inc. (registered transfer agent), and Series Funds, Inc.;
Fund Management Company (registered broker INVESCO Global &
dealer); and Chief Executive Officer, AMVESCAP International Funds,
PLC - AIM Division (parent of AIM and a global Inc.; INVESCO Manager
investment management firm); Series Funds, Inc.;
INVESCO Money Market
Formerly; Director, Chairman and Chief Executive Funds, Inc.; INVESCO
Officer, INVESCO Funds Group, Inc.; and Chief Sector Funds, Inc.;
Executive Officer, AMVESCAP PLC - Managed INVESCO Stock Funds,
Products Inc.; INVESCO
Treasurer's Series
Funds, Inc. and INVESCO
Variable Investment
Funds, Inc.
|
(2) Mr. Williamson is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. Mr. Williamson became Executive Vice President of the Trust on March 4, 2003.
TRUSTEE
AND/OR
NAME, YEAR OF BIRTH AND OFFICER OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
------------------------------- ------- ------------------------------------------- ---------------------
INDEPENDENT TRUSTEES
Frank S. Bayley -- 1939 2001 Of Counsel, law firm of Baker & McKenzie Badgley Funds, Inc.
Trustee (registered investment
company)
Bruce L. Crockett -- 1944 1993 Chairman, Crockett Technology Associates ACE Limited (insurance
Trustee (technology consulting company) company); and Captaris,
Inc. (unified messaging
provider)
Albert R. Dowden -- 1941 2000 Director, Magellan Insurance Company; Member of Cortland Trust, Inc.
Trustee Advisory Board of Rotary Power International (registered investment
(designer, manufacturer, and seller of rotary company)
power engines); and Director, The Boss Group
(private equity group);
Formerly; Director, President and Chief Executive
Officer, Volvo Group North America, Inc.; Senior
Vice President, AB Volvo and director of various
affiliated Volvo companies
Edward K. Dunn, Jr. -- 1935 1998 Formerly; Chairman, Mercantile Mortgage Corp.; None
Trustee President and Chief Operating Officer,
Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares Corp.
Jack M. Fields -- 1952 1997 Chief Executive Officer, Twenty First Century Administaff
Trustee Group, Inc. (government affairs company) and
Texana Timber LP
Carl Frischling -- 1937 1993 Partner, law firm of Kramer Levin Naftalis and Cortland Trust, Inc.
Trustee Frankel LLP (registered investment
company)
Prema Mathai-Davis -- 1950 1998 Formerly; Chief Executive Officer, YWCA of the None
Trustee USA
Lewis F. Pennock -- 1942 1993 Partner, law firm of Pennock & Cooper None
Trustee
Ruth H. Quigley -- 1935 2001 Retired None
Trustee
|
TRUSTEE
AND/OR
NAME, YEAR OF BIRTH AND OFFICER OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
------------------------------- ------- ------------------------------------------- ---------------------
INDEPENDENT TRUSTEES
Louis S. Sklar -- 1939 1993 Executive Vice President, Development and None
Trustee Operations, Hines Interests Limited Partnership
(real estate development company)
OTHER OFFICERS
Gary T. Crum(3) -- 1947 1993 Director, Chairman and Director of Investments, N/A
Senior Vice President A I M Capital Management, Inc.; Director and
Executive Vice 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;
Formerly; Chief Executive Officer and President,
A I M Capital Management, Inc.
Robert G. Alley -- 1948 1993 Managing Director and Chief Fixed Income N/A
Vice President Officer, A I M Capital Management, Inc.; and
Vice President, A I M Advisors, Inc.
Stuart W. Coco -- 1955 1993 Managing Director and Chief Research Officer - N/A
Vice President Fixed Income,, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
Melville B. Cox -- 1943 1993 Vice President and Chief Compliance Officer, A I N/A
Vice President M Advisors, Inc. and A I M Capital Management,
Inc.; and Vice President, A I M Fund Services,
Inc.
Karen Dunn Kelley -- 1960 1993 Managing Director and Chief Cash Management N/A
Vice President Officer, A I M Capital Management, Inc.;
Director and President, Fund Management Company;
and Vice President, A I M Advisors, Inc.
Edgar M. Larsen(3) -- 1940 1999 Vice President, A I M Advisors, Inc.; and N/A
Vice President President, Chief Executive Officer and Chief
Investment Officer, A I M Capital Management,
Inc.
|
TRUSTEE
AND/OR
NAME, YEAR OF BIRTH AND OFFICER OTHER DIRECTORSHIP(S)
POSITION(S) HELD WITH THE TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS HELD BY TRUSTEE
------------------------------- ------- ------------------------------------------- ---------------------
OTHER OFFICERS
Dana R. Sutton -- 1959 1993 Vice President and Fund Treasurer, A I M N/A
Vice President and Treasurer Advisors, Inc.
Nancy L. Martin(4) -- 1957 2003 Vice President, A I M Advisors, Inc.; and Vice N/A
Secretary President and General Counsel, A I M Capital
Management, Inc.
|
TRUSTEE OWNERSHIP OF FUND SHARES
AS OF DECEMBER 31, 2002
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
INVESTMENT COMPANIES OVERSEEN BY
DOLLAR RANGE OF EQUITY SECURITIES TRUSTEE IN THE AIM FAMILY OF FUNDS
NAME OF TRUSTEE PER FUND(1) --Registered Trademark--
--------------- --------------------------------- -------------------------------------
Robert H. Graham -0- Over $100,000
Mark H. Williamson -0- $10,001 - $50,000
Frank S. Bayley -0- $10,001 - $50,000
Bruce L. Crockett -0- $1 - $10,000
Albert R. Dowden -0- $50,001 - $100,000
Edward K. Dunn, Jr. -0- Over $100,000(2)
Jack M. Fields -0- Over $100,000(2)
Carl Frischling -0- Over $100,000(2)
Prema Mathai-Davis -0- Over $100,000(2)
Lewis F. Pennock -0- $50,001 - $100,000
Ruth H. Quigley -0- $1 - $10,000
Louis S. Sklar -0- Over $100,000(2)
|
(1) During the above period, no Trustee had any equity securities in the Funds.
(2) Includes the total amount of compensation deferred by the trustee at his or her election. Such deferred compensation is placed in a deferral account and deemed to be invested in one or more of the AIM Funds.
APPENDIX C
TRUSTEE COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust who is not affiliated with AIM during the year ended December 31, 2002:
RETIREMENT
AGGREGATE BENEFITS ESTIMATED TOTAL
COMPENSATION FROM ACCRUED ANNUAL BENEFITS COMPENSATION
THE BY ALL UPON FROM ALL AIM
TRUSTEE TRUST(1) AIM FUNDS(2) RETIREMENT(3) FUNDS(4)
------- ----------------- ------------ --------------- ------------
Frank S. Bayley $ 18,970 $ 142,800 $ 90,000 $ 150,000
Bruce L. Crockett 18,846 50,132 90,000 149,000
Albert R. Dowden 18,970 57,955 90,000 150,000
Edward K. Dunn, Jr. 18,846 94,149 90,000 149,000
Jack M. Fields 18,970 29,153 90,000 153,000
Carl Frischling(5) 18,970 74,511 90,000 150,000
Prema Mathai-Davis 18,970 33,931 90,000 150,000
Lewis F. Pennock 19,482 54,802 90,000 154,000
Ruth H. Quigley 18,970 142,502 90,000 153,000
Louis S. Sklar 19,358 78,500 90,000 153,000
|
(1) The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended December 31, 2002, including earnings, was $ 83,924.
(2) During the fiscal year ended December 31, 2002, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $ 36,489.
(3) Amounts shown assume each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as directors or trustees of seventeen registered investment companies advised by AIM.
(5) During the fiscal year ended December 31, 2002, the Trust paid $ 58,956 in legal fees to Kramer Levin Naftalis & Frankel LLP for services rendered by such firm as counsel to the independent trustees of the Trust. Mr. Frischling is a partner of such firm.
APPENDIX D
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding shares of each class of the Trust's equity securities and the percentage of the outstanding shares held by such holders are set forth below. Unless otherwise indicated below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
A shareholder who owns beneficially 25% or more of the outstanding securities of a Fund is presumed to "control" that Fund as defined in the 1940 Act. Such control may affect the voting rights of other shareholders.
All information listed below is as of April 15, 2003.
AIM V.I. AGGRESSIVE GROWTH FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLMERICA FINANCIAL LIFE INS &
ANNUITY COMPANY
ATTN: LYNNE MCENTEGART SEP ACCT
440 LINCOLN STREET 42.25%* N/A
MAILSTOP S-310
WORCESTER MA 01653-0000
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT
P.O. BOX 94200 22.27% N/A
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 44.48%
VERNON HILLS IL 60061-1553
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK 14.66% N/A
P.O. BOX 2999
HARTFORD CT 06104-2999
MINNESOTA LIFE INSURANCE CO.
ATTN A6-5216 N/A 45.35%
400 ROBERT ST N
ST PAUL MN 55101-2015
PAUL IANNELLI
3900 BURGESS PLACE N/A 5.03%
EQUITY ACCOUNTING 3-S
BETHLEHEM PA 18017-9097
|
AIM V.I. AGGRESSIVE GROWTH FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
SAFECO LIFE INSURANCE COMPANY
ATTN MICHAEL ZHANG 7.88% N/A
4854 154TH PLACE NE
REDMOND WA 98052-9664
|
AIM V.I. BALANCED FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INS CO OF NEW YORK
NY PROPRIETARY 5.86% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD N/A 7.77%
NORTHBROOK IL 60062-7155
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 57.05%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
VA1 AND SPVL ACCOUNT 6.05% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 63.09%
VERNON HILLS IL 60061-1533
MINNESOTA LIFE INSURANCE CO
ATTN A6-5216 N/A 16.74%
400 ROBERT ST N
ST PAUL MN 55101-2015
TRANSAMERICA LIFE INSURANCE CO
ATTN FMD ACCTG MS 4410 N/A 12.40%
4333 EDGEWOOD RD NE
CEDAR RAPIDS IOWA 52499
|
AIM V.I. BALANCED FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
UNION CENTRAL LIFE INSURANCE
FBO VARIABLE UNIVERSAL LIFE
ATTN ROBERTA UJVARY 13.46% N/A
PO BOX 40888
CINCINNATI OH 45240-0000
|
AIM V.I. BASIC VALUE FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLMERICA FINANCIAL LIFE INS & ANNUITY COMPANY
ATTN: LYNNE MCENTEGART SEP ACCOUNT
440 LINCOLN STSREET N/A 45.59%
MAILSTOP S-310
WORCESTER MA 01653-0001
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 9.32% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK 64.61%* N/A
PO BOX 2999
HARTFORD CT 06104-2999
HARTFORD LIFE SEPARATE ACCOUNT
ATTN DAVE TEN BROECK 14.94% N/A
PO BOX 2999
HARTFORD CT 06104-2999
NATIONWIDE INSURANCE COMPANY NWVA7
C/O IPO PORTFOLIO ACCOUNTING N/A 5.70%
PO BOX 182029
COLUMBUS OH 43218-2029
TRANSAMERICA LIFE INSURANCE CO
LANDMARK
ATTN FMD OPERATIONAL ACCOUNTING N/A 27.19%
4333 EDGEWOOD RD NE
CEDAR RAPIDS IA 52499-0001
|
AIM V.I. BASIC VALUE FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
TRANSAMERICA LIFE INSURANCE CO
EXTRA
ATTN FMD OPERATIONAL ACCOUNTING N/A 10.26%
4333 EDGEWOOD DR NE
CEDAR RAPIDS IA 52499-0001
|
AIM V.I. BLUE CHIP FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLMERICA FINANCIAL LIFE INS & ANNUITY COMPANY
ATTN: LYNNE MCENTEGART SEP ACCOUNT
440 LINCOLN STREET 26.64%* N/A
MAILSTOP S-310
WORCESTER MA 01653-0000
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD N/A 21.73%
NORTHBROOK IL 60061-7155
ALLSTATE LIFE INS CO OF NEW YORK
NY PROPRIETARY 7.25% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 25.25%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 76.37%
VERNON HILLS IL 60061-1533
HARTFORD LIFE
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK 7.29% N/A
P.O. BOX 2999
HARTFORD CT 06104-2999
|
AIM V.I. BLUE CHIP FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 25.13%* N/A
PO BOX 2999
HARTFORD CT 06104-2999
|
AIM V.I. CAPITAL APPRECIATION FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO
ATTN FINANCIAL CONTROL- CIGNA 11.45% N/A
300 N MILWAUKEE AVE STE AN2N
VERNON HILLS IL 60061-1533
GLENBROOK LIFE & ANNUITY CO
VA 1 AND SPVL ACCOUNT 5.97% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 5.16% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
IDS LIFE INSURANCE CO
IDS TOWER 10T11/340 9.11% N/A
MINNEAPOLIS MN 55440
IDS LIFE INSURANCE CO
222 AXP FINANCIAL CENTER N/A 52.16%
MINNEAPOLIS MN 55474-0002
ING LIFE INSURANCE AND ANNUITY CO
CONVEYOR TN41 13.66% N/A
151 FARMINGTON AVE
HARTFORD CT 06156-0001
MERRILL LYNCH LIFE INSURANCE CO
FBO THE SOLE BENEFIT OF CUSTOMERS 11.97% N/A
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
|
AIM V.I. CAPITAL APPRECIATION FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
TRANSAMERICA LIFE INSURANCE CO.
LANDMARK
ATTN MFD OPERATIONAL ACCOUNTING N/A 19.20%
4333 EDGEWOOD RD NE
CEDAR RAPIDS IA 52499-0001
TRANSAMERICA LIFE INSURANCE CO
EXTRA
ATTN FMD OPERATIONAL ACCOUNTING N/A 6.71%
4333 EDGEWOOD RD NE
CEDAR RAPIDS IA 52499-0001
|
AIM V.I. CAPITAL DEVELOPMENT FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLMERICA FINANCIAL LIFE INS & ANNUITY COMPANY
ATTN: LYNNE MCENTEGART SEP ACCOUNT
440 LINCOLN STREET N/A 18.50%
MAILSTOP S-310
WORCESTER MA 01653-0001
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 18.09% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
IDS LIFE INSURANCE CO
IDS TOWER 10T11/340 69.34%* N/A
MINNEAPOLIS MN 55440
IDS LIFE INSURANCE CO RAVA
222 AXP FINANCIAL CENTER N/A 69.10%
MINNEAPOLIS MN 55474-0002
|
AIM V.I. CORE EQUITY FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GLENBROOK LIFE & ANNUITY CO
300 N. MILWAUKEE AVE STE AN2N N/A 6.64%
VERNON HILLS IL 60061-1533
IDS LIFE INSURANCE CO
IDS TOWER 10T11/340 58.46%* N/A
MINNEAPOLIS MN 55410
ING LIFE INSURANCE AND ANNUITY CO
CONVEYOR TN41 7.95% N/A
151 FARMINGTON AVE
HARTFORD CT 06156-0001
PRUDENTIAL INSURANCE CO OF AMERICA
ATTN IGG FINL REP SEP ACCTS
NJ-02-07-01 6.45% N/A
213 WASHINGTON ST 7TH FL
NEWARK NJ 07102-2992
SAGE LIFE ASSURANCE OF AMERICA
300 ATLANTIC ST STE 302 N/A 68.27%
STAMFORD CT 06901-0000
SUN LIFE FINANCIAL
P.O. BOX 9137 N/A 9.57%
WELLESLEY HILLS MA 02481-9137
TRANSAMERICA LIFE INSURANCE CO
RIB II
ATTN FMD OPERATIONAL ACCOUNTING N/A 8.58%
4333 EDGEWOOD DR NE
CEDAR RAPIDS IA 52499-0001
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 29.04%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GOLDEN AMERICAN LIFE INSURANCE CO
1475 DUNWOODY DRIVE N/A 98.66%*
WEST CHESTER, PA 19380-1478
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK 18.93% N/A
P.O. BOX 2999
HARTFORD CT 06104-2999
RELIASTAR LIFE INSURANCE CO
FBO SELECT LIFE 2/3 24.25% N/A
RTE 5106 PO BOX 20
MINNEAPOLIS MN 55440-0020
|
AIM V.I. DIVERSIFIED INCOME FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO
ATTN FINANCIAL CONTROL- CIGNA 25.99%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD N/A 20.54%
NORTHBROOK IL 60062-7155
AMERICAN GENERAL ANNUITY
ATTN CHRIS BOUMAN 5.12% N/A
205 E 10TH ST
AMARILLO TX 79101-3507
GENERAL AMERICAN LIFE INSURANCE
SEPARATE ACCOUNTS B1-08 7.43% N/A
13045 TESSON FERRY RD
ST LOUIS MO 63128-3499
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 25.46%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
|
AIM V.I. DIVERSIFIED INCOME FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GLENBROOK LIFE & ANNUITY CO
VA1 AND SPV L ACCOUNT 19.25% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 79.46%
VERNON HILLS IL 60061-1553
|
AIM V.I. GLOBAL UTILITIES FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO
ATTN FINANCIAL CONTROL- CIGNA 21.62% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD N/A 24.18%
NORTHBROOK IL 60062-7155
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 32.08%* N/A
3100 SANDERS RD
NORTHBROOK IL 60062-7155
GLENBROOK LIFE & ANNUITY CO
VA 1 AND SPVL ACCOUNT 19.54% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 65.40%
VERNON HILLS IL 60061-1533
GUARDIAN INSURANCE & ANNUITY CO
ATTN EQUITY ACCOUNTING DEPT 3-S-18 14.05% N/A
3900 BURGESS PL
BETHLEHEM PA 18017-9097
|
AIM V.I. GLOBAL UTILITIES FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
SAGE LIFE ASSURANCE OF AMERICA
300 ATLANTIC ST N/A 8.08%
STE 302
STAMFORD CT 06901-3539
|
AIM V.I. GOVERNMENT SECURITIES FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE IN OF NEW YORK
3100 SANDERS ROAD
NORTHBROOK IL 60062-7155 N/A 19.96%
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT
3100 SANDERS RD
NORTHBROOK IL 60062-7155 9.68% N/A
GLENBROOK LIFE & ANNUITY CO
300 N. MILWAUKEE AVE STE AN2N
VERNON HILLS IL 60061-1533 N/A 11.28%
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK
PO BOX 2999
HARTFORD CT 06104-2999 43.27%* N/A
HARTFORD LIFE
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK
P.O. BOX 2999
HARTFORD CT 06104-2999 11.16% N/A
PAUL IANNELLI
3900 BURGESS PLACE
EQUITY ACCOUNTING 3-S
BETHLEHEM PA 18017-9097 N/A 5.83%
SAGE LIFE ASSURANCE OF AMERICA
300 ATLANTIC ST STE 302
STAMFORD CT 06901-3539 N/A 21.69%
|
AIM V.I. GOVERNMENT SECURITIES FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
SECURITY LIFE OF DENVER
VARIABLE OPERATIONS
1290 BROADWAY
DENVER CO 80203-2122 6.19% N/A
THE LINCOLN NATIONAL LIFE INS CO
ATTN SHIRLEY SMITH
1300 SOUTH CLINTON STREET
FORT WAYNE IN 46802-3506 N/A 19.52%
TRANSAMERICA LIFE INSURANCE CO
PREFERRED ADVANTAGE
ATTN FMD OPERATIONAL ACCOUNTING
4333 EDGEWOOD RD NE
CEDAR RAPIDS IA 52499 N/A 21.18%
|
AIM V.I. GROWTH FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO
ATTN FINANCIAL CONTROL- CIGNA 11.97% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 11.13% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
VA 1 AND SPVL ACCOUNT 6.80% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
300 N. MILWAUKEE AVE STE AN2N N/A 6.25%
VERNON HILLS IL 60061-1533
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1475 DUNWOODY DRIVE N/A 30.75%
WEST CHESTER PA 19380
|
AIM V.I. GROWTH FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ING LIFE INSURANCE AND ANNUITY CO
CONVEYOR TN41 12.41% N/A
151 FARMINGTON AVE
HARTFORD CT 06156-0001
LINCOLN LIFE FLEXIBLE PREMIUM
VARIABLE LIFE ACCT M/VUL-1 SA-M
ATTN KAREN GERKA 11.88% N/A
1300 CLINTON ST
MAIL STOP 4CO1
FORT WAYNE IL 46802-3518
SUN LIFE FINANCIAL
RETIREMENT PRODUCTS & SERVICES 9.00% N/A
PO BOX 9134
WELLESLEY HILLS, MA 02481-9134
SUN LIFE FINANCIAL
P.O. BOX 9137 N/A 7.48%
WELLESLEY HILLS MA 02481-9137
THE LINCOLN NATIONAL LIFE INS CO.
ATTN SHIRLEY SMITH N/A 43.67%
1300 SOUTH CLINTON STREET
FORT WAYNE IN 46802-0000
TRANSAMERICA LIFE INSURANCE CO
PREFERRED ADVANTAGE
ATTN FMD OPERATIONAL ACCOUNTING 6.86% N/A
4333 EDGEWOOD RD NE
CEDAR RAPIDS IA 52499
|
AIM V.I. HIGH YIELD FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLMERICA FINANCIAL LIFE INS
ATTN: LYNNE MCENTEGART
440 LINCOLN STREET 6.62% N/A
MAILSTOP S-310
WORCESTER MA 01653-0001
|
* Presumed to be a control person because of beneficial ownership of 25% or more of the Fund.
AIM V.I. HIGH YIELD FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO ATTN FINANCIAL
CONTROL-CIGNA 7.81% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD N/A 8.03%
NORTHBROOK IL 60062-7155
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 42.96%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
VA 1 AND SPVL ACCOUNT 8.48% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
GLAC MULTI-MANAGER ACCOUNT 5.45% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 91.97%*
VERNON HILLS IL 60061-1533
HARTFORD LIFE INSURANCE CO
SEPARATE ACCOUNT 2
ATTN DAVID TEN BROECK 24.47% N/A
PO BOX 2999
HARTFORD CT 06104-2999
|
AIM V.I. INTERNATIONAL GROWTH FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
ATTN: FINANCIAL CONTROL-CIGNA 14.38% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
|
AIM V.I. INTERNATIONAL GROWTH FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GLENBROOK LIFE & ANNUITY CO
VA 1 AND SPVL ACCOUNT 7.89% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 7.73% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 27.79%
VERNON HILLS IL 60061-1533
KEYPORT LIFE INSURANCE COMPANY
125 HIGH STREET 9.13% N/A
BOSTON MA 02110-2704
LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 S. CLINTON STREET 8.39% N/A
FORT WAYNE IN 46802-3506
LINCOLN NATIONAL LIFE INSURANCE COMPANY
1300 S. CLINTON STREET N/A 41.53%
FORT WAYNE IN 46802-3506
MERRILL LYNCH LIFE INSURANCE CO
FBO THE SOLE BENEFIT OF CUSTOMERS 6.98% N/A
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
SAGE LIFE ASSURANCE OF AMERICA
300 ATLANTIC ST N/A 11.60%
STE 302
STAMFORD CT 06901-3539
SUN LIFE FINANCIAL
RETIREMENT PRODUCTS & SERVICES 9.83% N/A
PO BOX 9134
WELLESLEY HILLS, MA 02481
SUN LIFE FINANCIAL
P.O. BOX 9137 N/A 12.66%
WELLESLEY HILLS MA 02481-9137
|
AIM V.I. MID CAP CORE EQUITY FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
A I M ADVISORS INC
ATTN: DAVID HESSEL N/A 33.74%**
11 GREENWAY PLAZA SUITE 1919
HOUSTON TX 77046-1173
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 7.49% N/A
P.O. BOX 94200
NORTHBROOK IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 47.04%
VERNON HILLS IL 60061-1533
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN DAVE TEN BROECK 68.61%* N/A
PO BOX 2999
HARTFORD CT 06104-2999
HARTFORD LIFE SEPARATE ACCOUNT
ATTN DAVE TEN BROECK 15.36% N/A
PO BOX 2999
HARTFORD CT 06104-2999
PAUL IANNELLI
3900 BURGESS PLACE N/A 7.14%
EQUITY ACCOUNTING 3-S
BETHLEHEM PA 18017-9097
TRANSAMERICA LIFE INSURANCE CO
PREFERRED ADVANTAGE
ATTN FMD OPERATIONAL ACCOUNTING N/A 9.33%
4333 EDGEWOOD RD NE
CEDAR RAPIDS IA 52499
|
** Owned of record and beneficially (such as A I M Advisors, Inc.)
AIM V.I. MONEY MARKET FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO
ATTN FINANCIAL CONTROL- CIGNA 29.54%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD N/A 26.65%
NORTHBROOK IL 60062-7155
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 39.88%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY CO
VA 1 AND SPVL ACCOUNT 20.03% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 73.35%
VERNON HILLS IL 60061-1533
|
AIM V.I. NEW TECHNOLOGY FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO OF NEW YORK
NY PROPRIETARY 5.33% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD N/A 20.89%
NORTHBROOK IL 60062-7155
GENERAL AMERICAN LIFE INSURANCE
SEPARATE ACCOUNTS B1-08 49.55%* N/A
13045 TESSON FERRY RD
ST LOUIS MO 63128-3499
|
AIM V.I. NEW TECHNOLOGY FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 33.66%* N/A
P.O. BOX 94200
PALATINE IL 60094-4200
GLENBROOK LIFE & ANNUITY
300 N. MILWAUKEE AVENUE STE AN2N N/A 79.10%
VERNON HILLS IL 60061-1533
|
AIM V.I. PREMIER EQUITY FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO
ATTN FINANCIAL CONTROL- CIGNA 7.15% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
COVA FINANCIAL SERVICES LIFE INSURANCE COMPANY
COVA VARIABLE ANNUITY ACCT ONE
ATTN STACIE GANNON N/A 6.07%
P.O. BOX 295
DES MOINES IA 50301-0295
GLENBROOK LIFE & ANNUITY CO
PROPRIETARY ACCOUNT 5.29% N/A
P.O. BOX 94200
PALATINE IL 60094-4200
ING LIFE INSURANCE AND ANNUITY CO
CONVEYOR TN41 6.64% N/A
151 FARMINGTON AVE
HARTFORD CT 06156-0001
LINCOLN LIFE FLEXIBLE PREMIUM
VARIABLE LIFE ACCT M/VUL-1 SA-M
ATTN KAREN GERKE 5.20% N/A
1300 CLINTON STREET MAIL STOP 4C01
FORT WAYNE IN 46802-3518
|
AIM V.I. PREMIER EQUITY FUND
SERIES I SERIES II
SHARES SHARES
---------------- ----------------
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
MERRILL LYNCH PIERCE FENNER & SMITH
FBO THE SOLE BENEFIT OF CUSTOMERS 16.00% N/A
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
NATIONWIDE INSURANCE COMPANY
NWVA7
C/O IPO PORTFOLIO ACCOUNTING N/A 8.25%
P.O. BOX 182029
COLUMBUS OH 43218-2029
NATIONWIDE INSURANCE COMPANY
NWVA9
C/O IPO PORTFOLIO ACCOUNTING N/A 6.86%
P.O. BOX 182029
COLUMBUS OH 43218-2029
PRUDENTIAL INSURANCE CO IF AMER
ATTN IGG FINL REP SEP ACCTS
NJ-02-07-01 11.97% N/A
213 WASHINGTON ST 7TH FL
NEWARK NJ 07102-2992
SAGE LIFE ASSURANCE OF AMERICA
300 ATLANTIC ST N/A 15.13%
STE 302
STAMFORD CT 06901-3539
THE LINCOLN NATIONAL LIFE INS CO
ATTN SHIRLEY SMITH N/A 44.00%
1300 SOUTH CLINTON STREET
FORT WAYNE IN 46802-3506
|
MANAGEMENT OWNERSHIP
As of April 15, 2003, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of any Fund.
APPENDIX E
MANAGEMENT FEES
For the last three fiscal years ended December 31, the management fees payable by each Fund, the amounts waived by AIM and the net fees paid by each Fund were as follows:
FUND NAME 2002 2001 2000
------------------------------------- ------------------------------------- -------------------------------------
NET NET NET
MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
AIM V.I
Aggressive
Growth
Fund $ 940,465 $ 1,006 $ 939,459 $ 871,609 $ 436 $ 871,173 $ 403,570 $ 50,479 $ 353,091
AIM V.I.
Balanced
Fund 706,989 1,275 705,714 712,273 685 711,588 520,878 -0- 520,878
AIM V.I.
Basic
Value Fund* 665,840 909 664,931 18,656 18,656 -0- N/A N/A N/A
AIM V.I.
Blue
Chip Fund** 486,916 602 486,314 328,003 205 327,798 82,552 82,552 -0-
AIM V.I.
Capital
Appreciation
Fund 5,887,471 6,569 5,880,902 7,575,407 4,991 7,570,416 8,988,195 -0- 8,988,195
AIM V.I.
Capital
Development
Fund 703,517 1,117 702,400 640,839 488 640,351 298,327 76,606 221,721
AIM V.I.
Core
Equity Fund 9,986,065 26,617 9,959,448 12,782,607 4,952 12,777,655 16,262,897 -0- 16,262,897
AIM V.I.
Dent
Demographic
Trends Fund** 346,076 50,928 295,148 324,199 21,814 302,385 176,047 47,600 128,447
AIM V.I
Diversified
Income Fund 446,474 294 446,180 495,418 100 495,318 546,264 -0- 546,264
|
* Commenced operations on September 10, 2001.
FUND NAME 2002 2001 2000
------------------------------------- ------------------------------------- -------------------------------------
NET NET NET
MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT MANAGEMENT
FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID FEE PAYABLE FEE WAIVERS FEE PAID
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
AIM V.I
Global
Utilities
Fund 180,490 509 179,981 $ 290,385 $ 357 $ 290,028 $ 307,312 -0- $ 307,312
AIM V.I
Government
Securities
Fund 1,298,875 7,105 1,291,770 731,079 1,957 729,122 358,276 -0- 358,276
AIM V.I
Growth
Fund 2,944,558 3,467 2,941,091 4,174,059 3,371 4,170,688 5,604,879 -0- 5,604,879
AIM V.I
High Yield
Fund 167,345 157 167,188 181,308 24,082 157,226 172,669 16,986 155,683
AIM V.I
International
Growth Fund 2,402,352 5,019 2,397,333 2,869,778 1,910 2,867,868 3,372,955 -0- 3,372,955
AIM V.I
Mid Cap
Core Equity
Fund* 253,827 873 252,954 9,869 9,869 -0- N/A N/A N/A
AIM V.I
Money
Market Fund 509,205 -0- 509,205 443,514 -0- 443,514 303,297 -0- 303,297
AIM V.I
New
Technology
Fund 216,332 87,975 128,357 408,471 51,975 356,496 1,024,453 -0- 1,024,453
AIM V.I
Premier
Equity Fund 12,074,846 22,903 12,051,943 15,665,367 17,692 15,647,675 16,526,917 -0- 16,526,917
|
* Commenced operations on September 10, 2001.
APPENDIX F
ADMINISTRATIVE SERVICES FEES
The Funds paid AIM the following amounts for administrative services for the last three fiscal years ended December 31:
Fund Name 2002 2001 2000 --------------------------------------------- ------------- ------------- ------------- AIM V.I. Aggressive Growth Fund $ 330,519 $ 50,000 $ 50,000 AIM V.I. Balanced Fund 270,132 50,000 50,000 AIM V.I. Basic Value Fund* 261,045 15,616 N/A AIM V.I. Blue Chip Fund** 207,856 50,000 50,000 AIM V.I. Capital Appreciation Fund 1,965,766 148,044 130,011 AIM V.I. Capital Development Fund 275,694 50,000 50,000 AIM V.I. Core Equity Fund 2,744,082 200,301 169,439 AIM V.I. Dent Demographic Trends Fund** 146,671 50,000 50,000 AIM V.I. Diversified Income Fund 157,854 50,000 50,000 AIM V.I. Global Utilities Fund 93,944 50,000 50,000 AIM V.I. Government Securities Fund 614,299 50,000 50,000 AIM V.I. Growth Fund 1,057,818 112,079 112,857 AIM V.I. High Yield Fund 117,619 50,000 50,137 AIM V.I. International Growth Fund 713,741 81,244 92,799 AIM V.I. Mid Cap Core Equity Fund* 125,138 15,616 N/A AIM V.I. Money Market Fund 262,888 50,000 50,000 AIM V.I. New Technology Fund 101,610 50,000 50,000 AIM V.I. Premier Equity Fund 4,279,991 235,436 167,010 |
* Commenced operations on September 10, 2001.
APPENDIX G
BROKERAGE COMMISSIONS
Brokerage commissions(1) paid by each of the Funds listed below during the last three fiscal years were as follows:
FUND 2002 2001 2000
-------------------------------------------------- ------------- ------------- -------------
AIM V.I. Aggressive Growth Fund .................. $ 286,261 208,272 $ 72,497
AIM V.I. Balanced Fund ........................... 99,479 67,091 38,836
AIM V.I. Basic Value Fund(2)...................... 309,565 18,909
AIM V.I. Blue Chip Fund .......................... 85,322 42,554 17,310
AIM V.I. Capital Appreciation Fund ............... 1,791,168 1,849,520 2,337,094
AIM V.I. Capital Development Fund ................ 389,305 298,181 116,941
AIM V.I. Core Equity Fund ........................ 4,263,079 3,927,280 3,238,465
AIM V.I. Dent Demographic Trends Fund ............ 294,834 124,137 39,329
AIM V.I. Diversified Income Fund ................. 101 2,523 -0-
AIM V.I. Global Utilities Fund ................... 59,432 40,766 63,962
AIM V.I. Government Securities Fund .............. -0- -0- -0-
AIM V.I. Growth Fund ............................. 2,667,179 3,029,850 2,025,067
AIM V.I. High Yield Fund ......................... 252 172 -0-
AIM V.I. International Growth Fund ............... 936,507 1,629,877 1,670,150
AIM V.I. Mid Cap Core Equity Fund (2) ............ 106,865 7,798
AIM V.I. Money Market Fund ....................... -0- -0- -0-
AIM V.I. New Technology Fund ..................... 99,370 121,277 85,374
AIM V.I. Premier Equity Fund ..................... 3,040,870 2,497,999 3,583,721
|
1 Disclosure regarding brokerage commissions is limited to commissions paid on agency trades and designated as such on the trade confirm.
2 Commenced operations on September 10, 2001.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
During the last fiscal year ended December 31, 2002, each Fund allocated the following amount of transactions to broker-dealers that provided AIM with certain research, statistics and other information:
Related
Brokerage
Fund Transactions Commissions
-------------------------------------------------- ------------- -------------
AIM V.I. Aggressive Growth Fund .................. $ 24,474,112 $ 37,650
AIM V.I. Balanced Fund ........................... 6,617,037 11,209
AIM V.I. Basic Value Fund ........................ 17,744,970 28,659
AIM V.I. Blue Chip Fund .......................... 6,862,726 10,516
AIM V.I. Capital Appreciation Fund ............... 164,270,551 200,865
AIM V.I. Capital Development Fund ................ 21,837,374 45,082
AIM V.I. Core Equity Fund ........................ 600,018,797 773,827
AIM V.I. Dent Demographic Trends Fund ............ 18,716,047 31,933
AIM V.I. Global Utilities Fund ................... 2,108,293 5,681
AIM V.I. Growth Fund ............................. 224,570,796 349,600
AIM V.I. International Growth Fund ............... 13,916,182 25,651
AIM V.I. Mid Cap Core Equity Fund ................ 3,856,528 7,758
AIM V.I. New Technology Fund ..................... 4,415,224 6,073
AIM V.I. Premier Equity Fund ..................... 295,577,948 420,673
|
SECURITY
-----------------------------------------------------------------------------------------------------
GOLDMAN LEHMAN SALOMON
SACHS BROTHERS MERRILL SMITH
AMERICAN GROUP, HOLDINGS LYNCH & MORGAN BARNEY JP MORGAN
FUNDS EXPRESS INC. (THE) INC. CO., INC. STANLEY HOLDINGS INC. CHASE & CO.
--------------------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------
AIM V.I. Balanced Fund 572,670 755,910 602,177 831,105 -- -- --
AIM V.I. Basic Value Fund -- -- -- 4,819,650 4,349,284 -- 4,993,200
AIM V.I. Blue Chip Fund 728,210 626,520 -- 652,740 822,352 -- 494,400
AIM V.I. Capital
Appreciation Fund -- 5,509,290 -- 6,163,080 6,215,544 -- --
AIM V.I. Core Equity Fund -- -- -- -- 13,772,400 -- --
AIM V.I. Dent
Demographic Trends Fund 357,035 769,530 -- -- -- 511,200
AIM V.I. Diversified
Income Fund -- -- 416,354 -- 216,950 617,881 --
AIM V.I. Growth Fund -- 5,448,000 -- -- -- -- 3,000,000
AIM V.I. Money Market Fund -- 6,000,000(a) -- 5,000,000(b) 5,000,000(b) -- --
AIM V.I. Premier
Equity Fund 6,857,900 -- -- 7,590,000 18,207,512 -- 7,706,400
|
(b) Promissory Note
APPENDIX I
AMOUNTS PAID TO A I M DISTRIBUTORS, INC. PURSUANT TO DISTRIBUTION PLAN
A list of amounts paid by each class of shares to AIM Distributors pursuant to the Plan for the fiscal year or period ended December 31, 2002 are as follows:
SERIES I SERIES II
FUND SHARES SHARES
---- -------- ---------
AIM V.I. Aggressive Growth Fund........................ N/A $ 1,269
AIM V.I. Balanced Fund ................................ N/A 639
AIM V.I. Basic Value Fund.............................. N/A 80,129
AIM V.I. Blue Chip Fund................................ N/A 211
AIM V.I. Capital Appreciation Fund..................... N/A 29,774
AIM V.I. Capital Development Fund...................... N/A 21,457
AIM V.I. Core Equity Fund.............................. N/A 3,059
AIM V.I. Dent Demographic Trends Fund.................. N/A 20,998
AIM V.I. Diversified Income Fund....................... N/A 81
AIM V.I. Global Utilities Fund......................... N/A 56
AIM V.I. Government Securities Fund.................... N/A 14,634
AIM V.I. Growth Fund................................... N/A 4,017
AIM V.I. High Yield Fund............................... N/A 114
AIM V.I. International Growth Fund..................... N/A 21,354
AIM V.I. Mid Cap Core Equity Fund...................... N/A 2,038
AIM V.I. Money Market Fund............................. N/A 8,683
AIM V.I. New Technology Fund........................... N/A 40
AIM V.I. Premier Equity Fund........................... N/A 13,525
|
APPENDIX J
ALLOCATION OF ACTUAL FEES PAID PURSUANT TO DISTRIBUTION PLAN
An estimate by category of the allocation of actual fees paid by Series II shares of the Funds during the fiscal year or period ended December 31, 2002 follows:
PRINTING & UNDERWRITERS DEALERS
ADVERTISING MAILING SEMINARS COMPENSATION COMPENSATION*
----------- ----------- ----------- ------------ ------------
AIM V.I. Aggressive Growth Fund ............. N/A N/A N/A N/A $ 828
AIM V.I. Balanced Fund ...................... N/A N/A N/A N/A 639
AIM V.I. Basic Value Fund ................... N/A N/A N/A N/A 80,129
AIM V.I. Blue Chip Fund ..................... N/A N/A N/A N/A 211
AIM V.I. Capital Appreciation Fund .......... N/A N/A N/A N/A 29,774
AIM V.I. Capital Development Fund ........... N/A N/A N/A N/A 21,457
AIM V.I. Core Equity Fund ................... N/A N/A N/A N/A 3,059
AIM V.I. Dent Demographic Trends Fund ....... N/A N/A N/A N/A 12,599
AIM V.I. Diversified Income Fund ............ N/A N/A N/A N/A 81
AIM V.I. Global Utilities Fund .............. N/A N/A N/A N/A 44
AIM V.I. Government Securities Fund ......... N/A N/A N/A N/A 14,634
AIM V.I. Growth Fund ........................ N/A N/A N/A N/A 4,017
AIM V.I. High Yield Fund .................... N/A N/A N/A N/A 68
AIM V.I. International Growth Fund .......... N/A N/A N/A N/A 19,121
AIM V.I. Mid Cap Core Equity Fund ........... N/A N/A N/A N/A 1,223
AIM V.I. Money Market Fund .................. N/A N/A N/A N/A 8,683
AIM V.I. New Technology Fund ................ N/A N/A N/A N/A 24
AIM V.I. Premier Equity Fund ................ N/A N/A N/A N/A 13,525
|
* Compensation to financial intermediaries and broker-dealers to pay or reimburse them for their services or expenses in connection with the distribution of the Shares to fund variable annuity and variable insurance contracts investing directly in the Shares.
APPENDIX K
PERFORMANCE DATA
The average annual total returns for each Fund, with respect to its Series I and Series II shares, for the periods ended December 31, 2002, are as follows:
SINCE INCEPTION
--------------------------------
ONE FIVE INCEPTION AVERAGE ANNUAL CUMULATIVE
YEAR YEAR DATE RETURN RETURN
------------- ------------ ------------- ---------------- ---------------
AIM V.I. Aggressive Growth Fund
Series I -22.66 N/A 05/01/1998 -3.65 -15.93
Series II -22.80 N/A 03/26/2002 -3.87 -16.85
AIM V.I. Balanced Fund
Series I -17.10 N/A 05/01/1998 -1.12 -5.14
Series II -17.30 N/A 01/24/2002 -1.37 -6.23
AIM V.I. Basic Value Fund
Series I -22.15 N/A 09/10/2001 -15.78 -20.10
Series II -22.34 N/A 09/10/2001 -15.97 -20.34
AIM V.I. Blue Chip Fund
Series I -26.16 N/A 12/29/1999 -19.29 -47.48
Series II -26.34 N/A 03/13/2002 -19.49 -47.87
AIM V.I. Capital Appreciation Fund
Series I -24.35 -2.26 05/05/1993 7.32 97.84
Series II -24.52 -2.49 08/21/2001 7.06 93.23
AIM V.I. Capital Development Fund
Series I -21.36 N/A 05/01/1998 -1.25 -5.70
Series II -21.61 N/A 08/21/2001 -1.49 -6.77
AIM V.I. Core Equity Fund
Series I -15.58 -0.94 05/02/1994 7.86 92.57
Series II -15.79 -1.18 10/24/2001 7.59 88.45
AIM V.I. Dent Demographic Trends Fund
Series I -32.20 N/A 12/29/1999 -27.59 -62.10
Series II -32.26 N/A 11/07/2001 -27.77 62.38
AIM V.I. Diversified Income Fund
Series I 2.30 1.63 05/05/1993 4.75 56.58
Series II 2.03 1.37 03/14/2002 4.49 52.83
AIM V.I. Global Utilities Fund
Series I -25.53 -3.99 05/02/1994 3.69 36.58
Series II -25.65 -4.21 03/26/2002 3.44 34.05
AIM V.I. Government Securities Fund
Series I 9.59 6.43 05/05/1993 5.90 74.02
Series II 9.25 6.15 09/19/2001 5.63 69.73
AIM V.I. Growth Fund
Series I -30.97 -8.02 05/05/1993 3.80 43.42
Series II -31.11 -8.24 09/19/2001 3.55 40.08
AIM V.I. High Yield Fund
Series I -5.84 N/A 05/01/1998 -6.25 -26.01
Series II -6.08 N/A 03/26/2002 -6.49 -26.88
AIM V.I. International Growth Fund
Series I -15.67 -3.20 05/05/1993 4.26 49.61
Series II -15.89 -3.44 09/19/2001 4.00 46.04
AIM V.I. Mid Cap Core Equity Fund
Series I -11.10 N/A 09/10/2001 -3.50 -4.55
Series II -11.20 N/A 09/10/2001 -3.69 -4.80
AIM V.I. Money Market Fund
Series I 1-.19 4.06 05/05/1993 4.26 49.68
Series II 0.93 3.80 12/16/2001 4.01 46.12
AIM V.I. New Technology Fund
Series I -45.13 -14.27 10/18/1993 -0.98 -8.63
Series II -45.17 -14.45 04/02/2002 -1.20 -10.55
AIM V.I. Premier Equity Fund
Series I -30.26 -2.19 05/05/1993 7.84 107.28
Series II -30.44 2.43 09/19/2001 7.57 102.37
|
The 30-day yield for AIM V.I. Money Market Fund is as follows:
30 DAYS ENDED
-----------------
DECEMBER 31, 2002
--------------------------
SERIES I SHARES SERIES II SHARES
----------------------- ------------------------
Simple Effective Simple Effective
------ --------- ------ ---------
AIM V.I. Money Market Fund 0.83% 0.84% 0.58% 0.58%
|
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, 2002, 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 years or periods in the four year 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, 2002 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. Aggressive Growth Fund, as of December 31, 2002, 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 years or periods in the four year 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 January 31, 2003 |
AIM V.I. AGGRESSIVE GROWTH FUND
FS-1
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
-----------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.53%
Advertising-0.63%
Lamar Advertising Co.(a) 19,500 $ 656,175
=======================================================================
Aerospace & Defense-2.54%
Alliant Techsystems Inc.(a) 24,800 1,546,280
-----------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 24,400 1,095,804
=======================================================================
2,642,084
=======================================================================
Air Freight & Logistics-1.82%
C.H. Robinson Worldwide, Inc. 19,600 611,520
-----------------------------------------------------------------------
Expeditors International of Washington, Inc. 39,400 1,286,410
=======================================================================
1,897,930
=======================================================================
Apparel Retail-3.42%
Men's Wearhouse, Inc. (The)(a) 25,200 432,180
-----------------------------------------------------------------------
Pacific Sunwear of California, Inc.(a) 82,350 1,456,771
-----------------------------------------------------------------------
TJX Cos., Inc. (The) 25,900 505,568
-----------------------------------------------------------------------
Too Inc.(a) 49,300 1,159,536
=======================================================================
3,554,055
=======================================================================
Application Software-2.85%
Intuit Inc.(a) 29,300 1,374,756
-----------------------------------------------------------------------
National Instruments Corp.(a) 29,850 969,827
-----------------------------------------------------------------------
Reynolds & Reynolds Co. (The)-Class A 24,400 621,468
=======================================================================
2,966,051
=======================================================================
Auto Parts & Equipment-3.04%
Gentex Corp.(a) 48,800 1,544,032
-----------------------------------------------------------------------
Lear Corp.(a) 24,500 815,360
-----------------------------------------------------------------------
Superior Industries International, Inc. 19,500 806,520
=======================================================================
3,165,912
=======================================================================
Banks-1.13%
Southwest Bancorp. of Texas, Inc.(a) 14,800 426,388
-----------------------------------------------------------------------
TCF Financial Corp. 17,100 747,099
=======================================================================
1,173,487
=======================================================================
Broadcasting & Cable TV-1.82%
Hispanic Broadcasting Corp.(a) 47,800 982,290
-----------------------------------------------------------------------
Westwood One, Inc.(a) 24,400 911,584
=======================================================================
1,893,874
=======================================================================
Computer & Electronics Retail-3.50%
Best Buy Co., Inc.(a) 39,000 941,850
-----------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 61,600 2,701,160
=======================================================================
3,643,010
=======================================================================
Construction & Engineering-3.13%
Jacobs Engineering Group Inc.(a) 91,500 3,257,400
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Consumer Finance-1.01%
Doral Financial Corp. (Puerto Rico) 36,600 $ 1,046,760
=======================================================================
Data Processing Services-6.01%
DST Systems, Inc.(a) 38,300 1,361,565
-----------------------------------------------------------------------
Fiserv, Inc.(a) 64,450 2,188,078
-----------------------------------------------------------------------
Iron Mountain Inc.(a) 19,900 656,899
-----------------------------------------------------------------------
Paychex, Inc. 73,200 2,042,280
=======================================================================
6,248,822
=======================================================================
Department Stores-0.53%
Kohl's Corp.(a) 9,800 548,310
=======================================================================
Diversified Commercial Services-2.13%
Apollo Group, Inc.-Class A(a) 12,075 531,300
-----------------------------------------------------------------------
ChoicePoint Inc.(a) 14,500 572,605
-----------------------------------------------------------------------
Cintas Corp. 24,400 1,116,300
=======================================================================
2,220,205
=======================================================================
Diversified Financial Services-3.96%
Federated Investors, Inc.-Class B 24,400 619,028
-----------------------------------------------------------------------
Investors Financial Services Corp. 58,600 1,605,054
-----------------------------------------------------------------------
Legg Mason, Inc. 12,600 611,604
-----------------------------------------------------------------------
Moody's Corp. 10,900 450,061
-----------------------------------------------------------------------
SEI Investments Co. 9,700 263,646
-----------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 28,800 566,496
=======================================================================
4,115,889
=======================================================================
Electronic Equipment & Instruments-0.38%
Molex Inc.-Class A 19,800 393,822
=======================================================================
Employment Services-1.73%
Robert Half International Inc.(a) 112,000 1,804,320
=======================================================================
General Merchandise Stores-1.14%
Dollar Tree Stores, Inc.(a) 48,500 1,191,645
=======================================================================
Health Care Distributors & Services-5.87%
AmerisourceBergen Corp. 39,300 2,134,383
-----------------------------------------------------------------------
Express Scripts, Inc.(a) 48,800 2,344,352
-----------------------------------------------------------------------
Lincare Holdings Inc.(a) 36,600 1,157,292
-----------------------------------------------------------------------
Patterson Dental Co.(a) 10,800 472,392
=======================================================================
6,108,419
=======================================================================
Health Care Equipment-4.33%
Biomet, Inc. 19,500 558,870
-----------------------------------------------------------------------
Fisher Scientific International Inc.(a) 61,100 1,837,888
-----------------------------------------------------------------------
ResMed Inc. 48,900 1,494,873
-----------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 12,400 615,040
=======================================================================
4,506,671
=======================================================================
|
AIM V.I. AGGRESSIVE GROWTH FUND
FS-2
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Health Care Facilities-5.04%
Community Health Systems Inc.(a) 82,800 $ 1,704,852
-----------------------------------------------------------------------
Health Management Associates, Inc.-Class A 124,100 2,221,390
-----------------------------------------------------------------------
LifePoint Hospitals, Inc.(a) 44,100 1,319,957
=======================================================================
5,246,199
=======================================================================
Industrial Machinery-2.33%
Danaher Corp. 36,900 2,424,330
=======================================================================
Insurance Brokers-1.15%
Brown & Brown, Inc. 37,000 1,195,840
=======================================================================
Internet Retail-0.57%
eBay Inc.(a) 8,700 590,034
=======================================================================
IT Consulting & Services-5.60%
Affiliated Computer Services, Inc.-Class A(a) 61,800 3,253,770
-----------------------------------------------------------------------
CACI International Inc.-Class A(a) 15,400 548,856
-----------------------------------------------------------------------
SunGard Data Systems Inc.(a) 86,100 2,028,516
=======================================================================
5,831,142
=======================================================================
Managed Health Care-4.36%
Caremark Rx, Inc.(a) 129,100 2,097,875
-----------------------------------------------------------------------
First Health Group Corp.(a) 100,000 2,435,000
=======================================================================
4,532,875
=======================================================================
Multi-Line Insurance-1.44%
HCC Insurance Holdings, Inc. 61,000 1,500,600
=======================================================================
Oil & Gas Drilling-6.57%
ENSCO International Inc. 36,600 1,077,870
-----------------------------------------------------------------------
National-Oilwell, Inc.(a) 48,800 1,065,792
-----------------------------------------------------------------------
Patterson-UTI Energy, Inc.(a) 73,200 2,208,444
-----------------------------------------------------------------------
Pride International, Inc.(a) 109,800 1,636,020
-----------------------------------------------------------------------
Varco International, Inc.(a) 48,800 849,120
=======================================================================
6,837,246
=======================================================================
Oil & Gas Equipment & Services-1.71%
Cal Dive International, Inc.(a) 48,800 1,146,800
-----------------------------------------------------------------------
Cooper Cameron Corp.(a) 12,700 632,714
=======================================================================
1,779,514
=======================================================================
Oil & Gas Exploration & Production-0.85%
Newfield Exploration Co.(a) 24,400 879,620
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Pharmaceuticals-2.35%
Medicis Pharmaceutical Corp.-Class A(a) 49,300 $ 2,448,731
=======================================================================
Restaurants-2.23%
Brinker International, Inc.(a) 600 19,350
-----------------------------------------------------------------------
CBRL Group, Inc. 24,400 735,172
-----------------------------------------------------------------------
Cheesecake Factory Inc. (The)(a) 15,100 545,865
-----------------------------------------------------------------------
Sonic Corp.(a) 24,500 502,005
-----------------------------------------------------------------------
Starbucks Corp.(a) 25,200 513,576
=======================================================================
2,315,968
=======================================================================
Semiconductors-2.02%
Linear Technology Corp. 29,900 769,028
-----------------------------------------------------------------------
Microchip Technology Inc. 37,300 911,985
-----------------------------------------------------------------------
QLogic Corp.(a) 12,300 424,473
=======================================================================
2,105,486
=======================================================================
Specialty Chemicals-1.04%
Valspar Corp. (The) 24,400 1,077,992
=======================================================================
Specialty Stores-4.15%
Bed Bath & Beyond Inc.(a) 48,800 1,685,064
-----------------------------------------------------------------------
Regis Corp. 24,700 641,953
-----------------------------------------------------------------------
Williams-Sonoma, Inc.(a) 73,200 1,987,380
=======================================================================
4,314,397
=======================================================================
Telecommunications Equipment-1.40%
UTStarcom, Inc.(a) 73,500 1,457,505
=======================================================================
Trading Companies & Distributors-1.75%
Fastenal Co. 48,800 1,824,632
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $96,832,798) 99,396,952
=======================================================================
MONEY MARKET FUNDS-4.49%
STIC Liquid Assets Portfolio(b) 2,333,208 2,333,208
-----------------------------------------------------------------------
STIC Prime Portfolio(b) 2,333,208 2,333,208
=======================================================================
Total Money Market Funds (Cost
$4,666,416) 4,666,416
=======================================================================
TOTAL INVESTMENTS-100.02% (Cost $101,499,214) 104,063,368
=======================================================================
OTHER ASSETS LESS LIABILITIES-(0.02%) (16,767)
=======================================================================
NET ASSETS-100.00% $104,046,601
_______________________________________________________________________
=======================================================================
|
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-3
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$101,499,214) $104,063,368
-------------------------------------------------------------
Receivables for:
Fund shares sold 219,140
-------------------------------------------------------------
Dividends 21,243
-------------------------------------------------------------
Investment for deferred compensation plan 19,764
-------------------------------------------------------------
Other assets 725
=============================================================
Total assets 104,324,240
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 167,276
-------------------------------------------------------------
Deferred compensation plan 19,764
-------------------------------------------------------------
Accrued administrative services fees 61,574
-------------------------------------------------------------
Accrued transfer agent fees 3,335
-------------------------------------------------------------
Accrued operating expenses 25,690
=============================================================
Total liabilities 277,639
=============================================================
Net assets applicable to shares outstanding $104,046,601
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $103,610,507
_____________________________________________________________
=============================================================
Series II $ 436,094
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Series I 12,391,023
_____________________________________________________________
=============================================================
Series II 52,237
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 8.36
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 8.35
_____________________________________________________________
=============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$1,294) $ 245,365
-------------------------------------------------------------
Dividends from affiliated money market funds 91,616
-------------------------------------------------------------
Interest 108
=============================================================
Total investment income 337,089
=============================================================
EXPENSES:
Advisory fees 940,465
-------------------------------------------------------------
Administrative services fees 330,519
-------------------------------------------------------------
Custodian fees 50,280
-------------------------------------------------------------
Distribution fees -- Series II 1,269
-------------------------------------------------------------
Transfer agent fees 13,365
-------------------------------------------------------------
Trustees' fees 8,817
-------------------------------------------------------------
Other 19,401
=============================================================
Total expenses 1,364,116
=============================================================
Less: Fees waived and expenses reimbursed (1,447)
-------------------------------------------------------------
Expenses paid indirectly (103)
=============================================================
Net expenses 1,362,566
=============================================================
Net investment income (loss) (1,025,477)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (24,744,006)
-------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (5,730,299)
-------------------------------------------------------------
Net gain (loss) from investment securities (30,474,305)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(31,499,782)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-4
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (1,025,477) $ (960,489)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (24,744,006) (37,314,213)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (5,730,299) 6,249,715
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (31,499,782) (32,024,987)
==========================================================================================
Share transactions-net:
Series I 13,097,095 50,732,875
------------------------------------------------------------------------------------------
Series II 560,534 --
==========================================================================================
Net increase (decrease) in net assets (17,842,153) 18,707,888
==========================================================================================
NET ASSETS:
Beginning of year 121,888,754 103,180,866
==========================================================================================
End of year $104,046,601 $121,888,754
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $170,635,558 $157,998,386
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (26,873) (22,457)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (69,126,238) (44,381,628)
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,564,154 8,294,453
==========================================================================================
$104,046,601 $121,888,754
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-5
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
E. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-6
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $1,006.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $330,519, of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $8,296 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $828 after plan fees reimbursed by AIM Distributors of $441.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,772 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, 2002, the Fund received reductions in custodian fees of $103 under an expense offset arrangement, which resulted in a reduction of the Fund's total expenses of $103.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended December 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation-investments $ 397,571
-------------------------------------------------------------
Temporary book/tax differences (26,873)
-------------------------------------------------------------
Capital loss carryforward (66,341,590)
-------------------------------------------------------------
Post-October capital loss deferral (618,065)
-------------------------------------------------------------
Shares of beneficial interest 170,635,558
=============================================================
$104,046,601
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
------------------------------------------------------------
December 31, 2006 $ 354,222
------------------------------------------------------------
December 31, 2007 44,406
------------------------------------------------------------
December 31, 2008 1,780,366
------------------------------------------------------------
December 31, 2009 35,123,543
------------------------------------------------------------
December 31, 2010 29,039,053
============================================================
$66,341,590
____________________________________________________________
============================================================
|
AIM V.I. AGGRESSIVE GROWTH FUND
FS-7
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, 2002 was $111,453,648 and $94,891,283, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 7,161,672 ------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (6,764,101) ========================================================================= Net unrealized appreciation of investment securities $ 397,571 _________________________________________________________________________ ========================================================================= Cost of investments for tax purposes is $103,665,797. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of net operating loss and other items on December 31, 2002, undistributed net investment income was increased by $1,021,061, undistributed net realized gains decreased by $604 and shares of beneficial interest decreased by $1,020,457. This reclassification had no effect on the net assets of the Fund.
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Sold:
Series I 3,797,152 $ 36,852,751 10,120,399 $120,647,678
----------------------------------------------------------------------------------------------------------------------
Series II* 4,341,864 39,301,001 -- --
======================================================================================================================
Reacquired:
Series I (2,678,493) (23,755,656) (5,904,160) (69,914,803)
----------------------------------------------------------------------------------------------------------------------
Series II* (4,289,627) (38,740,467) -- --
======================================================================================================================
1,170,896 $ 13,657,629 4,216,239 $ 50,732,875
______________________________________________________________________________________________________________________
======================================================================================================================
|
* Series II shares commenced sales on March 26, 2002.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-8
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
---------------------------------------------------------------------------
MAY 1, 1998
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.81 $ 14.62 $ 14.25 $ 9.85 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.08) (0.10)(a) (0.10)(a) (0.04)(a) 0.04
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (2.37) (3.71) 0.47 4.44 (0.14)
=================================================================================================================================
Total from investment operations (2.45) (3.81) 0.37 4.40 (0.10)
=================================================================================================================================
Less distributions from net investment income -- -- -- -- (0.05)
=================================================================================================================================
Net asset value, end of period $ 8.36 $ 10.81 $ 14.62 $ 14.25 $ 9.85
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (22.66)% (26.06)% 2.60% 44.67% (0.94)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $103,611 $121,889 $103,181 $17,326 $4,399
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.16%(c) 1.21% 1.16% 1.19% 1.16%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.16%(c) 1.21% 1.26% 2.42% 4.62%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.87)%(c) (0.88)% (0.59)% (0.41)% 0.96%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 85% 90% 65% 89% 30%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $117,050,654.
(d) Annualized.
SERIES II
-------------
MARCH 26,
2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
-----------------------------------------------------------------------------
Net asset value, beginning of period $ 10.70
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)
-----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.25)
=============================================================================
Total from investment operations (2.35)
=============================================================================
Net asset value, end of period $ 8.35
_____________________________________________________________________________
=============================================================================
Total return(a) (21.96)%
_____________________________________________________________________________
=============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 436
_____________________________________________________________________________
=============================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.32%(b)
-----------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.41%(b)
=============================================================================
Ratio of net investment income (loss) to average net assets (1.03)%
_____________________________________________________________________________
=============================================================================
Portfolio turnover rate 85%
_____________________________________________________________________________
=============================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total return does not reflect charges at the
separate account level which if included would reduce the total return
for the period shown.
(b) Ratios are annualized and based on average daily net assets of $663,940.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-9
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, 2002, 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 years or periods in the four year 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, 2002 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, 2002, 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 years or periods in the four year 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.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. BALANCED FUND
FS-10
Schedule of Investments
December 31, 2002
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
BONDS & NOTES-21.40%
Aerospace & Defense-0.13%
Raytheon Co., Notes, 6.75%, 08/15/07 $ 100,000 $ 110,826
========================================================================
Agricultural Products-0.08%
Archer-Daniels-Midland Co., Unsec. Unsub.
Deb., 6.95%, 12/15/97 60,000 65,443
========================================================================
Automobile Manufacturers-0.31%
DaimlerChrysler N.A. Holding Corp.-Series D,
Gtd. Medium Term Notes, 3.40%, 12/15/04 40,000 40,521
------------------------------------------------------------------------
General Motors Corp., Unsec. Deb., 8.80%,
03/01/21 200,000 215,948
========================================================================
256,469
========================================================================
Banks-2.42%
African Development Bank (Luxembourg), Sr.
Unsec. Unsub. Yankee Notes, 3.25%, 07/29/05 85,000 87,445
------------------------------------------------------------------------
Barclays O/S Investment Co. (Netherlands),
Unsec. Gtd. Unsub. Floating Rate Yankee
Notes, 1.63%, 05/14/03 300,000 253,762
------------------------------------------------------------------------
Citicorp, Unsec. Sub. Notes, 7.13%, 09/01/05 100,000 111,972
------------------------------------------------------------------------
Dresdner Funding Trust I, Bonds, 8.15%,
06/30/31 (Acquired 05/09/02; Cost
$132,621)(a) 125,000 126,205
------------------------------------------------------------------------
European Investment Bank (Luxembourg),
Euro Notes, 4.63%, 03/01/07 110,000 118,017
------------------------------------------------------------------------
Medium Term Yankee Notes, 4.88%, 09/06/06 250,000 269,911
------------------------------------------------------------------------
KeyBank N.A., Sr. Notes, 4.10%, 06/30/05 100,000 103,628
------------------------------------------------------------------------
Lloyds Bank PLC-Series 1 (United Kingdom),
Unsec. Sub. Floating Rate Yankee Notes,
1.69%, 06/29/03 130,000 105,281
------------------------------------------------------------------------
NBD Bank N.A. Michigan, Unsec. Putable Sub.
Deb., 8.25%, 11/01/04 100,000 126,560
------------------------------------------------------------------------
Santander Financial Issuances (Cayman
Islands), Unsec. Gtd. Sub. Yankee Notes,
7.00%, 04/01/06 160,000 171,074
------------------------------------------------------------------------
St. Paul Bancorp., Inc., Sr. Unsec. Unsub.
Notes, 7.13%, 02/15/04 75,000 78,826
------------------------------------------------------------------------
U.S. Bank N.A., Sub. Notes, 6.30%, 02/04/14 175,000 198,235
------------------------------------------------------------------------
UBS Preferred Funding Trust I, Gtd. Bonds,
8.62%, 10/29/49 60,000 71,834
------------------------------------------------------------------------
Wachovia Corp., Unsec. Putable Sub. Deb.,
6.55%, 10/15/05 185,000 201,792
========================================================================
2,024,542
========================================================================
Brewers-0.20%
Anheuser-Busch Cos., Inc., Sr. Unsec. Deb.,
6.50%, 02/01/43 150,000 167,274
========================================================================
Broadcasting & Cable TV-1.57%
Continental Cablevision, Inc., Sr. Deb.,
9.50%, 08/01/13 200,000 227,750
------------------------------------------------------------------------
Jones Intercable, Inc., Sr. Unsec. Notes,
8.88%, 04/01/07 135,000 144,183
------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
Broadcasting & Cable TV-(Continued)
Lenfest Communications, Inc., Sr. Unsec. Sub.
Notes, 8.25%, 02/15/08 $ 150,000 $ 157,125
------------------------------------------------------------------------
TCA Cable TV, Inc., Sr. Unsec. Putable Deb.,
6.53%, 02/01/08 150,000 186,079
------------------------------------------------------------------------
TCI Communications, Inc.,
Sr. Unsec. Deb., 7.88%, 02/15/26 175,000 179,203
------------------------------------------------------------------------
Sr. Unsec. Notes, 8.00%, 08/01/05 60,000 63,951
------------------------------------------------------------------------
Time Warner Inc.,
Sr. Unsec. Gtd. Deb., 6.88%, 06/15/18 200,000 198,122
------------------------------------------------------------------------
Unsec. Notes, 7.75%, 06/15/05 150,000 159,771
========================================================================
1,316,184
========================================================================
Computer Hardware-0.33%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb., 8.00%, 05/01/03
(Acquired 11/06/98-04/19/01; Cost
$353,650)(a)(b)(c) 548,000 29,044
------------------------------------------------------------------------
International Business Machines Corp., Deb.,
8.38%, 11/01/19 200,000 251,210
========================================================================
280,254
========================================================================
Consumer Finance-2.07%
CitiFinancial Credit Co.,
Notes, 6.63%, 06/01/15 150,000 170,145
------------------------------------------------------------------------
Unsec. Notes, 6.75%, 07/01/07 100,000 112,686
------------------------------------------------------------------------
Countrywide Home Loans, Inc.,
Series K, Medium Term Notes, 3.50%,
12/19/05 75,000 75,461
------------------------------------------------------------------------
Unsec. Gtd. Notes, 6.85%, 06/15/04 300,000 318,729
------------------------------------------------------------------------
Ford Motor Credit Co.,
Notes, 7.88%, 06/15/10 100,000 101,011
------------------------------------------------------------------------
Unsec. Notes, 6.70%, 07/16/04 140,000 143,070
------------------------------------------------------------------------
Unsec. Notes, 6.88%, 02/01/06 200,000 200,892
------------------------------------------------------------------------
General Motors Acceptance Corp.,
Medium Term Notes, 5.25%, 05/16/05 100,000 100,615
------------------------------------------------------------------------
Notes, 6.85%, 06/17/04 140,000 145,582
------------------------------------------------------------------------
Unsec. Unsub. Notes, 7.63%, 06/15/04 175,000 183,505
------------------------------------------------------------------------
Household Finance Corp., Sr. Unsec. Notes,
6.50%, 01/24/06 70,000 73,925
------------------------------------------------------------------------
8.00%, 05/09/05 100,000 108,757
========================================================================
1,734,378
========================================================================
Distillers & Vintners-0.26%
Diageo PLC, Sr. Unsec. Gtd. Putable Notes,
7.45%, 04/15/05 175,000 214,793
========================================================================
Diversified Financial Services-4.32%
Associates Corp. of North America, Sr. Notes,
5.80%, 04/20/04 100,000 105,161
------------------------------------------------------------------------
Auburn Hills Trust, Unsec. Gtd. Deb., 12.38%,
05/01/20 275,000 418,720
------------------------------------------------------------------------
|
AIM V.I. BALANCED FUND
FS-11
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
Diversified Financial Services-(Continued)
CIT Group Inc.,
Sr. Floating Rate Medium Term Notes,
2.67%, 11/25/03 $ 70,000 $ 70,045
------------------------------------------------------------------------
Sr. Notes, 7.13%, 10/15/04 100,000 105,324
------------------------------------------------------------------------
Citigroup Capital II, Jr. Gtd. Sub. Bonds,
7.75%, 12/01/36 200,000 215,182
------------------------------------------------------------------------
Citigroup Inc.,
Sr. Unsec. Notes, 4.13%, 06/30/05 200,000 208,944
------------------------------------------------------------------------
Unsec. Sub. Notes, 6.63%, 06/15/32 100,000 108,552
------------------------------------------------------------------------
Fidelity Investments, Bonds, 7.57%, 06/15/29
(Acquired 04/10/01; Cost $104,113)(a) 100,000 119,584
------------------------------------------------------------------------
General Electric Capital Corp.,
Gtd. Sub. Notes, 8.13%, 05/15/12 100,000 121,832
------------------------------------------------------------------------
Series A, Medium Term Notes, 5.00%,
06/15/07 50,000 53,071
------------------------------------------------------------------------
Series A, Medium Term Notes, 6.80%,
11/01/05 360,000 400,144
------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), Bonds,
7.63%, 08/17/05 150,000 168,699
------------------------------------------------------------------------
Heller Financial, Inc.,
Sr. Unsec. Notes, 8.00%, 06/15/05 75,000 83,689
------------------------------------------------------------------------
Unsec. Notes, 7.38%, 11/01/09 100,000 115,728
------------------------------------------------------------------------
John Hancock Global Funding II,
Medium Term Notes, 6.50%, 03/01/11
(Acquired 07/24/02; Cost $57,994)(a) 55,000 59,143
------------------------------------------------------------------------
Notes, 5.00%, 07/27/07 (Acquired 06/12/02;
Cost $99,945)(a) 100,000 104,604
------------------------------------------------------------------------
Lehman Brothers Holdings Inc., Sr. Notes,
8.75%, 03/15/05 125,000 141,069
------------------------------------------------------------------------
Lehman Brothers Inc.,
Sr. Sub. Deb., 11.63%, 05/15/05 100,000 118,925
------------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 7.63%, 06/01/06 100,000 113,073
------------------------------------------------------------------------
Merrill Lynch & Co., Inc.,
Series B, Medium Term Notes, 4.54%,
03/08/05 45,000 46,832
------------------------------------------------------------------------
Series E, Floating Rate Medium Term Yankee
Notes, 1.68%, 06/28/04 125,000 125,336
------------------------------------------------------------------------
Morgan Stanley, Sr. Notes, 7.75%, 06/15/05 200,000 224,040
------------------------------------------------------------------------
Salomon Smith Barney Holdings Inc., Sr.
Unsec. Notes, 6.25%, 06/15/05 165,000 178,410
------------------------------------------------------------------------
Swiss Bank Corp.-NY, Sub. Notes, 7.38%,
06/15/17 50,000 60,103
------------------------------------------------------------------------
Washington Mutual Financial Corp., Sr. Unsec.
Notes, 8.25%, 06/15/05 125,000 141,660
========================================================================
3,607,870
========================================================================
Electric Utilities-1.66%
Cleveland Electric Illuminating Co. (The),
First Mortgage Bonds, 6.86%, 10/01/08 100,000 105,823
------------------------------------------------------------------------
Duke Energy Corp., Bonds, 6.45%, 10/15/32 60,000 59,476
------------------------------------------------------------------------
El Paso Electric Co.-Series E, Sr. Sec. First
Mortgage Bonds, 9.40%, 05/01/11 200,000 200,134
------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
Electric Utilities-(Continued)
Hydro-Quebec (Canada),
Gtd. Yankee Bonds, 9.40%, 02/01/21(d) $ 50,000 $ 71,516
------------------------------------------------------------------------
Series B, Gtd. Medium Term Yankee Notes,
8.62%, 12/15/11 50,000 65,017
------------------------------------------------------------------------
Series GL, Gtd. Floating Rate Yankee Notes,
1.94%, 09/29/49 170,000 150,920
------------------------------------------------------------------------
Niagara Mohawk Power Corp.,
Sec. First Mortgage Bonds, 7.75%,
05/15/06(d) 100,000 112,628
------------------------------------------------------------------------
Series H, Sr. Unsec. Disc. Notes, 8.50%,
07/01/10(e) 250,000 252,227
------------------------------------------------------------------------
Public Service Company of New Mexico-Series
A, Sr. Unsec. Notes, 7.10%, 08/01/05 130,000 134,016
------------------------------------------------------------------------
Texas-New Mexico Power Co., Sr. Unsec. Notes,
6.25%, 01/15/09 250,000 237,537
========================================================================
1,389,294
========================================================================
Gas Utilities-0.20%
Tennessee Gas Pipeline Co., Unsec. Deb.,
7.63%, 04/01/37 200,000 164,000
========================================================================
General Merchandise Stores-0.11%
Wal-Mart Stores, Inc., Unsec. Deb., 8.50%,
09/15/24 80,000 90,778
========================================================================
Integrated Oil & Gas-1.22%
BP Canada Finance Co. (Canada), Yankee Bonds,
3.38%, 10/31/07 750,000 758,512
------------------------------------------------------------------------
ConocoPhillips, Unsec. Notes, 8.50%, 05/25/05 125,000 142,566
------------------------------------------------------------------------
Occidental Petroleum Corp., Sr. Unsec. Notes,
7.38%, 11/15/08 100,000 116,683
========================================================================
1,017,761
========================================================================
Integrated Telecommunication Services-1.09%
GTE Hawaiian Telephone Co., Inc.-Series A,
Unsec. Deb., 7.00%, 02/01/06 80,000 86,239
------------------------------------------------------------------------
Olivetti International Finance N.V.-Series E
(Netherlands), Gtd. Medium Term Euro Notes,
6.13%, 07/30/09(f) EUR 30,000 32,040
------------------------------------------------------------------------
Sprint Capital Corp.,
Sr. Unsec. Gtd. Notes, 5.70%, 11/15/03 85,000 84,681
------------------------------------------------------------------------
Sr. Unsec. Gtd. Notes, 6.00%, 01/15/07 85,000 80,431
------------------------------------------------------------------------
Sr. Unsec. Gtd. Notes, 7.13%, 01/30/06 125,000 123,906
------------------------------------------------------------------------
Unsec. Gtd. Notes, 8.75%, 03/15/32 280,000 268,450
------------------------------------------------------------------------
Sprint Corp., Deb., 9.00%, 10/15/19 200,000 180,750
------------------------------------------------------------------------
Verizon Global Funding Corp., Sr. Unsec.
Notes, 6.13%, 06/15/07 50,000 54,993
========================================================================
911,490
========================================================================
Life & Health Insurance-0.40%
American General Corp., Unsec. Notes, 7.50%,
08/11/10 50,000 58,694
------------------------------------------------------------------------
Lincoln National Corp., Unsec. Deb., 9.13%,
10/01/24 145,000 165,045
------------------------------------------------------------------------
|
AIM V.I. BALANCED FUND
FS-12
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
Life & Health Insurance-(Continued)
Sun Canada Financial Co., Gtd. Sub. Bonds,
6.63%, 12/15/07 (Acquired 03/15/00; Cost
$91,980)(a) $ 100,000 $ 109,233
========================================================================
332,972
========================================================================
Oil & Gas Equipment & Services-0.31%
Smith International, Inc., Notes, 6.75%,
02/15/11 250,000 260,798
========================================================================
Oil & Gas Exploration & Production-2.20%
Amerada Hess Corp., Unsec. Notes,
5.30%, 08/15/04 225,000 234,968
------------------------------------------------------------------------
7.30%, 08/15/31 85,000 92,513
------------------------------------------------------------------------
Anadarko Petroleum Corp., Unsec. Putable
Deb., 7.73%, 09/15/26 150,000 178,110
------------------------------------------------------------------------
Burlington Resources Finance Co. (Canada),
Sr. Unsec. Gtd. Yankee Notes, 7.40%,
12/01/31 70,000 80,599
------------------------------------------------------------------------
Canadian Oil Sands Ltd. (Canada), Sr. Yankee
Notes, 7.90%, 09/01/21 (Acquired
08/17/01-07/31/02; Cost $225,936)(a) 225,000 237,443
------------------------------------------------------------------------
Devon Energy Corp., Sr. Unsec. Deb., 7.95%,
04/15/32 100,000 120,216
------------------------------------------------------------------------
Devon Financing Corp. ULC, Unsec. Gtd. Unsub.
Deb., 7.88%, 09/30/31 125,000 151,155
------------------------------------------------------------------------
Noble Energy, Inc., Sr. Unsec. Deb., 7.25%,
08/01/97 650,000 627,822
------------------------------------------------------------------------
Norcen Energy Resources Ltd. (Canada), Unsec.
Yankee Deb., 7.38%, 05/15/06 100,000 113,868
========================================================================
1,836,694
========================================================================
Oil & Gas Refining, Marketing &
Transportation-0.17%
Petroleos Mexicanos (Mexico),
Series P, Unsec. Putable Unsub. Yankee
Bonds, 9.50%, 03/15/06 50,000 56,536
------------------------------------------------------------------------
Sr. Unsec. Gtd. Yankee Bonds, 9.38%,
12/02/08 75,000 86,719
========================================================================
143,255
========================================================================
Pharmaceuticals-0.14%
Johnson & Johnson, Unsec. Deb., 8.72%,
11/01/24 100,000 116,892
========================================================================
Property & Casualty Insurance-0.17%
Allstate Corp. (The), Sr. Unsec. Notes,
7.88%, 05/01/05 125,000 139,621
========================================================================
Publishing-0.21%
News America Inc., Putable Deb., 6.75%,
01/09/10 175,000 179,916
========================================================================
Railroads-0.20%
Norfolk Southern Corp., Sr. Putable Notes,
7.05%, 05/01/04 150,000 170,103
========================================================================
Real Estate-0.61%
EOP Operating L.P.,
Sr. Unsec. Notes, 7.25%, 02/15/18 65,000 69,787
------------------------------------------------------------------------
Unsec. Gtd. Notes, 6.75%, 02/15/12 100,000 107,880
------------------------------------------------------------------------
Unsec. Notes, 6.50%, 01/15/04 60,000 62,149
------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
Real Estate-(Continued)
Spieker Properties, Inc.,
Unsec. Unsub. Deb., 7.35%, 12/01/17 $ 100,000 $ 108,852
------------------------------------------------------------------------
Unsec. Unsub. Notes, 6.80%, 05/01/04 150,000 157,382
========================================================================
506,050
========================================================================
Soft Drinks-0.17%
Coca-Cola Enterprises Inc., Putable Notes,
8.00%, 01/04/04 125,000 138,504
========================================================================
Sovereign Debt-0.77%
Export Development Canada (Canada), Yankee
Bonds, 4.00%, 08/01/07 160,000 167,306
------------------------------------------------------------------------
Japan Bank for International Cooperation
(Japan), Unsec. Gtd. Euro Bonds, 6.50%,
10/06/05 125,000 138,698
------------------------------------------------------------------------
Region of Lombardy (Italy), Unsec. Yankee
Notes, 5.80%, 10/25/32 325,000 339,242
========================================================================
645,246
========================================================================
Wireless Telecommunication Services-0.08%
AT&T Wireless Services Inc., Sr. Unsec.
Unsub. Notes, 8.75%, 03/01/31 60,000 59,025
------------------------------------------------------------------------
Vodafone Finance B.V. (Netherlands), Unsec.
Unsub. Gtd. Euro Bonds, 4.75%, 05/27/09(f)
EUR 10,000 10,578
========================================================================
69,603
========================================================================
Total Bonds & Notes (Cost $17,459,864) 17,891,010
========================================================================
SHARES
STOCKS & OTHER EQUITY INTERESTS-56.48%
Advertising-2.00%
Lamar Advertising Co.(g) 20,600 693,190
------------------------------------------------------------------------
Omnicom Group Inc. 15,100 975,460
========================================================================
1,668,650
========================================================================
Aerospace & Defense-1.92%
Honeywell International Inc. 26,900 645,600
------------------------------------------------------------------------
United Technologies Corp. 15,500 960,070
========================================================================
1,605,670
========================================================================
Apparel Retail-0.78%
Limited Brands 46,900 653,317
========================================================================
Banks-2.61%
Bank of America Corp. 13,400 932,238
------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 21,000 503,160
------------------------------------------------------------------------
Northern Trust Corp. 21,400 750,070
========================================================================
2,185,468
========================================================================
Broadcasting & Cable TV-0.46%
Univision Communications Inc.-Class A(g) 15,500 379,750
========================================================================
Building Products-1.40%
American Standard Cos. Inc.(g) 7,500 533,550
------------------------------------------------------------------------
|
AIM V.I. BALANCED FUND
FS-13
MARKET
SHARES VALUE
------------------------------------------------------------------------
Building Products-(Continued)
Masco Corp. 30,400 $ 639,920
========================================================================
1,173,470
========================================================================
Computer Hardware-0.91%
International Business Machines Corp. 9,800 759,500
========================================================================
Data Processing Services-1.09%
DST Systems, Inc.(g) 25,500 906,525
========================================================================
Diversified Financial Services-6.47%
American Express Co. 16,200 572,670
------------------------------------------------------------------------
Citigroup Inc. 40,800 1,435,752
------------------------------------------------------------------------
Fannie Mae 8,900 572,537
------------------------------------------------------------------------
Freddie Mac 10,800 637,740
------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 11,100 755,910
------------------------------------------------------------------------
Lehman Brothers Holdings Inc. 11,300 602,177
------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 21,900 831,105
========================================================================
5,407,891
========================================================================
Food Distributors-0.64%
Sysco Corp. 18,000 536,220
========================================================================
Food Retail-1.29%
Kroger Co. (The)(g) 40,500 625,725
------------------------------------------------------------------------
Safeway Inc.(g) 19,500 455,520
========================================================================
1,081,245
========================================================================
General Merchandise Stores-2.23%
Target Corp. 30,900 927,000
------------------------------------------------------------------------
Wal-Mart Stores, Inc. 18,600 939,486
========================================================================
1,866,486
========================================================================
Health Care Distributors & Services-1.09%
Cardinal Health, Inc. 15,350 908,566
========================================================================
Health Care Equipment-0.40%
Beckman Coulter, Inc. 11,400 336,528
========================================================================
Health Care Facilities-0.90%
HCA Inc. 18,200 755,300
========================================================================
Health Care Supplies-0.95%
Alcon, Inc. (Switzerland)(g) 20,200 796,890
========================================================================
Home Improvement Retail-1.45%
Home Depot, Inc. (The) 16,700 400,132
------------------------------------------------------------------------
Lowe's Cos., Inc. 21,700 813,750
========================================================================
1,213,882
========================================================================
Household Appliances-1.47%
Black & Decker Corp. (The) 28,700 1,230,943
========================================================================
Household Products-1.82%
Colgate-Palmolive Co. 20,800 1,090,544
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Household Products-(Continued)
Kimberly-Clark Corp. 9,100 $ 431,977
========================================================================
1,522,521
========================================================================
Industrial Conglomerates-1.09%
General Electric Co. 37,400 910,690
========================================================================
Insurance Brokers-0.68%
Marsh & McLennan Cos., Inc. 12,300 568,383
========================================================================
Integrated Oil & Gas-2.73%
BP PLC-ADR (United Kingdom) 11,000 447,150
------------------------------------------------------------------------
Exxon Mobil Corp. 30,500 1,065,670
------------------------------------------------------------------------
Total Fina Elf S.A. (France) 5,400 771,503
========================================================================
2,284,323
========================================================================
Integrated Telecommunication Services-0.99%
Verizon Communications Inc. 21,400 829,250
========================================================================
IT Consulting & Services-1.04%
SunGard Data Systems Inc.(g) 36,700 864,652
========================================================================
Life & Health Insurance-1.01%
Nationwide Financial Services, Inc.-Class A 9,700 277,905
------------------------------------------------------------------------
Prudential Financial, Inc. 17,900 568,146
========================================================================
846,051
========================================================================
Movies & Entertainment-0.78%
Viacom Inc.-Class B(g) 16,045 653,994
========================================================================
Multi-Line Insurance-1.98%
American International Group, Inc. 19,300 1,116,505
------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 11,800 536,074
========================================================================
1,652,579
========================================================================
Networking Equipment-0.96%
Cisco Systems, Inc.(g) 61,100 800,410
========================================================================
Oil & Gas Drilling-0.73%
Noble Corp. (Cayman Islands)(g) 17,300 608,095
========================================================================
Oil & Gas Equipment & Services-1.28%
Cooper Cameron Corp.(g) 21,400 1,066,148
========================================================================
Oil & Gas Exploration & Production-1.17%
Apache Corp. 11,650 663,934
------------------------------------------------------------------------
Kerr-McGee Corp.-$1.83 Pfd. DECS 7,300 312,440
========================================================================
976,374
========================================================================
Packaged Foods & Meats-0.99%
Kraft Foods Inc.-Class A 21,300 829,209
========================================================================
Personal Products-0.73%
Estee Lauder Cos. Inc. (The)-Class A 23,100 609,840
========================================================================
|
AIM V.I. BALANCED FUND
FS-14
MARKET
SHARES VALUE
------------------------------------------------------------------------
Pharmaceuticals-5.08%
Abbott Laboratories 13,500 $ 540,000
------------------------------------------------------------------------
Johnson & Johnson 15,800 848,618
------------------------------------------------------------------------
Merck & Co. Inc. 14,000 792,540
------------------------------------------------------------------------
Pfizer Inc. 26,000 794,820
------------------------------------------------------------------------
Pharmacia Corp. 17,200 718,960
------------------------------------------------------------------------
Wyeth 14,800 553,520
========================================================================
4,248,458
========================================================================
Property & Casualty Insurance-0.74%
MGIC Investment Corp. 15,000 619,500
========================================================================
Semiconductor Equipment-0.47%
Applied Materials, Inc.(g) 30,300 394,809
========================================================================
Semiconductors-1.24%
Analog Devices, Inc.(g) 23,100 551,397
------------------------------------------------------------------------
Intel Corp. 31,200 485,784
========================================================================
1,037,181
========================================================================
Specialty Stores-1.14%
Bed Bath & Beyond Inc.(g) 27,500 949,575
========================================================================
Systems Software-1.77%
Microsoft Corp.(g) 17,200 889,240
------------------------------------------------------------------------
Oracle Corp.(g) 55,000 594,000
========================================================================
1,483,240
========================================================================
Total Stocks & Other Equity Interests
(Cost $53,465,124) 47,221,583
========================================================================
PRINCIPAL
AMOUNT
ASSET BACKED SECURITIES-1.51%
Airlines-0.58%
Continental Airlines, Inc.,
Series 2000-1, Class A-1, Sr. Pass Through
Ctfs., 8.05%, 11/01/20 $ 184,378 159,026
------------------------------------------------------------------------
Series 2000-2, Class A-1, Sr. Sec. Pass
Through Ctfs., 7.71%, 04/02/21 59,863 51,632
------------------------------------------------------------------------
Series 974A, Pass Through Ctfs., 6.90%,
01/02/18 87,086 76,561
------------------------------------------------------------------------
United Air Lines, Inc.-Series 2000-2, Class
A-2, Sr. Sec. Pass Through Ctfs., 7.19%,
04/01/11 250,302 198,364
========================================================================
485,583
========================================================================
Diversified Financial Services-0.66%
Citicorp Lease,
Series 1999-1, Class A1, Pass Through
Ctfs., 7.22%, 06/15/05 (Acquired 05/08/02;
Cost $155,519)(a) 147,502 161,574
------------------------------------------------------------------------
Series 1999-1, Class A2, Pass Through
Ctfs., 8.04%, 12/15/19 (Acquired
06/01/00-07/14/00; Cost $198,931)(a) 200,000 231,152
------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
Diversified Financial Services-(Continued)
National Rural Utilities Cooperative Finance
Corp., Sr. Sec. Bonds, 6.00%, 05/15/06 $ 50,000 $ 54,640
------------------------------------------------------------------------
Premium Asset Trust-Series 2001-6, Sec.
Notes, 5.25%, 07/19/04 (Acquired 07/11/01;
Cost $99,868)(a) 100,000 104,399
========================================================================
551,765
========================================================================
Electric Utilities-0.27%
Beaver Valley II Funding Corp., SLOBS, 9.00%,
06/01/17 200,000 222,418
========================================================================
Total Asset Backed Securities (Cost
$1,273,259) 1,259,766
========================================================================
U.S. GOVERNMENT AGENCY SECURITIES-10.37%
Federal Home Loan Bank-0.04%
Unsec. Bonds,
4.88%, 04/16/04 30,000 31,324
========================================================================
Federal Home Loan Mortgage Corp.
(FHLMC)-2.45%
Pass Through Ctfs.,
7.00%, 06/01/15 to 04/01/32 120,569 127,184
------------------------------------------------------------------------
6.00%, 05/01/17 to 05/01/32 430,319 447,561
------------------------------------------------------------------------
7.50%, 12/01/30 to 05/01/31 324,966 345,799
------------------------------------------------------------------------
6.50%, 01/01/31 to 08/01/32 1,082,607 1,128,617
========================================================================
2,049,161
========================================================================
Federal National Mortgage Association
(FNMA)-5.58%
Pass Through Ctfs.,
6.50%, 04/01/14 to 11/01/31 1,149,321 1,203,096
------------------------------------------------------------------------
7.50%, 11/01/15 36,561 39,070
------------------------------------------------------------------------
7.00%, 02/01/16 to 09/01/32 1,039,124 1,095,052
------------------------------------------------------------------------
6.00%, 01/01/17 to 05/01/17 413,894 433,250
------------------------------------------------------------------------
8.00%, 08/01/21 to 12/01/23 165,607 180,339
------------------------------------------------------------------------
Pass Through Ctfs. TBA,
6.00%, 01/01/33(h) 835,000 865,506
------------------------------------------------------------------------
Unsec. Notes,
6.20%, 06/13/17 300,000 323,145
------------------------------------------------------------------------
Unsec. Sub. Notes,
4.75%, 01/02/07 300,000 318,162
------------------------------------------------------------------------
5.25%, 08/01/12 200,000 209,022
========================================================================
4,666,642
========================================================================
|
AIM V.I. BALANCED FUND
FS-15
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
Government National Mortgage Association
(GNMA)-2.30%
Pass Through Ctfs.,
7.50%, 06/15/23 to 10/15/31 $ 356,274 $ 380,858
------------------------------------------------------------------------
8.50%, 11/15/24 306,134 336,702
------------------------------------------------------------------------
8.00%, 08/15/25 72,732 79,470
------------------------------------------------------------------------
6.50%, 03/15/29 to 06/15/32 463,006 486,481
------------------------------------------------------------------------
7.00%, 09/15/31 416,152 441,292
------------------------------------------------------------------------
6.00%, 12/15/31 189,278 197,379
========================================================================
1,922,182
========================================================================
Total U.S. Government Agency Securities
(Cost $8,410,827) 8,669,309
========================================================================
U.S. TREASURY SECURITIES-6.21%
U.S. Treasury Notes-5.35%
3.25%, 12/31/03 50,000 51,013
------------------------------------------------------------------------
6.75%, 05/15/05 500,000(i) 557,595
------------------------------------------------------------------------
6.50%, 08/15/05 to 02/15/10 2,470,000(i) 2,833,150
------------------------------------------------------------------------
6.88%, 05/15/06 500,000 575,490
------------------------------------------------------------------------
4.75%, 11/15/08 25,000 27,299
------------------------------------------------------------------------
5.00%, 08/15/11 390,000 428,029
========================================================================
4,472,576
========================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------
U.S. Treasury Bonds-0.86%
7.50%, 11/15/16 $ 100,000 $ 130,960
------------------------------------------------------------------------
6.25%, 08/15/23 145,000 170,516
------------------------------------------------------------------------
6.13%, 11/15/27 to 08/15/29 355,000 415,963
========================================================================
717,439
========================================================================
Total U.S. Treasury Securities (Cost
$4,700,914) 5,190,015
========================================================================
SHARES
MONEY MARKET FUNDS-4.63%
STIC Liquid Assets Portfolio(j) 1,935,047 1,935,047
------------------------------------------------------------------------
STIC Prime Portfolio(j) 1,935,047 1,935,047
========================================================================
Total Money Market Funds (Cost
$3,870,094) 3,870,094
========================================================================
TOTAL INVESTMENTS-100.60% (Cost $89,180,082) 84,101,777
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.60%) (503,178)
========================================================================
NET ASSETS-100.00% $83,598,599
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Conv. - Convertible Ctfs. - Certificates Deb. - Debentures DECS - Dividend Enhanced Convertible Stock Disc. - Discounted EUR - Euro Gtd. - Guaranteed Jr. - Junior N.A. - National Association Pfd. - Preferred Sec. - Secured SLOBS - Secured Lease Obligation Securities Sr. - Senior Sub. - Subordinated TBA - To Be Announced Unsec. - Unsecured Unsub. - Unsubordinated |
Notes to Schedule of Investments:
(a) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act. The Fund has no rights to demand
registration of these securities. The aggregate market value of these
securities at 12/31/02 was $1,282,381, which represented 1.53% of the Fund's
net assets. These securities are considered to be illiquid.
(b) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees and may be considered illiquid.
(d) Secured by bond insurance provided by one of the following companies: Ambac
Assurance Corp. or MBIA Insurance Co.
(e) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) Non-income producing security.
(h) Security purchased on forward commitment basis. These securities are subject
to dollar roll transactions. See Note 1 Section C.
(i) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(j) 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-16
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $89,180,082) $84,101,777
------------------------------------------------------------
Receivables for:
Variation margin 3,850
------------------------------------------------------------
Fund shares sold 27,966
------------------------------------------------------------
Dividends and interest 461,822
------------------------------------------------------------
Investment for deferred compensation plan 19,786
============================================================
Total assets 84,615,201
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 857,684
------------------------------------------------------------
Fund shares reacquired 53,989
------------------------------------------------------------
Deferred compensation plan 19,786
------------------------------------------------------------
Accrued administrative services fees 48,578
------------------------------------------------------------
Accrued distribution fees - Series II 373
------------------------------------------------------------
Accrued transfer agent fees 2,476
------------------------------------------------------------
Accrued operating expenses 33,716
============================================================
Total liabilities 1,016,602
============================================================
Net assets applicable to shares outstanding $83,598,599
____________________________________________________________
============================================================
NET ASSETS:
Series I $82,865,744
____________________________________________________________
============================================================
Series II $ 732,855
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 9,473,273
____________________________________________________________
============================================================
Series II 83,948
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 8.75
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 8.73
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Interest $ 2,225,584
-------------------------------------------------------------
Dividends (net of foreign withholding tax of
$5,583) 542,564
-------------------------------------------------------------
Dividends from affiliated money market funds 124,511
=============================================================
Total investment income 2,892,659
=============================================================
EXPENSES:
Advisory fees 706,989
-------------------------------------------------------------
Administrative services fees 270,132
-------------------------------------------------------------
Custodian fees 56,431
-------------------------------------------------------------
Distribution fees - Series II 639
-------------------------------------------------------------
Transfer agent fees 11,542
-------------------------------------------------------------
Trustees' fees 9,129
-------------------------------------------------------------
Other 51,070
=============================================================
Total expenses 1,105,932
=============================================================
Less: Fees waived (1,275)
-------------------------------------------------------------
Expenses paid indirectly (116)
=============================================================
Net expenses 1,104,541
=============================================================
Net investment income 1,788,118
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (14,724,522)
-------------------------------------------------------------
Foreign currencies 18,364
-------------------------------------------------------------
Futures contracts (1,425,872)
-------------------------------------------------------------
Option contracts written 46,894
=============================================================
(16,085,136)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (4,128,565)
-------------------------------------------------------------
Foreign currencies 284
-------------------------------------------------------------
Futures contracts (35,779)
=============================================================
(4,164,060)
=============================================================
Net gain (loss) from investment securities,
foreign currencies, futures contracts and
option contracts (20,249,196)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(18,461,078)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. BALANCED FUND
FS-17
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,788,118 $ 2,291,059
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
contracts and option contracts (16,085,136) (9,282,433)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, foreign
currency contracts and futures contracts (4,164,060) (4,254,811)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (18,461,078) (11,246,185)
==========================================================================================
Distributions to shareholders from net investment income:
Series I (2,269,083) (1,807,108)
------------------------------------------------------------------------------------------
Series II (18,693) --
------------------------------------------------------------------------------------------
Share transactions-net:
Series I (1,822,445) 32,754,770
------------------------------------------------------------------------------------------
Series II 775,141 --
==========================================================================================
Net increase (decrease) in net assets (21,796,158) 19,701,477
==========================================================================================
NET ASSETS:
Beginning of year 105,394,757 85,693,280
==========================================================================================
End of year $ 83,598,599 $105,394,757
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $115,469,762 $116,517,075
------------------------------------------------------------------------------------------
Undistributed net investment income 1,821,292 2,226,310
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts (28,577,873) (12,398,106)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and futures contracts (5,114,582) (950,522)
==========================================================================================
$ 83,598,599 $105,394,757
__________________________________________________________________________________________
==========================================================================================
|
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Currently SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is to achieve as high a total return 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. Each security reported on the NASDAQ National Market System is valued at the last sales price as
AIM V.I. BALANCED FUND
FS-18
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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DOLLAR ROLL TRANSACTIONS -- 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 different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal 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. The return earned by the Fund with the proceeds of the dollar roll transaction may not exceed transaction costs. The difference between the selling price and the future repurchase price is recorded as an adjustment to Interest Income.
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 that 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. The fund will segregate assets to cover its obligations under dollar roll transactions.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies annually and recorded on ex-dividend date.
E. 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
F. 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
G. 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
AIM V.I. BALANCED FUND
FS-19
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.
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. Risks also include to varying degrees, the risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
I. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
J. 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. The risk in buying an option is that the Fund pays a premiums whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased or sold.
K. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $1,275.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $270,132, of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $6,338 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $639.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,733 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, 2002, the Fund received reductions in custodian fees of $116 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $116.
AIM V.I. BALANCED FUND
FS-20
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------------------------------------------------
Beginning of year -- $ --
----------------------------------------------------------
Written 582 73,773
----------------------------------------------------------
Closed (298) (37,802)
----------------------------------------------------------
Exercised (131) (19,594)
----------------------------------------------------------
Expired (153) (16,377)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
NOTE 7--FUTURES CONTRACTS
On December 31, 2002, $1,035,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of December 31, 2002 were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
----------------------------------------------------------------------------
S&P 500 Index 11 Mar-03/Long $2,416,975 $(36,514)
____________________________________________________________________________
============================================================================
|
NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from:
Ordinary income $2,287,776 $1,807,108
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (5,550,960)
-------------------------------------------------------------
Undistributed ordinary income 1,876,984
-------------------------------------------------------------
Post-October capital loss deferral (600,292)
-------------------------------------------------------------
Temporary book/tax differences (26,964)
-------------------------------------------------------------
Capital loss carryforward (27,569,931)
-------------------------------------------------------------
Shares of beneficial interest 115,469,762
=============================================================
$ 83,598,599
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales, bond premium amortization and the treatment of defaulted bonds. The tax-basis unrealized appreciation (depreciation) on investments amount includes appreciation on foreign currencies of $237.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
December 31, 2008 $ 2,283,751
-----------------------------------------------------------
December 31, 2009 9,069,227
-----------------------------------------------------------
December 31, 2010 16,216,953
===========================================================
$27,569,931
___________________________________________________________
===========================================================
|
NOTE 9--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, 2002 was $78,405,711 and $80,570,361, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 2,802,599 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (8,353,796) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(5,551,197) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $89,652,974. |
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of bond premium amortization, paydowns on mortgage backed securities and foreign currency transactions on December 31, 2002, undistributed net investment income was increased by $94,640, undistributed net realized gains decreased by $94,631 and shares of beneficial interest decreased by $9. This reclassification had no effect on the net assets of the Fund.
AIM V.I. BALANCED FUND
FS-21
NOTE 11--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
Sold:
Series I 1,829,800 $ 17,783,774 3,315,299 $38,177,054
--------------------------------------------------------------------------------------------------------------------
Series II* 91,699 849,224 -- --
====================================================================================================================
Issued as reinvestment of dividends:
Series I 259,028 2,269,083 170,643 1,807,109
--------------------------------------------------------------------------------------------------------------------
Series II* 2,139 18,693 -- --
====================================================================================================================
Reacquired:
Series I (2,334,627) (21,875,302) (646,498) (7,229,393)
--------------------------------------------------------------------------------------------------------------------
Series II* (9,890) (92,776) -- --
====================================================================================================================
(161,851) $ (1,047,304) 2,839,444 $32,754,770
____________________________________________________________________________________________________________________
====================================================================================================================
|
* Series II shares commenced sales on January 24, 2002.
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
------------------------------------------------------------------------
MAY 1, 1998
(DATE
OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.84 $ 12.46 $ 13.04 $ 11.14 $ 10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.18(a) 0.27(a)(b) 0.37(a) 0.31(a) 0.12
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.02) (1.70) (0.93) 1.83 1.18
=================================================================================================================================
Total from investment operations (1.84) (1.43) (0.56) 2.14 1.30
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.25) (0.19) (0.02) (0.17) (0.14)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- (0.07) (0.02)
=================================================================================================================================
Total distributions (0.25) (0.19) (0.02) (0.24) (0.16)
=================================================================================================================================
Net asset value, end of period $ 8.75 $ 10.84 $ 12.46 $ 13.04 $ 11.14
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (17.02)% (11.43)% (4.28)% 19.31% 13.02%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $82,866 $105,395 $85,693 $48,307 $10,343
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.17%(d) 1.12% 1.10% 1.21% 1.18%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.17%(d) 1.12% 1.10% 1.31% 2.83%(e)
=================================================================================================================================
Ratio of net investment income to average net assets 1.90%(d) 2.37%(b) 2.80% 2.66% 3.71%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 90% 55% 49% 57% 9%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.29 and the ratio of net investment income to
average net assets would have been 2.52%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(d) Ratios are based on average daily net assets of $94,009,578.
(e) Annualized.
AIM V.I. BALANCED FUND
FS-22
NOTE 12--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
----------------
JANUARY 24, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
----------------
Net asset value, beginning of period $ 10.70
------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.14(a)
------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86)
==============================================================================
Total from investment operations (1.72)
==============================================================================
Less distributions from net investment income (0.25)
==============================================================================
Net asset value, end of period $ 8.73
______________________________________________________________________________
==============================================================================
Total return(b) (16.12)%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 733
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets: 1.42%(c)
==============================================================================
Ratio of net investment income to average net assets 1.65%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 90%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are annualized and based on average daily net assets of $273,650.
AIM V.I. BALANCED FUND
FS-23
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. Basic Value Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2002, 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 September 10, 2001 (commencement of operations) through December 31, 2001. 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, 2002 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. Basic Value Fund, as of December 31, 2002, 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 September 10, 2001 (commencement of operations) through December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. BASIC VALUE FUND
FS-24
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
-----------------------------------------------------------------------
DOMESTIC COMMON STOCKS-84.54%
Advertising-5.03%
Interpublic Group of Cos., Inc. (The) 305,000 $ 4,294,400
-----------------------------------------------------------------------
Omnicom Group Inc. 91,150 5,888,290
=======================================================================
10,182,690
=======================================================================
Aerospace & Defense-1.06%
Honeywell International Inc. 89,400 2,145,600
=======================================================================
Apparel Retail-3.06%
Gap, Inc. (The) 399,000 6,192,480
=======================================================================
Banks-6.30%
Bank of America Corp. 65,000 4,522,050
-----------------------------------------------------------------------
Bank of New York Co., Inc. (The) 172,600 4,135,496
-----------------------------------------------------------------------
Bank One Corp. 112,100 4,097,255
=======================================================================
12,754,801
=======================================================================
Building Products-4.13%
American Standard Cos. Inc.(a) 61,550 4,378,667
-----------------------------------------------------------------------
Masco Corp. 189,550 3,990,027
=======================================================================
8,368,694
=======================================================================
Data Processing Services-4.38%
Ceridian Corp.(a) 261,450 3,770,109
-----------------------------------------------------------------------
First Data Corp. 143,850 5,093,728
=======================================================================
8,863,837
=======================================================================
Diversified Commercial Services-3.83%
Cendant Corp.(a) 209,750 2,198,180
-----------------------------------------------------------------------
H&R Block, Inc. 138,550 5,569,710
=======================================================================
7,767,890
=======================================================================
Diversified Financial Services-13.61%
Citigroup Inc. 151,650 5,336,563
-----------------------------------------------------------------------
Freddie Mac 92,700 5,473,935
-----------------------------------------------------------------------
J.P. Morgan Chase & Co. 208,050 4,993,200
-----------------------------------------------------------------------
Janus Capital Group Inc. 198,050 2,588,513
-----------------------------------------------------------------------
Merrill Lynch & Co., Inc. 127,000 4,819,650
-----------------------------------------------------------------------
Morgan Stanley 108,950 4,349,284
=======================================================================
27,561,145
=======================================================================
Electric Utilities-1.08%
PG&E Corp.(a) 157,350 2,187,165
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Electronic Equipment & Instruments-2.21%
Waters Corp.(a) 205,450 $ 4,474,701
=======================================================================
Employment Services-0.81%
Robert Half International Inc.(a) 101,750 1,639,192
=======================================================================
Environmental Services-3.08%
Waste Management, Inc. 272,500 6,245,700
=======================================================================
Food Retail-3.53%
Kroger Co. (The)(a) 316,450 4,889,153
-----------------------------------------------------------------------
Safeway Inc.(a) 96,900 2,263,584
=======================================================================
7,152,737
=======================================================================
General Merchandise Stores-1.79%
Target Corp. 120,650 3,619,500
=======================================================================
Health Care Distributors & Services-3.53%
IMS Health Inc. 243,750 3,900,000
-----------------------------------------------------------------------
McKesson Corp. 120,100 3,246,303
=======================================================================
7,146,303
=======================================================================
Hotels, Resorts & Cruise Lines-1.57%
Starwood Hotels & Resorts Worldwide, Inc. 133,600 3,171,664
=======================================================================
Industrial Machinery-1.62%
Parker-Hannifin Corp. 71,050 3,277,537
=======================================================================
Leisure Products-1.53%
Mattel, Inc. 162,000 3,102,300
=======================================================================
Life & Health Insurance-1.21%
UnumProvident Corp. 139,950 2,454,723
=======================================================================
Managed Health Care-1.50%
UnitedHealth Group Inc. 36,400 3,039,400
=======================================================================
Movies & Entertainment-1.75%
Walt Disney Co. (The) 216,950 3,538,455
=======================================================================
Multi-Utilities & Unregulated Power-1.51%
Duke Energy Corp. 157,050 3,068,757
=======================================================================
Oil & Gas Drilling-4.95%
ENSCO International Inc. 198,150 5,835,518
-----------------------------------------------------------------------
Transocean Inc. 180,300 4,182,960
=======================================================================
10,018,478
=======================================================================
|
AIM V.I. BASIC VALUE FUND
FS-25
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Pharmaceuticals-2.07%
Wyeth 111,900 $ 4,185,060
=======================================================================
Property & Casualty Insurance-2.41%
MGIC Investment Corp. 48,950 2,021,635
-----------------------------------------------------------------------
Radian Group Inc. 77,100 2,864,265
=======================================================================
4,885,900
=======================================================================
Semiconductor Equipment-3.15%
Applied Materials, Inc.(a) 220,000 2,866,600
-----------------------------------------------------------------------
Novellus Systems, Inc.(a) 125,200 3,515,616
=======================================================================
6,382,216
=======================================================================
Systems Software-2.78%
Computer Associates International, Inc. 417,300 5,633,550
=======================================================================
Telecommunications Equipment-1.06%
Motorola, Inc. 247,250 2,138,713
=======================================================================
Total Domestic Common Stocks (Cost
$185,466,304) 171,199,188
=======================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-11.61%
Bermuda-8.23%
Nabors Industries, Ltd. (Oil & Gas
Drilling)(a) 104,550 3,687,478
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Bermuda-(Continued)
Tyco International Ltd. (Industrial
Conglomerates) 468,950 $ 8,009,666
-----------------------------------------------------------------------
Weatherford International Ltd. (Oil & Gas
Equipment & Services)(a) 124,450 4,969,289
=======================================================================
16,666,433
=======================================================================
Cayman Islands-2.36%
ACE Ltd. (Property & Casualty Insurance) 163,300 4,791,222
=======================================================================
Netherlands-1.02%
Koninklijke (Royal) Philips Electronics
N.V.-New York Shares (Consumer Electronics) 116,700 2,063,256
=======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $25,169,150) 23,520,911
=======================================================================
MONEY MARKET FUNDS-8.07%
STIC Liquid Assets Portfolio(b) 8,169,237 8,169,237
-----------------------------------------------------------------------
STIC Prime Portfolio(b) 8,169,237 8,169,237
=======================================================================
Total Money Market Funds (Cost
$16,338,474) 16,338,474
=======================================================================
TOTAL INVESTMENTS-104.22% (Cost $226,973,928) 211,058,573
=======================================================================
OTHER ASSETS LESS LIABILITIES-(4.22%) (8,545,100)
=======================================================================
NET ASSETS-100.00% $202,513,473
_______________________________________________________________________
=======================================================================
|
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. BASIC VALUE FUND
FS-26
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $226,973,928) $211,058,573
--------------------------------------------------------------------------------
Receivables for:
Investments sold 231,508
--------------------------------------------------------------------------------
Fund shares sold 629,499
--------------------------------------------------------------------------------
Dividends 285,926
--------------------------------------------------------------------------------
Investment for deferred compensation plan 3,739
--------------------------------------------------------------------------------
Other assets 756
================================================================================
Total assets 212,210,001
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 9,417,309
--------------------------------------------------------------------------------
Fund shares reacquired 69,021
--------------------------------------------------------------------------------
Deferred compensation plan 3,739
--------------------------------------------------------------------------------
Accrued administrative services fees 96,723
--------------------------------------------------------------------------------
Accrued distribution fees -- Series II 50,776
--------------------------------------------------------------------------------
Accrued transfer agent fees 6,787
--------------------------------------------------------------------------------
Accrued operating expenses 52,173
================================================================================
Total liabilities 9,696,528
================================================================================
Net assets applicable to shares outstanding $202,513,473
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $ 97,916,361
________________________________________________________________________________
================================================================================
Series II $104,597,112
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 12,273,863
________________________________________________________________________________
================================================================================
Series II 13,138,621
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 7.98
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 7.96
________________________________________________________________________________
================================================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $1,823) $ 1,101,710
--------------------------------------------------------------------------------
Dividends from affiliated money market funds 128,175
================================================================================
Total investment income 1,229,885
================================================================================
EXPENSES:
Advisory fees 665,840
--------------------------------------------------------------------------------
Administrative services fees 261,045
--------------------------------------------------------------------------------
Custodian fees 67,243
--------------------------------------------------------------------------------
Distribution fees -- Series II 80,129
--------------------------------------------------------------------------------
Transfer agent fees 18,642
--------------------------------------------------------------------------------
Trustees' fees 9,083
--------------------------------------------------------------------------------
Other 42,798
================================================================================
Total expenses 1,144,780
================================================================================
Less: Fees waived (909)
--------------------------------------------------------------------------------
Expenses paid indirectly (123)
================================================================================
Net expenses 1,143,748
================================================================================
Net investment income 86,137
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (5,434,212)
--------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment
securities (16,952,445)
================================================================================
Net gain (loss) from investment securities (22,386,657)
================================================================================
Net increase (decrease) in net assets resulting from operations $(22,300,520)
________________________________________________________________________________
================================================================================
|
See Notes to Financial Statements.
AIM V.I. BASIC VALUE FUND
FS-27
Statement of Changes in Net Assets
For the year ended December 31, 2002 and the period September 10, 2001 (date operations commenced) to December 31, 2001
2002 2001
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 86,137 $ 7,048
--------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities (5,434,212) (112,647)
--------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities (16,952,445) 1,037,090
================================================================================
Net increase (decrease) in net assets resulting
from operations (22,300,520) 931,491
================================================================================
Distributions to shareholders from net investment
income:
Series I (1,149) (18,751)
--------------------------------------------------------------------------------
Series II (1,176) (380)
--------------------------------------------------------------------------------
Share transactions-net:
Series I 95,319,632 18,738,090
--------------------------------------------------------------------------------
Series II 109,345,836 500,400
================================================================================
Net increase in net assets 182,362,623 20,150,850
================================================================================
NET ASSETS:
Beginning of year 20,150,850 --
================================================================================
End of year $202,513,473 $20,150,850
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $223,892,597 $19,227,129
--------------------------------------------------------------------------------
Undistributed net investment income 83,090 (722)
--------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (5,546,859) (112,647)
--------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities (15,915,355) 1,037,090
================================================================================
$202,513,473 $20,150,850
________________________________________________________________________________
================================================================================
|
See Notes to Financial Statements.
AIM V.I. BASIC VALUE FUND
FS-28
Notes to Financial Statements
December 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Basic Value Fund (the "Fund") is a series portfolio of AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
E. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
AIM V.I. BASIC VALUE FUND
FS-29
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 0.725% of the first $500 million of the Fund's average daily net assets, plus 0.70% of the Fund's average daily net assets on the next $500 million, plus 0.675% of the Fund's average daily net assets on the next $500 million, plus 0.65% of the Fund's average daily nest assets in excess of $1.5 billion. AIM has agreed to waive advisory fees of Series I and Series II shares to the extent necessary to limit the expenses (excluding Rule 12b-1 plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of each Series to 1.30%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $909.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $261,045 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $9,120 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $80,129.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,740 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, 2002, the Fund received reductions in custodian fees of $123 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $123.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the periods ended December 31, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $2,325 $19,131
________________________________________________________________________________
================================================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 88,664
--------------------------------------------------------------------------------
Unrealized appreciation (depreciation) -- investments (16,204,126)
--------------------------------------------------------------------------------
Temporary book/tax differences (5,574)
--------------------------------------------------------------------------------
Capital loss carryforward (5,258,088)
--------------------------------------------------------------------------------
Shares of beneficial interest 223,892,597
================================================================================
$202,513,473
________________________________________________________________________________
================================================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
AIM V.I. BASIC VALUE FUND
FS-30
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
--------------------------------------------------------------------------------
December 31, 2009 $ 4,100
--------------------------------------------------------------------------------
December 31, 2010 5,253,988
================================================================================
$5,258,088
________________________________________________________________________________
================================================================================
|
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, 2002 was $217,211,924 and $19,035,877, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 3,085,466 ------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (19,289,592) ============================================================================== Net unrealized appreciation (depreciation) of investment securities $(16,204,126) ______________________________________________________________________________ ============================================================================== Cost of investments for tax purposes is $227,262,699. |
NOTE 8--SHARE INFORMATION
Changes in shares outstanding during the year ended December 31, 2002 and the period September 10, 2001 (date operations commenced) to December 31, 2001 were as follows:
2002 2001
--------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------
Sold:
Series I 11,859,976 $108,027,378 1,956,344 $19,139,289
--------------------------------------------------------------------------------
Series II 13,491,664 112,789,473 50,002 500,020
================================================================================
Issued as reinvestment
of dividends:
Series I 143 1,149 1,886 18,751
--------------------------------------------------------------------------------
Series II 147 1,176 38 380
================================================================================
Reacquired:
Series I (1,501,923) (12,708,895) (42,563) (419,950)
--------------------------------------------------------------------------------
Series II (403,230) (3,444,813) -- --
================================================================================
23,446,777 $204,665,468 1,965,707 $19,238,490
________________________________________________________________________________
================================================================================
|
AIM V.I. BASIC VALUE FUND
FS-31
NOTE 9--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
-------------------------------------
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.25 $ 10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.02(a) 0.01
--------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) (2.29) 0.25
================================================================================
Total from investment operations (2.27) 0.26
================================================================================
Less distributions from net investment
income (0.00) (0.01)
================================================================================
Net asset value, end of period $ 7.98 $ 10.25
________________________________________________________________________________
================================================================================
Total return(b) (22.15)% 2.63%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 97,916 $19,638
________________________________________________________________________________
================================================================================
Ratio of expenses to average net
assets:
With fee waivers and expense
reimbursements 1.16%(c) 1.27%(d)
--------------------------------------------------------------------------------
Without fee waivers and expense
reimbursements 1.16%(c) 2.61%(d)
================================================================================
Ratio of net investment income to
average net assets 0.18%(c) 0.28%(d)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 22% 4%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $59,788,335.
(d) Annualized.
AIM V.I. BASIC VALUE FUND
FS-32
NOTE 9--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
----------------------------------
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.25 $10.00
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) 0.00
--------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (2.28) 0.26
================================================================================
Total from investment operations (2.29) 0.26
================================================================================
Less distributions from net investment
income (0.00) (0.01)
================================================================================
Net asset value, end of period $ 7.96 $10.25
________________________________________________________________________________
================================================================================
Total return(b) (22.34)% 2.58%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $104,597 $ 513
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers and expense
reimbursements 1.41%(c) 1.44%(d)
--------------------------------------------------------------------------------
Without fee waivers and expense
reimbursements 1.41%(c) 2.88%(d)
================================================================================
Ratio of net investment income (loss) to
average net assets (0.07)%(c) 0.12%(d)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 22% 4%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $32,051,622.
(d) Annualized.
AIM V.I. BASIC VALUE FUND
FS-33
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 interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2002, 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 years or periods in the three year period then ended and for the period December 29, 1999 (commencement of operations) 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, 2002 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. Blue Chip Fund, as of December 31, 2002, 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 years or periods in the three year period then ended and for the period December 29, 1999 (commencement of operations) through December 31, 1999 in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. BLUE CHIP FUND
FS-34
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-93.50%
Advertising-0.46%
Omnicom Group Inc. 4,700 $ 303,620
============================================================================
Aerospace & Defense-2.24%
Lockheed Martin Corp. 10,800 623,700
----------------------------------------------------------------------------
United Technologies Corp. 13,700 848,578
============================================================================
1,472,278
============================================================================
Aluminum-0.55%
Alcoa Inc. 16,000 364,480
============================================================================
Apparel Retail-0.70%
Gap, Inc. (The) 21,100 327,472
----------------------------------------------------------------------------
Limited Brands 9,500 132,335
============================================================================
459,807
============================================================================
Banks-5.16%
Bank of America Corp. 19,500 1,356,615
----------------------------------------------------------------------------
Fifth Third Bancorp 14,700 860,685
----------------------------------------------------------------------------
Wells Fargo & Co. 25,100 1,176,437
============================================================================
3,393,737
============================================================================
Biotechnology-1.31%
Amgen Inc.(a) 17,800 860,452
============================================================================
Brewers-0.76%
Anheuser-Busch Cos., Inc. 10,300 498,520
============================================================================
Broadcasting & Cable TV-0.98%
Clear Channel Communications, Inc.(a) 17,200 641,388
============================================================================
Building Products-0.58%
Masco Corp. 18,200 383,110
============================================================================
Computer Hardware-3.38%
Dell Computer Corp.(a) 42,400 1,133,776
----------------------------------------------------------------------------
Hewlett-Packard Co. 19,800 343,728
----------------------------------------------------------------------------
International Business Machines Corp. 9,600 744,000
============================================================================
2,221,504
============================================================================
Data Processing Services-2.27%
First Data Corp. 25,000 885,250
----------------------------------------------------------------------------
Fiserv, Inc.(a) 17,800 604,310
============================================================================
1,489,560
============================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Department Stores-1.00%
Kohl's Corp.(a) 11,800 $ 660,210
============================================================================
Diversified Chemicals-0.26%
Du Pont (E. I.) de Nemours & Co. 4,000 169,600
============================================================================
Diversified Financial Services-11.69%
American Express Co. 20,600 728,210
----------------------------------------------------------------------------
Citigroup Inc. 54,600 1,921,374
----------------------------------------------------------------------------
Fannie Mae 16,000 1,029,280
----------------------------------------------------------------------------
Freddie Mac 14,900 879,845
----------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 9,200 626,520
----------------------------------------------------------------------------
J.P. Morgan Chase & Co. 20,600 494,400
----------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 17,200 652,740
----------------------------------------------------------------------------
Morgan Stanley 20,600 822,352
----------------------------------------------------------------------------
SLM Corp. 5,100 529,686
============================================================================
7,684,407
============================================================================
Electric Utilities-1.02%
FPL Group, Inc. 5,700 342,741
----------------------------------------------------------------------------
Southern Co. (The) 11,500 326,485
============================================================================
669,226
============================================================================
Food Distributors-1.30%
Sysco Corp. 28,600 851,994
============================================================================
General Merchandise Stores-4.24%
Costco Wholesale Corp.(a) 6,300 176,778
----------------------------------------------------------------------------
Target Corp. 21,400 642,000
----------------------------------------------------------------------------
Wal-Mart Stores, Inc. 39,000 1,969,890
============================================================================
2,788,668
============================================================================
Health Care Distributors & Services-1.21%
Cardinal Health, Inc. 13,400 793,146
============================================================================
Health Care Equipment-4.17%
Boston Scientific Corp.(a) 15,300 650,556
----------------------------------------------------------------------------
Medtronic, Inc. 24,500 1,117,200
----------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 10,600 421,032
----------------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 13,300 552,216
============================================================================
2,741,004
============================================================================
Health Care Facilities-1.27%
HCA Inc. 20,200 838,300
============================================================================
|
AIM V.I. BLUE CHIP FUND
FS-35
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Home Improvement Retail-1.54%
Home Depot, Inc. (The) 42,400 $ 1,015,904
============================================================================
Hotels, Resorts & Cruise Lines-0.75%
Carnival Corp. (Panama) 19,900 496,505
============================================================================
Household Products-2.78%
Colgate-Palmolive Co. 16,000 838,880
----------------------------------------------------------------------------
Procter & Gamble Co. (The) 11,500 988,310
============================================================================
1,827,190
============================================================================
Industrial Conglomerates-2.89%
General Electric Co. 78,000 1,899,300
============================================================================
Industrial Gases-0.67%
Air Products & Chemicals, Inc. 10,300 440,325
============================================================================
Integrated Oil & Gas-3.17%
Exxon Mobil Corp. 59,700 2,085,918
============================================================================
Integrated Telecommunication Services-1.85%
AT&T Corp. 11,300 295,043
----------------------------------------------------------------------------
BellSouth Corp. 8,000 206,960
----------------------------------------------------------------------------
SBC Communications Inc. 26,400 715,704
============================================================================
1,217,707
============================================================================
Life & Health Insurance-0.66%
Prudential Financial, Inc. 13,700 434,838
============================================================================
Managed Health Care-1.31%
UnitedHealth Group Inc. 10,300 860,050
============================================================================
Motorcycle Manufacturers-0.38%
Harley-Davidson, Inc. 5,400 249,480
============================================================================
Movies & Entertainment-1.74%
Viacom Inc.-Class B(a) 28,000 1,141,280
============================================================================
Multi-Line Insurance-1.86%
American International Group, Inc. 21,200 1,226,420
============================================================================
Multi-Utilities & Unregulated Power-0.49%
Duke Energy Corp. 16,600 324,364
============================================================================
Networking Equipment-2.05%
Cisco Systems, Inc.(a) 103,100 1,350,610
============================================================================
Oil & Gas Drilling-1.66%
ENSCO International Inc. 15,500 456,475
----------------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 11,500 405,605
----------------------------------------------------------------------------
|
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Oil & Gas Drilling-(Continued)
Transocean Inc. 10,000 $ 232,000
============================================================================
1,094,080
============================================================================
Oil & Gas Equipment & Services-0.66%
Schlumberger Ltd. (Netherlands) 10,300 433,527
============================================================================
Pharmaceuticals-10.06%
Allergan, Inc. 10,300 593,486
----------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 6,300 618,786
----------------------------------------------------------------------------
Johnson & Johnson 36,500 1,960,415
----------------------------------------------------------------------------
Pfizer Inc. 72,000 2,201,040
----------------------------------------------------------------------------
Pharmacia Corp. 12,300 514,140
----------------------------------------------------------------------------
Wyeth 19,500 729,300
============================================================================
6,617,167
============================================================================
Railroads-0.60%
Canadian National Railway Co. (Canada) 9,500 394,820
============================================================================
Semiconductor Equipment-1.75%
Applied Materials, Inc.(a) 61,300 798,739
----------------------------------------------------------------------------
KLA-Tencor Corp.(a) 10,000 353,700
============================================================================
1,152,439
============================================================================
Semiconductors-4.02%
Analog Devices, Inc.(a) 17,200 410,564
----------------------------------------------------------------------------
Intel Corp. 36,300 565,191
----------------------------------------------------------------------------
Linear Technology Corp. 10,900 280,348
----------------------------------------------------------------------------
Maxim Integrated Products, Inc. 3,700 122,248
----------------------------------------------------------------------------
Microchip Technology Inc. 22,900 559,905
----------------------------------------------------------------------------
Micron Technology, Inc.(a) 18,500 180,190
----------------------------------------------------------------------------
Texas Instruments Inc. 19,700 295,697
----------------------------------------------------------------------------
Xilinx, Inc.(a) 11,300 232,780
============================================================================
2,646,923
============================================================================
Soft Drinks-1.61%
Coca-Cola Co. (The) 13,700 600,334
----------------------------------------------------------------------------
PepsiCo, Inc. 10,800 455,976
============================================================================
1,056,310
============================================================================
Specialty Stores-0.79%
Bed Bath & Beyond Inc.(a) 15,000 517,950
============================================================================
Systems Software-4.59%
Microsoft Corp.(a) 45,800 2,367,860
----------------------------------------------------------------------------
Oracle Corp.(a) 42,000 453,600
----------------------------------------------------------------------------
VERITAS Software Corp.(a) 12,600 196,812
============================================================================
3,018,272
============================================================================
|
AIM V.I. BLUE CHIP FUND
FS-36
MARKET
SHARES VALUE
----------------------------------------------------------------------------
Telecommunications Equipment-0.44%
Nokia Oyj-ADR (Finland) 18,700 $ 289,850
============================================================================
Wireless Telecommunication Services-0.63%
Vodafone Group PLC-ADR (United Kingdom) 22,700 411,324
============================================================================
Total Common Stocks & Other Equity
Interests (Cost $70,865,788) 61,487,564
============================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.76%
1.18%, 03/20/03 (Cost $498,722)(b) $ 500,000(c) 498,722
============================================================================
|
PRINCIPAL
AMOUNT
MARKET
SHARES VALUE
----------------------------------------------------------------------------
MONEY MARKET FUNDS-5.80%
STIC Liquid Assets Portfolio(d) 1,909,358 $ 1,909,358
----------------------------------------------------------------------------
STIC Prime Portfolio(d) 1,909,358 1,909,358
============================================================================
Total Money Market Funds (Cost
$3,818,716) 3,818,716
============================================================================
TOTAL INVESTMENTS-100.06% (Cost $75,183,226) 65,805,002
============================================================================
OTHER ASSETS LESS LIABILITIES-(0.06%) (42,170)
============================================================================
NET ASSETS-100.00% $65,762,832
____________________________________________________________________________
============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(c) The principal amount was pledged as collateral to cover margin requirements
for open futures contracts. See Note 6.
(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-37
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $75,183,226) $65,805,002
------------------------------------------------------------
Receivables for:
Investments sold 45,143
------------------------------------------------------------
Variation margin 3,150
------------------------------------------------------------
Fund shares sold 16,304
------------------------------------------------------------
Dividends 45,598
------------------------------------------------------------
Investment for deferred compensation plan 12,345
------------------------------------------------------------
Other assets 320
============================================================
Total assets 65,927,862
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 87,096
------------------------------------------------------------
Deferred compensation plan 12,345
------------------------------------------------------------
Accrued administrative services fees 38,959
------------------------------------------------------------
Accrued distribution fees -- Series II 135
------------------------------------------------------------
Accrued transfer agent fees 2,608
------------------------------------------------------------
Accrued operating expenses 23,887
============================================================
Total liabilities 165,030
============================================================
Net assets applicable to shares outstanding $65,762,832
____________________________________________________________
============================================================
NET ASSETS:
Series I $65,489,539
____________________________________________________________
============================================================
Series II $ 273,293
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 12,471,076
____________________________________________________________
============================================================
Series II 52,142
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 5.25
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 5.24
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$2,215) $ 680,703
-------------------------------------------------------------
Dividends from affiliated money market funds 58,196
-------------------------------------------------------------
Interest 8,533
=============================================================
Total investment income 747,432
=============================================================
EXPENSES:
Advisory fees 486,916
-------------------------------------------------------------
Administrative services fees 207,856
-------------------------------------------------------------
Custodian fees 34,528
-------------------------------------------------------------
Distribution fees -- Series II 211
-------------------------------------------------------------
Transfer agent fees 11,536
-------------------------------------------------------------
Trustees' fees 8,963
-------------------------------------------------------------
Other 16,352
=============================================================
Total expenses 766,362
=============================================================
Less: Fees waived (602)
-------------------------------------------------------------
Expenses paid indirectly (14)
=============================================================
Net expenses 765,746
=============================================================
Net investment income (loss) (18,314)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (15,554,771)
-------------------------------------------------------------
Futures contracts 539,706
=============================================================
(15,015,065)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (4,604,566)
-------------------------------------------------------------
Futures contracts (783,346)
=============================================================
(5,387,912)
=============================================================
Net gain (loss) from investment securities and
futures contracts (20,402,977)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(20,421,291)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. BLUE CHIP FUND
FS-38
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
-----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (18,314) $ (74,326)
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
futures contracts (15,015,065) (7,619,531)
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and futures contracts (5,387,912) (2,129,492)
=========================================================================================
Net increase (decrease) in net assets resulting from
operations (20,421,291) (9,823,349)
=========================================================================================
Distributions to shareholders from net investment income:
Series I -- (8,180)
-----------------------------------------------------------------------------------------
Share transactions-net:
Series I 25,763,748 40,173,563
-----------------------------------------------------------------------------------------
Series II 291,643 --
=========================================================================================
Net increase in net assets 5,634,100 30,342,034
=========================================================================================
NET ASSETS:
Beginning of year 60,128,732 29,786,698
=========================================================================================
End of year $ 65,762,832 $60,128,732
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 98,767,349 $72,726,131
-----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (16,520) (12,379)
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and futures contracts (23,566,459) (8,551,394)
-----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and futures contracts (9,421,538) (4,033,626)
=========================================================================================
$ 65,762,832 $60,128,732
_________________________________________________________________________________________
=========================================================================================
|
See Notes to Financial Statements.
AIM V.I. BLUE CHIP FUND
FS-39
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's primary 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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.
AIM V.I. BLUE CHIP FUND
FS-40
The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
F. 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. Risks also include to varying degrees, the risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
G. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $602.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $207,856 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $7,059 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $211.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,704 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, 2002, the Fund received reductions in custodian fees of $14 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $14.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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--FUTURES CONTRACTS
On December 31, 2002, $148,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of December 31, 2002 were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
----------------------------------------------------------------------------
S&P 500 Futures 9 Mar-03/Long $1,977,525 $(43,314)
____________________________________________________________________________
============================================================================
|
AIM V.I. BLUE CHIP FUND
FS-41
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
------------------------------------------------------------
Distributions paid from ordinary income $ -- $8,180
____________________________________________________________
============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $(14,448,449)
-------------------------------------------------------------
Temporary book/tax differences (16,520)
-------------------------------------------------------------
Capital loss carryforward (17,599,890)
-------------------------------------------------------------
Post-October capital loss deferral (939,658)
-------------------------------------------------------------
Shares of beneficial interest 98,767,349
=============================================================
$ 65,762,832
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains (losses) on certain futures contracts.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
December 31, 2008 $ 427,121
-----------------------------------------------------------
December 31, 2009 5,392,628
-----------------------------------------------------------
December 31, 2010 11,780,141
===========================================================
$17,599,890
___________________________________________________________
===========================================================
|
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, 2002 was $48,772,639 and $23,424,530, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,232,562 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (15,681,011) ------------------------------------------------------------- Net unrealized appreciation (depreciation) of investment securities $(14,448,449) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $80,253,451. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of a net operating losses on December 31, 2002, undistributed net investment income was increased by $14,173 and shares of beneficial interest decreased by $14,173. This reclassification had no effect on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------------
Sold:
Series I 7,212,098 $ 43,703,169 6,509,601 $49,761,632
---------------------------------------------------------------------------------------------------------------------
Series II* 59,871 337,748 -- --
=====================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,178 8,180
=====================================================================================================================
Reacquired:
Series I (3,203,422) (17,939,421) (1,292,618) (9,596,249)
---------------------------------------------------------------------------------------------------------------------
Series II* (7,729) (46,105) -- --
=====================================================================================================================
4,060,818 $ 26,055,391 5,218,161 $40,173,563
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
* Series II shares commenced sales on March 13, 2002.
AIM V.I. BLUE CHIP FUND
FS-42
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
-----------------------------------------------------
DECEMBER 29, 1999
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
-------------------------------- DECEMBER 31,
2002 2001 2000 1999
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 7.11 $ 9.18 $ 10.00 $10.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.00(a) (0.01) 0.02(a) 0.00
-------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.86) (2.06) (0.84) 0.00
===================================================================================================================
Total from investment operations (1.86) (2.07) (0.82) 0.00
===================================================================================================================
Net asset value, end of period $ 5.25 $ 7.11 $ 9.18 $10.00
___________________________________________________________________________________________________________________
===================================================================================================================
Total return(b) (26.16)% (22.54)% (8.18)% 0.00
___________________________________________________________________________________________________________________
===================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $65,490 $60,129 $29,787 $1,000
___________________________________________________________________________________________________________________
===================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.18%(c) 1.26% 1.31% 1.30%(d)
-------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.18%(c) 1.26% 2.13% 12.49%(d)
===================================================================================================================
Ratio of net investment income (loss) to average net assets (0.03)%(c) (0.17)% 0.07% 3.07%(d)
___________________________________________________________________________________________________________________
===================================================================================================================
Portfolio turnover rate 38% 19% 15% --
___________________________________________________________________________________________________________________
===================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total return for
the period shown.
(c) Ratios are based on average daily net assets of $64,837,979.
(d) Annualized.
SERIES II
--------------
MARCH 13, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
----------------------------------------------------------------------------
Net asset value, beginning of period $ 7.00
----------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a)
----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.75)
============================================================================
Total from investment operations (1.76)
============================================================================
Net asset value, end of period $ 5.24
____________________________________________________________________________
============================================================================
Total return(b) (25.14)%
____________________________________________________________________________
============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 273
____________________________________________________________________________
============================================================================
Ratio of expenses to average net assets 1.43%(c)
============================================================================
Ratio of net investment income (loss) to average net assets (0.28)%(c)
____________________________________________________________________________
============================================================================
Portfolio turnover rate 38%
____________________________________________________________________________
============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total return for
the period shown.
(c) Ratios are annualized and based on average daily net assets of $104,902.
AIM V.I. BLUE CHIP FUND
FS-43
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, 2002, 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 years or periods in the five year 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, 2002 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, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. CAPITAL APPRECIATION FUND
FS-44
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.27%
Advertising-1.38%
Lamar Advertising Co.(a) 323,700 $ 10,892,505
========================================================================
Aerospace & Defense-4.63%
L-3 Communications Holdings, Inc.(a) 196,400 8,820,324
------------------------------------------------------------------------
Lockheed Martin Corp. 323,700 18,693,675
------------------------------------------------------------------------
Northrop Grumman Corp. 91,700 8,894,900
========================================================================
36,408,899
========================================================================
Airlines-0.57%
Southwest Airlines Co. 323,700 4,499,430
========================================================================
Apparel Retail-2.50%
Gap, Inc. (The) 426,100 6,613,072
------------------------------------------------------------------------
Limited Brands 323,700 4,509,141
------------------------------------------------------------------------
Ross Stores, Inc. 54,400 2,306,016
------------------------------------------------------------------------
TJX Cos., Inc. (The) 319,500 6,236,640
========================================================================
19,664,869
========================================================================
Application Software-2.05%
Electronic Arts Inc.(a) 118,700 5,907,699
------------------------------------------------------------------------
Intuit Inc.(a) 163,600 7,676,112
------------------------------------------------------------------------
Mercury Interactive Corp.(a) 86,700 2,570,655
========================================================================
16,154,466
========================================================================
Banks-3.00%
Bank of America Corp. 81,300 5,656,041
------------------------------------------------------------------------
Fifth Third Bancorp 138,100 8,085,755
------------------------------------------------------------------------
Washington Mutual, Inc. 213,000 7,354,890
------------------------------------------------------------------------
Wells Fargo & Co. 53,200 2,493,484
========================================================================
23,590,170
========================================================================
Biotechnology-2.45%
Amgen Inc.(a) 214,600 10,373,764
------------------------------------------------------------------------
Cephalon, Inc.(a) 54,100 2,632,939
------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 78,300 2,662,200
------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 108,100 3,585,677
========================================================================
19,254,580
========================================================================
Broadcasting & Cable TV-1.47%
Clear Channel Communications, Inc.(a) 161,300 6,014,877
------------------------------------------------------------------------
Hispanic Broadcasting Corp.(a) 80,900 1,662,495
------------------------------------------------------------------------
Univision Communications Inc.-Class A(a) 159,700 3,912,650
========================================================================
11,590,022
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Casinos & Gambling-0.65%
MGM Mirage Inc.(a) 155,000 $ 5,110,350
========================================================================
Computer & Electronics Retail-1.50%
CDW Computer Centers, Inc.(a) 269,000 11,795,650
========================================================================
Computer Hardware-2.18%
Dell Computer Corp.(a) 431,600 11,540,984
------------------------------------------------------------------------
Hewlett-Packard Co. 323,700 5,619,432
========================================================================
17,160,416
========================================================================
Construction, Farm Machinery & Heavy
Trucks-0.79%
Deere & Co. 134,900 6,185,165
========================================================================
Consumer Finance-0.71%
MBNA Corp. 292,950 5,571,909
========================================================================
Data Processing Services-3.12%
Concord EFS, Inc.(a) 161,900 2,548,306
------------------------------------------------------------------------
Fiserv, Inc.(a) 647,412 21,979,637
========================================================================
24,527,943
========================================================================
Department Stores-0.58%
Kohl's Corp.(a) 81,600 4,565,520
========================================================================
Derivatives-0.97%
Nasdaq-100 Index Tracking Stock(a) 312,900 7,634,760
========================================================================
Diversified Financial Services-5.95%
Citigroup Inc. 129,500 4,557,105
------------------------------------------------------------------------
Fannie Mae 55,100 3,544,583
------------------------------------------------------------------------
Freddie Mac 81,400 4,806,670
------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 80,900 5,509,290
------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 162,400 6,163,080
------------------------------------------------------------------------
Moody's Corp. 200,300 8,270,387
------------------------------------------------------------------------
Morgan Stanley 155,700 6,215,544
------------------------------------------------------------------------
SLM Corp. 74,700 7,758,342
========================================================================
46,825,001
========================================================================
Drug Retail-0.81%
Walgreen Co. 217,600 6,351,744
========================================================================
Electronic Equipment & Instruments-0.93%
Molex Inc. 161,900 3,730,176
------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 319,500 3,572,010
========================================================================
7,302,186
========================================================================
|
AIM V.I. CAPITAL APPRECIATION FUND
FS-45
MARKET
SHARES VALUE
------------------------------------------------------------------------
Employment Services-0.66%
Robert Half International Inc.(a) 323,100 $ 5,205,141
========================================================================
Food Distributors-0.50%
Sysco Corp. 133,100 3,965,049
========================================================================
General Merchandise Stores-2.12%
Family Dollar Stores, Inc. 188,800 5,892,448
------------------------------------------------------------------------
Wal-Mart Stores, Inc. 213,000 10,758,630
========================================================================
16,651,078
========================================================================
Health Care Distributors & Services-1.40%
AdvancePCS(a) 98,000 2,176,580
------------------------------------------------------------------------
Cardinal Health, Inc. 149,500 8,848,905
========================================================================
11,025,485
========================================================================
Health Care Equipment-3.54%
Biomet, Inc. 406,925 11,662,470
------------------------------------------------------------------------
Medtronic, Inc. 220,400 10,050,240
------------------------------------------------------------------------
St. Jude Medical, Inc.(a) 155,200 6,164,544
========================================================================
27,877,254
========================================================================
Health Care Facilities-1.53%
HCA Inc. 146,000 6,059,000
------------------------------------------------------------------------
Health Management Associates, Inc.-Class A 336,200 6,017,980
========================================================================
12,076,980
========================================================================
Home Improvement Retail-1.16%
Lowe's Cos., Inc. 242,800 9,105,000
========================================================================
Homebuilding-1.51%
Centex Corp. 64,700 3,247,940
------------------------------------------------------------------------
D.R. Horton, Inc. 129,500 2,246,825
------------------------------------------------------------------------
Lennar Corp. 64,700 3,338,520
------------------------------------------------------------------------
Pulte Homes, Inc. 63,900 3,058,893
========================================================================
11,892,178
========================================================================
Household Products-1.70%
Clorox Co. (The) 80,900 3,337,125
------------------------------------------------------------------------
Procter & Gamble Co. (The) 117,100 10,063,574
========================================================================
13,400,699
========================================================================
Housewares & Specialties-0.75%
Newell Rubbermaid Inc. 194,200 5,890,086
========================================================================
Industrial Conglomerates-0.68%
3M Co. 43,200 5,326,560
========================================================================
Industrial Machinery-0.45%
Danaher Corp. 54,000 3,547,800
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Integrated Oil & Gas-0.44%
Exxon Mobil Corp. 98,000 $ 3,424,120
========================================================================
Internet Retail-0.47%
eBay Inc.(a) 54,000 3,662,280
========================================================================
IT Consulting & Services-1.05%
Affiliated Computer Services, Inc.-Class A(a) 47,400 2,495,610
------------------------------------------------------------------------
SunGard Data Systems Inc.(a) 244,000 5,748,640
========================================================================
8,244,250
========================================================================
Life & Health Insurance-0.39%
AFLAC Inc. 102,500 3,087,300
========================================================================
Managed Health Care-2.99%
Caremark Rx, Inc.(a) 539,500 8,766,875
------------------------------------------------------------------------
UnitedHealth Group Inc. 71,400 5,961,900
------------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 123,400 8,781,144
========================================================================
23,509,919
========================================================================
Motorcycle Manufacturers-1.42%
Harley-Davidson, Inc. 241,400 11,152,680
========================================================================
Movies & Entertainment-0.24%
Viacom Inc.-Class B(a) 47,000 1,915,720
========================================================================
Multi-Line Insurance-1.94%
American International Group, Inc. 263,400 15,237,690
========================================================================
Networking Equipment-1.44%
Cisco Systems, Inc.(a) 863,200 11,307,920
========================================================================
Oil & Gas Drilling-1.36%
Nabors Industries, Ltd. (Bermuda)(a) 107,900 3,805,633
------------------------------------------------------------------------
Noble Corp. (Cayman Islands)(a) 107,900 3,792,685
------------------------------------------------------------------------
Transocean Inc. 133,100 3,087,920
========================================================================
10,686,238
========================================================================
Oil & Gas Equipment & Services-0.80%
Smith International, Inc.(a) 95,800 3,124,996
------------------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 79,900 3,190,407
========================================================================
6,315,403
========================================================================
Oil & Gas Exploration & Production-0.39%
Apache Corp. 54,000 3,077,460
========================================================================
Packaged Foods & Meats-0.54%
General Mills, Inc. 54,000 2,535,300
------------------------------------------------------------------------
Unilever PLC (United Kingdom) 177,400 1,689,814
========================================================================
4,225,114
========================================================================
Personal Products-0.52%
Gillette Co. (The) 134,900 4,095,564
========================================================================
|
AIM V.I. CAPITAL APPRECIATION FUND
FS-46
MARKET
SHARES VALUE
------------------------------------------------------------------------
Pharmaceuticals-6.41%
Forest Laboratories, Inc.(a) 76,800 $ 7,543,296
------------------------------------------------------------------------
Johnson & Johnson 77,100 4,141,041
------------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 215,800 10,718,786
------------------------------------------------------------------------
Pfizer Inc. 616,600 18,849,462
------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 239,000 9,227,790
========================================================================
50,480,375
========================================================================
Property & Casualty Insurance-0.24%
XL Capital Ltd.-Class A (Bermuda) 24,200 1,869,450
========================================================================
Publishing-0.49%
Gannett Co., Inc. 54,000 3,877,200
========================================================================
Restaurants-2.70%
Brinker International, Inc.(a) 292,500 9,433,125
------------------------------------------------------------------------
Darden Restaurants, Inc. 161,900 3,310,855
------------------------------------------------------------------------
Outback Steakhouse, Inc. 161,000 5,544,840
------------------------------------------------------------------------
Wendy's International, Inc. 108,500 2,937,095
========================================================================
21,225,915
========================================================================
Semiconductor Equipment-4.62%
Applied Materials, Inc.(a) 814,600 10,614,238
------------------------------------------------------------------------
KLA-Tencor Corp.(a) 187,700 6,638,949
------------------------------------------------------------------------
Lam Research Corp.(a) 431,600 4,661,280
------------------------------------------------------------------------
Novellus Systems, Inc.(a) 323,700 9,089,496
------------------------------------------------------------------------
Teradyne, Inc.(a) 412,800 5,370,528
========================================================================
36,374,491
========================================================================
Semiconductors-7.26%
Altera Corp.(a) 481,200 5,938,008
------------------------------------------------------------------------
Analog Devices, Inc.(a) 381,000 9,094,470
------------------------------------------------------------------------
Integrated Device Technology, Inc.(a) 238,600 1,997,082
------------------------------------------------------------------------
Intel Corp. 326,500 5,083,605
------------------------------------------------------------------------
Linear Technology Corp. 277,400 7,134,728
------------------------------------------------------------------------
Maxim Integrated Products, Inc. 215,800 7,130,032
------------------------------------------------------------------------
Microchip Technology Inc. 606,025 14,817,311
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Semiconductors-(Continued)
Micron Technology, Inc.(a) 323,700 $ 3,152,838
------------------------------------------------------------------------
Texas Instruments Inc. 185,900 2,790,359
========================================================================
57,138,433
========================================================================
Soft Drinks-1.08%
Coca-Cola Co. (The) 194,200 8,509,844
========================================================================
Specialty Stores-2.88%
Bed Bath & Beyond Inc.(a) 280,600 9,689,118
------------------------------------------------------------------------
CarMax, Inc.(a) 107,900 1,929,252
------------------------------------------------------------------------
Office Depot, Inc.(a) 215,800 3,185,208
------------------------------------------------------------------------
Staples, Inc.(a) 430,200 7,872,660
========================================================================
22,676,238
========================================================================
Systems Software-3.54%
Microsoft Corp.(a) 539,500 27,892,150
========================================================================
Telecommunications Equipment-0.49%
Motorola, Inc. 450,000 3,892,500
========================================================================
Tobacco-0.50%
Philip Morris Cos. Inc. 97,600 3,955,728
========================================================================
Wireless Telecommunication Services-0.83%
Nextel Communications, Inc.-Class A(a) 312,200 3,605,910
------------------------------------------------------------------------
Vodafone Group PLC (United Kingdom) 1,618,730 2,954,679
========================================================================
6,560,589
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $800,418,311) 765,443,466
========================================================================
MONEY MARKET FUNDS-3.16%
STIC Liquid Assets Portfolio(b) 12,440,001 12,440,001
------------------------------------------------------------------------
STIC Prime Portfolio(b) 12,440,001 12,440,001
========================================================================
Total Money Market Funds (Cost
$24,880,002) 24,880,002
========================================================================
TOTAL INVESTMENTS-100.43% (Cost $825,298,313) 790,323,468
========================================================================
OTHER ASSETS LESS LIABILITIES-(0.43%) (3,392,591)
========================================================================
NET ASSETS-100.00% $786,930,877
________________________________________________________________________
========================================================================
|
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. CAPITAL APPRECIATION FUND
FS-47
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$825,298,313) $790,323,468
-------------------------------------------------------------
Receivables for:
Fund shares sold 295,888
-------------------------------------------------------------
Dividends 319,087
-------------------------------------------------------------
Amount due from advisor 10,914
-------------------------------------------------------------
Investment for deferred compensation plan 44,480
-------------------------------------------------------------
Other assets 4,271
=============================================================
Total assets 790,998,108
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 2,264,397
-------------------------------------------------------------
Fund shares reacquired 1,148,789
-------------------------------------------------------------
Deferred compensation plan 44,480
-------------------------------------------------------------
Accrued administrative services fees 427,182
-------------------------------------------------------------
Accrued distribution fees -- Series II 12,611
-------------------------------------------------------------
Accrued transfer agent fees 30,955
-------------------------------------------------------------
Accrued operating expenses 138,817
=============================================================
Total liabilities 4,067,231
=============================================================
Net assets applicable to shares outstanding $786,930,877
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $763,038,338
_____________________________________________________________
=============================================================
Series II $ 23,892,539
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 46,438,631
_____________________________________________________________
=============================================================
Series II 1,459,034
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 16.43
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 16.38
_____________________________________________________________
=============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$20,133) $ 4,988,342
-------------------------------------------------------------
Dividends from affiliated money market funds 560,811
=============================================================
Total investment income 5,549,153
=============================================================
EXPENSES:
Advisory fees 5,887,471
-------------------------------------------------------------
Administrative services fees 1,965,766
-------------------------------------------------------------
Custodian fees 139,417
-------------------------------------------------------------
Distribution fees -- Series II 29,774
-------------------------------------------------------------
Transfer agent fees 97,877
-------------------------------------------------------------
Trustees' fees 13,857
-------------------------------------------------------------
Other 98,440
=============================================================
Total expenses 8,232,602
=============================================================
Less: Fees waived (6,569)
-------------------------------------------------------------
Expenses paid indirectly (399)
=============================================================
Net expenses 8,225,634
=============================================================
Net investment income (loss) (2,676,481)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities (155,802,654)
-------------------------------------------------------------
Foreign currencies (9,494)
=============================================================
(155,812,148)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (118,601,496)
-------------------------------------------------------------
Foreign currencies 403
=============================================================
(118,601,093)
=============================================================
Net gain (loss) from investment securities and
foreign currencies (274,413,241)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(277,089,722)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
FS-48
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (2,676,481) $ (2,701,518)
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (155,812,148) (228,295,601)
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (118,601,093) (130,556,561)
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (277,089,722) (361,553,680)
==============================================================================================
Distributions to shareholders from net realized gains:
Series I -- (93,353,689)
----------------------------------------------------------------------------------------------
Series II -- (235,797)
----------------------------------------------------------------------------------------------
Share transactions-net:
Series I (123,222,717) 81,141,922
----------------------------------------------------------------------------------------------
Series II 23,479,493 3,556,366
==============================================================================================
Net increase (decrease) in net assets (376,832,946) (370,444,878)
==============================================================================================
NET ASSETS:
Beginning of year 1,163,763,823 1,534,208,701
==============================================================================================
End of year $ 786,930,877 $1,163,763,823
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,242,488,118 $1,344,898,013
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (92,938) (73,633)
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (420,489,854) (264,687,201)
----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (34,974,449) 83,626,644
==============================================================================================
$ 786,930,877 $1,163,763,823
______________________________________________________________________________________________
==============================================================================================
|
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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
AIM V.I. CAPITAL APPRECIATION FUND
FS-49
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, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
F. COVERED CALL OPTIONS -- The Fund may write call options, on a covered basis; that is, the Fund will own the underlying security. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
G. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market fund in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $6,569.
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 fees paid to insurance companies
AIM V.I. CAPITAL APPRECIATION FUND
FS-50
that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $1,965,766 of which AIM retained $172,093 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $53,537 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $29,774.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $4,440 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, 2002, the Fund received reductions in custodian fees of $399 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $399.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------------------------
Distributions paid from:
Long-term capital gain $-- $93,589,486
______________________________________________________________
==============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (41,070,176)
-------------------------------------------------------------
Capital loss carryforward (411,162,152)
-------------------------------------------------------------
Post-October capital loss deferral (3,231,975)
-------------------------------------------------------------
Post-October currency loss deferral (9,502)
-------------------------------------------------------------
Temporary book/tax differences (83,436)
-------------------------------------------------------------
Shares of beneficial interest 1,242,488,118
=============================================================
$ 786,930,877
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales. The tax-basis unrealized appreciation (depreciation) on investments amount includes appreciation on foreign currencies of $396.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
---------------------------------------------------------
December 31, 2009 $254,717,808
---------------------------------------------------------
December 31, 2010 156,444,344
=========================================================
$411,162,152
_________________________________________________________
=========================================================
|
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, 2002 was $625,333,312 and $726,993,216, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 92,934,486 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (134,005,058) ============================================================= Net unrealized appreciation (depreciation) of investment securities $ (41,070,572) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $831,394,040. |
AIM V.I. CAPITAL APPRECIATION FUND
FS-51
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of net operating losses and foreign
currency transactions on December 31, 2002, undistributed net investment income
(loss) was increased by $2,657,176, undistributed net realized gains (losses)
increased by $9,495 and shares of beneficial interest decreased by $2,666,671.
This reclassification had no effect on the net assets of the Fund.
NOTE 9--CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------------------------------------------------
Beginning of year -- $ --
----------------------------------------------------------
Written 154 39,577
----------------------------------------------------------
Exercised (154) (39,577)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 10,379,924 $ 195,828,397 11,408,354 $ 289,501,205
--------------------------------------------------------------------------------------------------------------------------
Series II* 1,386,641 24,993,930 154,482 3,376,463
==========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 4,384,861 93,353,689
--------------------------------------------------------------------------------------------------------------------------
Series II* -- -- 11,086 235,797
==========================================================================================================================
Reacquired:
Series I (17,365,036) (319,051,114) (12,117,352) (301,712,972)
--------------------------------------------------------------------------------------------------------------------------
Series II* (90,181) (1,514,437) (2,994) (55,894)
==========================================================================================================================
(5,688,652) $ (99,743,224) 3,838,437 $ 84,698,288
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Series II shares commenced sales on August 21, 2001.
AIM V.I. CAPITAL APPRECIATION FUND
FS-52
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.72 $ 30.84 $ 35.58 $ 25.20 $ 21.75
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.05)(a) (0.05) (0.02) 0.02
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.24) (7.17) (3.79) 11.17 4.12
=================================================================================================================================
Total from investment operations (5.29) (7.22) (3.84) 11.15 4.14
=================================================================================================================================
Less distributions:
Dividends from net investment income -- -- -- (0.02) (0.04)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.90) (0.90) (0.75) (0.65)
=================================================================================================================================
Total distributions -- (1.90) (0.90) (0.77) (0.69)
=================================================================================================================================
Net asset value, end of period $ 16.43 $ 21.72 $ 30.84 $ 35.58 $ 25.20
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (24.35)% (23.28)% (10.91)% 44.61% 19.30%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $763,038 $1,160,236 $1,534,209 $1,131,217 $647,248
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 0.85%(c) 0.85% 0.82% 0.73% 0.67%
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.27)%(c) (0.22)% (0.17)% (0.06)% 0.11%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 67% 65% 98% 65% 83%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(c) Ratios are based on average daily net assets of $948,502,072.
SERIES II
----------------------------------
AUGUST 21, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.70 $23.19
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.04)(a)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.23) 0.45
================================================================================================
Total from investment operations (5.32) 0.41
================================================================================================
Less distributions from net realized gains -- (1.90)
================================================================================================
Net asset value, end of period $ 16.38 $21.70
________________________________________________________________________________________________
================================================================================================
Total return(b) (24.52)% 1.94%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $23,893 $3,527
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets 1.10%(c) 1.09%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.52)%(c) (0.46)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 67% 65%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $11,909,687.
(d) Annualized.
AIM V.I. CAPITAL APPRECIATION FUND
FS-53
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, 2002, 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 years or periods in the four year 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, 2002 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, 2002, 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 years or periods in the four year 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.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-54
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
----------------------------------------------------------------------
DOMESTIC COMMON STOCKS & OTHER EQUITY
INTERESTS-80.97%
Advertising-1.11%
Lamar Advertising Co.(a) 27,950 $ 940,517
======================================================================
Air Freight & Logistics-2.14%
C.H. Robinson Worldwide, Inc. 36,600 1,141,920
----------------------------------------------------------------------
Ryder System, Inc. 30,100 675,444
======================================================================
1,817,364
======================================================================
Apparel Retail-0.75%
Ross Stores, Inc. 15,000 635,850
======================================================================
Application Software-2.34%
Fair, Issac and Co., Inc. 25,700 1,097,390
----------------------------------------------------------------------
J.D. Edwards & Co.(a) 42,800 482,784
----------------------------------------------------------------------
PeopleSoft, Inc.(a) 22,200 406,260
======================================================================
1,986,434
======================================================================
Banks-1.44%
Compass Bancshares, Inc. 19,600 612,892
----------------------------------------------------------------------
Huntington Bancshares Inc. 32,500 608,075
======================================================================
1,220,967
======================================================================
Broadcasting & Cable TV-1.39%
Cox Radio, Inc.-Class A(a) 30,200 688,862
----------------------------------------------------------------------
Entercom Communications Corp.(a) 10,500 492,660
======================================================================
1,181,522
======================================================================
Building Products-1.03%
American Standard Cos. Inc.(a) 12,300 875,022
======================================================================
Commercial Printing-0.00%
American Bank Note Holographics, Inc.-Wts.,
expiring 06/18/03(a) 74 2
======================================================================
Computer & Electronics Retail-1.88%
Best Buy Co., Inc.(a) 36,000 869,400
----------------------------------------------------------------------
CDW Computer Centers, Inc.(a) 16,700 732,295
======================================================================
1,601,695
======================================================================
Consumer Finance-1.00%
AmeriCredit Corp.(a) 57,600 445,824
----------------------------------------------------------------------
Saxon Capital Acquisition Corp. (Acquired
07/27/01; Cost $212,100)(a)(b) 21,000 262,710
----------------------------------------------------------------------
Saxon Capital, Inc.(a) 11,600 145,116
======================================================================
853,650
======================================================================
Data Processing Services-6.00%
Alliance Data Systems Corp.(a) 56,800 1,006,496
----------------------------------------------------------------------
|
MARKET
SHARES VALUE
----------------------------------------------------------------------
Data Processing Services-(Continued)
BISYS Group, Inc. (The)(a) 50,000 $ 795,000
----------------------------------------------------------------------
Ceridian Corp.(a) 46,000 663,320
----------------------------------------------------------------------
Certegy Inc.(a) 37,550 921,853
----------------------------------------------------------------------
DST Systems, Inc.(a) 13,900 494,145
----------------------------------------------------------------------
Iron Mountain Inc.(a) 36,925 1,218,894
======================================================================
5,099,708
======================================================================
Diversified Financial Services-2.15%
Affiliated Managers Group, Inc.(a) 9,300 467,790
----------------------------------------------------------------------
LaBranche & Co. Inc.(a) 16,100 428,904
----------------------------------------------------------------------
Principal Financial Group, Inc. 30,900 931,017
======================================================================
1,827,711
======================================================================
Electric Utilities-1.01%
FPL Group, Inc. 14,300 859,859
======================================================================
Electrical Components & Equipment-1.36%
Rockwell Automation, Inc. 56,000 1,159,760
======================================================================
Electronic Equipment & Instruments-4.84%
Amphenol Corp.-Class A(a) 18,800 714,400
----------------------------------------------------------------------
Tektronix, Inc.(a) 38,900 707,591
----------------------------------------------------------------------
Thermo Electron Corp.(a) 44,600 897,352
----------------------------------------------------------------------
Varian Inc.(a) 33,600 963,984
----------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 25,800 288,444
----------------------------------------------------------------------
Waters Corp.(a) 24,700 537,966
======================================================================
4,109,737
======================================================================
Environmental Services-1.06%
Republic Services, Inc.(a) 43,000 902,140
======================================================================
Food Distributors-0.92%
Performance Food Group Co.(a) 23,100 784,453
======================================================================
Food Retail-0.51%
Winn-Dixie Stores, Inc. 28,400 433,952
======================================================================
Footwear-1.04%
Reebok International Ltd.(a) 30,100 884,940
======================================================================
Forest Products-0.52%
Louisiana-Pacific Corp.(a) 54,700 440,882
======================================================================
Gas Utilities-1.01%
Kinder Morgan, Inc. 20,400 862,308
======================================================================
|
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-55
MARKET
SHARES VALUE
----------------------------------------------------------------------
General Merchandise Stores-1.21%
BJ's Wholesale Club, Inc.(a) 10,200 $ 186,660
----------------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 34,400 845,208
======================================================================
1,031,868
======================================================================
Gold-0.53%
Newmont Mining Corp. 15,500 449,965
======================================================================
Health Care Distributors & Services-1.63%
AdvancePCS(a) 22,400 497,504
----------------------------------------------------------------------
Andrx Group(a) 26,900 394,623
----------------------------------------------------------------------
Lincare Holdings Inc.(a) 15,600 493,272
======================================================================
1,385,399
======================================================================
Health Care Equipment-2.02%
Bard (C.R.), Inc. 15,200 881,600
----------------------------------------------------------------------
Fisher Scientific International Inc.(a) 27,700 833,216
======================================================================
1,714,816
======================================================================
Health Care Facilities-0.53%
LifePoint Hospitals, Inc.(a) 14,900 445,972
======================================================================
Household Appliances-1.95%
Black & Decker Corp. (The) 15,200 651,928
----------------------------------------------------------------------
Snap-on Inc. 35,900 1,009,149
======================================================================
1,661,077
======================================================================
Industrial Machinery-3.47%
Flowserve Corp.(a) 15,000 221,850
----------------------------------------------------------------------
Pall Corp. 52,600 877,368
----------------------------------------------------------------------
Parker-Hannifin Corp. 19,100 881,083
----------------------------------------------------------------------
SPX Corp.(a) 25,900 969,955
======================================================================
2,950,256
======================================================================
Integrated Oil & Gas-0.84%
Murphy Oil Corp. 16,600 711,310
======================================================================
IT Consulting & Services-2.72%
Affiliated Computer Services, Inc.-Class A(a) 2,200 115,830
----------------------------------------------------------------------
SunGard Data Systems Inc.(a) 21,100 497,116
----------------------------------------------------------------------
Titan Corp. (The)(a) 87,100 905,840
----------------------------------------------------------------------
Unisys Corp.(a) 80,100 792,990
======================================================================
2,311,776
======================================================================
Leisure Products-1.77%
Brunswick Corp. 30,600 607,716
----------------------------------------------------------------------
Hasbro, Inc. 77,800 898,590
======================================================================
1,506,306
======================================================================
Life & Health Insurance-0.77%
Nationwide Financial Services, Inc.-Class A 22,900 656,085
======================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------
Managed Health Care-2.70%
Anthem, Inc.(a) 15,400 $ 968,660
----------------------------------------------------------------------
Caremark Rx, Inc.(a) 47,500 771,875
----------------------------------------------------------------------
Coventry Health Care, Inc.(a) 19,200 557,376
======================================================================
2,297,911
======================================================================
Movies & Entertainment-0.29%
Macrovision Corp.(a) 15,200 243,808
======================================================================
Mutual Funds-1.49%
iShares Nasdaq Biotechnology Index Fund(a) 8,200 404,670
----------------------------------------------------------------------
S&P MidCap 400 Depositary Receipts Trust
Series 1 11,000 865,150
======================================================================
1,269,820
======================================================================
Office Electronics-0.94%
Zebra Technologies Corp.-Class A(a) 13,900 796,470
======================================================================
Oil & Gas Drilling-1.17%
Pride International, Inc.(a) 66,800 995,320
======================================================================
Oil & Gas Equipment & Services-1.61%
BJ Services Co.(a) 27,600 891,756
----------------------------------------------------------------------
Key Energy Services, Inc.(a) 53,200 477,204
======================================================================
1,368,960
======================================================================
Oil & Gas Exploration & Production-1.72%
Devon Energy Corp. 16,500 757,350
----------------------------------------------------------------------
Ocean Energy, Inc. 35,200 702,944
======================================================================
1,460,294
======================================================================
Oil & Gas Refining, Marketing &
Transportation-1.12%
Valero Energy Corp. 25,800 953,052
======================================================================
Paper Products-1.23%
Bowater Inc. 24,900 1,044,555
======================================================================
Pharmaceuticals-2.74%
Allergan, Inc. 15,200 875,824
----------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 9,300 461,931
----------------------------------------------------------------------
Mylan Laboratories Inc. 28,300 987,670
======================================================================
2,325,425
======================================================================
Property & Casualty Insurance-2.94%
PMI Group, Inc. (The) 41,700 1,252,668
----------------------------------------------------------------------
Radian Group Inc. 33,500 1,244,525
======================================================================
2,497,193
======================================================================
Publishing-2.61%
Belo Corp.-Class A 20,100 428,532
----------------------------------------------------------------------
Knight-Ridder, Inc. 14,000 885,500
----------------------------------------------------------------------
New York Times Co. (The)-Class A 19,700 900,881
======================================================================
2,214,913
======================================================================
|
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-56
MARKET
SHARES VALUE
----------------------------------------------------------------------
Real Estate Investment Trusts-3.13%
American Financial Realty Trust (Acquired
09/04/02; Cost $883,000)(a)(b) 88,300 $ 1,081,675
----------------------------------------------------------------------
FBR Asset Investment Corp. 33,300 1,128,870
----------------------------------------------------------------------
Plum Creek Timber Co., Inc. 18,900 446,040
======================================================================
2,656,585
======================================================================
Restaurants-1.57%
Brinker International, Inc.(a) 28,100 906,225
----------------------------------------------------------------------
Ruby Tuesday, Inc. 24,700 427,063
======================================================================
1,333,288
======================================================================
Semiconductors-0.88%
Microchip Technology Inc. 30,700 750,615
======================================================================
Specialty Chemicals-1.19%
International Flavors & Fragrances Inc. 28,800 1,010,880
======================================================================
Specialty Stores-1.64%
Advance Auto Parts, Inc.(a) 17,700 865,530
----------------------------------------------------------------------
Copart, Inc.(a) 44,700 529,248
======================================================================
1,394,778
======================================================================
Systems Software-1.06%
Adobe Systems Inc. 12,800 318,848
----------------------------------------------------------------------
Symantec Corp.(a) 14,300 578,435
======================================================================
897,283
======================================================================
Total Domestic Common Stocks & Other
Equity Interests (Cost $66,899,457) 68,814,453
======================================================================
FOREIGN STOCKS & OTHER EQUITY INTERESTS-9.92%
Bermuda-3.06%
Everest Re Group, Ltd. (Reinsurance) 7,600 420,280
----------------------------------------------------------------------
PartnerRe Ltd. (Reinsurance) 17,500 906,850
----------------------------------------------------------------------
Platinum Underwriters Holdings, Ltd.
(Insurance Brokers)(a) 23,600 621,860
----------------------------------------------------------------------
Willis Group Holdings Ltd. (Insurance
Brokers)(a) 22,600 647,942
======================================================================
2,596,932
======================================================================
|
MARKET
SHARES VALUE
----------------------------------------------------------------------
Canada-1.84%
Biovail Corp. (Pharmaceuticals)(a) 10,600 $ 279,946
----------------------------------------------------------------------
Celestica Inc. (Electronic Equipment &
Instruments)(a) 25,000 352,500
----------------------------------------------------------------------
Potash Corp. of Saskatchewan Inc.
(Fertilizers & Agricultural Chemicals) 14,600 928,414
======================================================================
1,560,860
======================================================================
Cayman Islands-3.80%
ACE Ltd. (Property & Casualty Insurance) 13,607 399,230
----------------------------------------------------------------------
Garmin Ltd. (Consumer Electronics)(a) 31,000 908,300
----------------------------------------------------------------------
GlobalSantaFe Corp. (Oil & Gas Drilling)(a) 38,900 946,048
----------------------------------------------------------------------
XL Capital Ltd.-Class A (Property & Casualty
Insurance) 12,600 973,350
======================================================================
3,226,928
======================================================================
France-0.47%
Business Objects S.A.-ADR (Application
Software)(a) 26,700 400,500
======================================================================
South Africa-0.49%
AngloGold Ltd.-ADR (Gold) 12,200 417,972
======================================================================
United Kingdom-0.26%
Shire Pharmaceuticals Group PLC-ADR
(Pharmaceuticals)(a) 11,900 224,791
======================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $8,251,231) 8,427,983
======================================================================
MONEY MARKET FUNDS-9.51%
STIC Liquid Assets Portfolio(c) 4,042,207 4,042,207
----------------------------------------------------------------------
STIC Prime Portfolio(c) 4,042,207 4,042,207
======================================================================
Total Money Market Funds (Cost
$8,084,414) 8,084,414
======================================================================
TOTAL INVESTMENTS-100.40% (Cost $83,235,102) 85,326,850
======================================================================
OTHER ASSETS LESS LIABILITIES-(0.40%) (340,384)
======================================================================
NET ASSETS-100.00% $84,986,466
______________________________________________________________________
======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Wts. - Warrants |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act. The Fund has no rights to demand
registration of these securities. The aggregate market value of these
securities at 12/31/02 was $1,344,385, which represented 1.58% of the Fund's
net assets. These securities may be considered illiquid.
(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 DEVELOPMENT FUND
FS-57
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $83,235,102) $85,326,850
------------------------------------------------------------
Receivables for:
Investments sold 107,973
------------------------------------------------------------
Fund shares sold 10,198
------------------------------------------------------------
Dividends 95,749
------------------------------------------------------------
Investment for deferred compensation plan 19,647
------------------------------------------------------------
Other assets 421
============================================================
Total assets 85,560,838
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 348,803
------------------------------------------------------------
Fund shares reacquired 78,340
------------------------------------------------------------
Deferred compensation plan 19,647
------------------------------------------------------------
Accrued administrative services fees 91,182
------------------------------------------------------------
Accrued distribution fees -- Series II 8,367
------------------------------------------------------------
Accrued transfer agent fees 4,843
------------------------------------------------------------
Accrued operating expenses 23,190
============================================================
Total liabilities 574,372
============================================================
Net assets applicable to shares outstanding $84,986,466
____________________________________________________________
============================================================
NET ASSETS:
Series I $70,017,654
____________________________________________________________
============================================================
Series II $14,968,812
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 7,455,722
____________________________________________________________
============================================================
Series II 1,598,575
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 9.39
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 9.36
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$2,439) $ 890,672
-------------------------------------------------------------
Dividends from affiliated money market funds 106,887
-------------------------------------------------------------
Interest 108
=============================================================
Total investment income 997,667
=============================================================
EXPENSES:
Advisory fees 703,517
-------------------------------------------------------------
Administrative services fees 275,694
-------------------------------------------------------------
Custodian fees 39,378
-------------------------------------------------------------
Distribution fees -- Series II 21,457
-------------------------------------------------------------
Transfer agent fees 19,823
-------------------------------------------------------------
Trustees' fees 9,121
-------------------------------------------------------------
Other 24,553
=============================================================
Total expenses 1,093,543
=============================================================
Less: Fees waived (1,117)
-------------------------------------------------------------
Expenses paid indirectly (100)
=============================================================
Net expenses 1,092,326
=============================================================
Net investment income (loss) (94,659)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (12,418,154)
-------------------------------------------------------------
Foreign currencies 10,931
-------------------------------------------------------------
Option contracts written 143,158
=============================================================
(12,264,065)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (10,808,516)
-------------------------------------------------------------
Foreign currencies 126
=============================================================
(10,808,390)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (23,072,455)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(23,167,114)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-58
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (94,659) $ (138,787)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (12,264,065) (11,864,022)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (10,808,390) 5,254,554
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (23,167,114) (6,748,255)
==========================================================================================
Share transactions-net:
Series I (1,892,798) 24,793,289
------------------------------------------------------------------------------------------
Series II 14,547,621 2,579,665
==========================================================================================
Net increase (decrease) in net assets (10,512,291) 20,624,699
==========================================================================================
NET ASSETS:
Beginning of year 95,498,757 74,874,058
==========================================================================================
End of year $ 84,986,466 $ 95,498,757
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $112,686,465 $100,111,093
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (26,541) (22,264)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (29,765,332) (17,490,336)
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 2,091,874 12,900,264
==========================================================================================
$ 84,986,466 $ 95,498,757
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-59
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-60
The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
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. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
H. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $1,117.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $275,694 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $11,951 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $21,457.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,734 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, 2002, the Fund received reductions in custodian fees of $100 under an expense offset arrangement which resulted in a reduction of the Fund's expenses of $100.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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. CAPITAL DEVELOPMENT FUND
FS-61
NOTE 6--CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-----------------------------------------------------------
Beginning of year -- $ --
-----------------------------------------------------------
Written 516 163,010
-----------------------------------------------------------
Closed (516) (163,010)
===========================================================
End of year -- $ --
___________________________________________________________
===========================================================
|
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended December 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation -- investments $ 1,569,731
-------------------------------------------------------------
Temporary book/tax differences (26,541)
-------------------------------------------------------------
Capital loss carryforward (29,062,697)
-------------------------------------------------------------
Post-October capital loss deferral (180,492)
-------------------------------------------------------------
Shares of beneficial interest 112,686,465
=============================================================
$ 84,986,466
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable primarily to the tax deferral of losses on wash sales and other deferrals. The tax-basis unrealized appreciation on investments includes appreciation on foreign currencies of $126.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL
LOSS
EXPIRATION CARRYFORWARD
------------------------------------
December 31, 2006 $ 204,323
------------------------------------
December 31, 2007 82,869
------------------------------------
December 31, 2008 2,661,143
------------------------------------
December 31, 2009 13,961,443
------------------------------------
December 31, 2010 12,152,919
====================================
$29,062,697
____________________________________
====================================
|
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, 2002 was $115,204,833 and $106,896,020, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 6,428,155 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (4,858,550) ============================================================= Net unrealized appreciation of investment securities $ 1,569,605 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $83,757,245. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of a net operating loss and foreign currency transactions on December 31, 2002, undistributed net investment income was increased by $90,382, undistributed net realized gains decreased by $10,931 and shares of beneficial interest decreased by $79,451. This reclassification had no effect on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------
Sold:
Series I 1,632,368 $ 18,502,411 2,664,233 $32,507,353
--------------------------------------------------------------------------------------------------------------------
Series II* 1,558,305 16,426,876 241,623 2,682,821
--------------------------------------------------------------------------------------------------------------------
Reacquired:
Series I (1,941,781) (20,395,209) (661,439) (7,714,064)
--------------------------------------------------------------------------------------------------------------------
Series II* (191,525) (1,879,255) (9,828) (103,156)
====================================================================================================================
1,057,367 $ 12,654,823 2,234,589 $27,372,954
____________________________________________________________________________________________________________________
====================================================================================================================
|
* Series II shares commenced sales on August 21, 2001.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-62
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
---------------------------------------------------------------------
MAY 1, 1998
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.94 $ 12.99 $ 11.89 $ 9.21 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.01)(a) (0.02) (0.01)(a) (0.03)(a) 0.03(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.54) (1.03) 1.11 2.71 (0.78)
=================================================================================================================================
Total from investment operations (2.55) (1.05) 1.10 2.68 (0.75)
=================================================================================================================================
Less distributions from net investment income -- -- -- -- (0.04)
=================================================================================================================================
Net asset value, end of period $ 9.39 $ 11.94 $ 12.99 $ 11.89 $ 9.21
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (21.36)% (8.08)% 9.25% 29.10% (7.51)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,018 $92,732 $74,874 $11,035 $3,172
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.14%(c) 1.16% 1.19% 1.23% 1.21%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.14%(c) 1.16% 1.38% 3.42% 5.80%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net
assets (0.08)%(c) (0.16)% (0.07)% (0.32)% 0.62%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 121% 125% 110% 132% 45%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $85,219,471.
(d) Annualized.
SERIES II
--------------------------------------
AUGUST 21, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.94 $11.88
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.01)
------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.55) 0.07
======================================================================================================
Total from investment operations (2.58) 0.06
======================================================================================================
Net asset value, end of period $ 9.36 $11.94
______________________________________________________________________________________________________
======================================================================================================
Total return(b) (21.61)% 0.50%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,969 $2,767
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets 1.39%(c) 1.41%(d)
======================================================================================================
Ratio of net investment income (loss) to average net assets (0.33)%(c) (0.41)%(d)
______________________________________________________________________________________________________
======================================================================================================
Portfolio turnover rate 121% 125%
______________________________________________________________________________________________________
======================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $8,582,831.
(d) Annualized.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-63
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. Core Equity Fund, formerly 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, 2002, 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 years or periods in the five year 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, 2002 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. Core Equity Fund, as of December 31, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. CORE EQUITY FUND
FS-64
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
---------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-87.69%
Advertising-1.52%
Omnicom Group Inc. 327,400 $ 21,150,040
===========================================================================
Aerospace & Defense-3.61%
Lockheed Martin Corp. 107,300 6,196,575
---------------------------------------------------------------------------
Northrop Grumman Corp. 230,000 22,310,000
---------------------------------------------------------------------------
Raytheon Co. 702,300 21,595,725
===========================================================================
50,102,300
===========================================================================
Apparel Retail-1.38%
Limited Brands 1,374,000 19,139,820
===========================================================================
Banks-2.55%
Bank of America Corp. 216,900 15,089,733
---------------------------------------------------------------------------
Washington Mutual, Inc. 589,300 20,348,529
===========================================================================
35,438,262
===========================================================================
Brewers-1.87%
Anheuser-Busch Cos., Inc. 535,000 25,894,000
===========================================================================
Building Products-2.15%
American Standard Cos. Inc.(a) 200,000 14,228,000
---------------------------------------------------------------------------
Masco Corp. 738,500 15,545,425
===========================================================================
29,773,425
===========================================================================
Computer & Electronics Retail-1.11%
Best Buy Co., Inc.(a) 640,000 15,456,000
===========================================================================
Computer Hardware-1.37%
International Business Machines Corp. 245,600 19,034,000
===========================================================================
Construction Materials-1.04%
Vulcan Materials Co. 384,700 14,426,250
===========================================================================
Data Processing Services-2.20%
Automatic Data Processing, Inc. 442,000 17,348,500
---------------------------------------------------------------------------
Convergys Corp.(a) 870,000 13,180,500
===========================================================================
30,529,000
===========================================================================
Diversified Financial Services-3.53%
Citigroup Inc. 573,000 20,163,870
---------------------------------------------------------------------------
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Diversified Financial Services-(Continued)
Morgan Stanley 345,000 $ 13,772,400
---------------------------------------------------------------------------
Principal Financial Group, Inc. 497,200 14,980,636
===========================================================================
48,916,906
===========================================================================
Electric Utilities-0.77%
FPL Group, Inc. 68,500 4,118,905
---------------------------------------------------------------------------
TXU Corp. 347,900 6,498,772
===========================================================================
10,617,677
===========================================================================
Electrical Components & Equipment-1.48%
Emerson Electric Co. 403,000 20,492,550
===========================================================================
Environmental Services-0.97%
Waste Management, Inc. 589,300 13,506,756
===========================================================================
Food Retail-2.65%
Kroger Co. (The)(a) 1,313,700 20,296,665
---------------------------------------------------------------------------
Safeway Inc.(a) 703,900 16,443,104
===========================================================================
36,739,769
===========================================================================
Footwear-1.32%
NIKE, Inc.-Class B 410,700 18,263,829
===========================================================================
General Merchandise Stores-0.75%
Wal-Mart Stores, Inc. 204,600 10,334,346
===========================================================================
Health Care Distributors & Services-1.01%
IMS Health Inc. 878,000 14,048,000
===========================================================================
Health Care Supplies-1.34%
Alcon, Inc. (Switzerland)(a) 470,600 18,565,170
===========================================================================
Home Improvement Retail-1.01%
Home Depot, Inc. (The) 585,000 14,016,600
===========================================================================
Hotels, Resorts & Cruise Lines-0.90%
Carnival Corp. (Panama) 501,300 12,507,435
===========================================================================
Household Products-1.74%
Kimberly-Clark Corp. 212,800 10,101,616
---------------------------------------------------------------------------
|
AIM V.I. CORE EQUITY FUND
FS-65
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Household Products-(Continued)
Procter & Gamble Co. (The) 163,700 $ 14,068,378
===========================================================================
24,169,994
===========================================================================
Industrial Machinery-2.61%
Dover Corp. 740,000 21,578,400
---------------------------------------------------------------------------
Illinois Tool Works Inc. 225,100 14,599,986
===========================================================================
36,178,386
===========================================================================
Integrated Oil & Gas-2.87%
ChevronTexaco Corp. 212,800 14,146,944
---------------------------------------------------------------------------
Exxon Mobil Corp. 735,000 25,680,900
===========================================================================
39,827,844
===========================================================================
Integrated Telecommunication Services-0.77%
AT&T Corp. 410,000 10,705,100
===========================================================================
Leisure Products-0.78%
Mattel, Inc. 564,800 10,815,920
===========================================================================
Life & Health Insurance-1.11%
Prudential Financial, Inc. 487,000 15,457,380
===========================================================================
Oil & Gas Drilling-1.08%
GlobalSantaFe Corp. (Cayman Islands) 613,900 14,930,048
===========================================================================
Oil & Gas Equipment & Services-1.14%
Baker Hughes Inc. 491,100 15,808,509
===========================================================================
Oil & Gas Refining, Marketing &
Transportation-1.21%
Valero Energy Corp. 454,300 16,781,842
===========================================================================
Packaged Foods & Meats-10.85%
Campbell Soup Co. 482,900 11,333,663
---------------------------------------------------------------------------
ConAgra Foods, Inc. 1,080,400 27,020,804
---------------------------------------------------------------------------
General Mills, Inc. 789,900 37,085,805
---------------------------------------------------------------------------
Kellogg Co. 789,900 27,069,873
---------------------------------------------------------------------------
Kraft Foods Inc.-Class A 511,600 19,916,588
---------------------------------------------------------------------------
Sara Lee Corp. 1,246,200 28,051,962
===========================================================================
150,478,695
===========================================================================
Personal Products-2.09%
Avon Products, Inc. 280,000 15,083,600
---------------------------------------------------------------------------
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Personal Products-(Continued)
Gillette Co. (The) 460,000 $ 13,965,600
===========================================================================
29,049,200
===========================================================================
Pharmaceuticals-7.94%
Abbott Laboratories 323,300 12,932,000
---------------------------------------------------------------------------
Bristol-Myers Squibb Co. 595,000 13,774,250
---------------------------------------------------------------------------
Johnson & Johnson 243,500 13,078,385
---------------------------------------------------------------------------
Merck & Co. Inc. 200,500 11,350,305
---------------------------------------------------------------------------
Pfizer Inc. 806,200 24,645,534
---------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 384,700 14,853,267
---------------------------------------------------------------------------
Wyeth 520,000 19,448,000
===========================================================================
110,081,741
===========================================================================
Property & Casualty Insurance-3.13%
ACE Ltd. (Cayman Islands) 340,000 9,975,600
---------------------------------------------------------------------------
MGIC Investment Corp. 269,800 11,142,740
---------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A(a) 350,482 5,134,561
---------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class B(a) 431,501 6,321,490
---------------------------------------------------------------------------
XL Capital Ltd.-Class A (Cayman Islands) 140,000 10,815,000
===========================================================================
43,389,391
===========================================================================
Publishing-1.02%
New York Times Co. (The)-Class A 310,000 14,176,300
===========================================================================
Railroads-1.65%
Norfolk Southern Corp. 546,000 10,914,540
---------------------------------------------------------------------------
Union Pacific Corp. 200,500 12,003,935
===========================================================================
22,918,475
===========================================================================
Restaurants-1.04%
McDonald's Corp. 900,000 14,472,000
===========================================================================
Semiconductor Equipment-0.76%
KLA-Tencor Corp.(a) 300,000 10,611,000
===========================================================================
Semiconductors-3.61%
Intel Corp. 1,432,400 22,302,468
---------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Taiwan)(a) 927,400 6,538,170
---------------------------------------------------------------------------
Texas Instruments Inc. 474,700 7,125,247
---------------------------------------------------------------------------
Xilinx, Inc.(a) 681,400 14,036,840
===========================================================================
50,002,725
===========================================================================
|
AIM V.I. CORE EQUITY FUND
FS-66
MARKET
SHARES VALUE
---------------------------------------------------------------------------
Soft Drinks-1.01%
Coca-Cola Co. (The) 320,000 $ 14,022,400
===========================================================================
Specialty Chemicals-1.01%
Rohm & Haas Co. 429,700 13,956,656
===========================================================================
Systems Software-5.74%
Computer Associates International, Inc. 2,193,600 29,613,600
---------------------------------------------------------------------------
Microsoft Corp.(a) 670,000 34,639,000
---------------------------------------------------------------------------
Oracle Corp.(a) 1,416,000 15,292,800
===========================================================================
79,545,400
===========================================================================
Total Common Stocks & Other Equity
Interests (Cost $1,342,984,723) 1,216,331,141
===========================================================================
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS & NOTES-0.07%
Computer Hardware-0.07%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/17/98-04/19/01; Cost
$14,364,365)(b)(c)(d) $18,500,000 980,500
===========================================================================
Total Convertible Bonds & Notes (Cost
$15,090,056) 980,500
===========================================================================
|
MARKET
SHARES VALUE
---------------------------------------------------------------------------
MONEY MARKET FUNDS-13.98%
STIC Liquid Assets Portfolio(e) 96,918,925 $ 96,918,925
---------------------------------------------------------------------------
STIC Prime Portfolio(e) 96,918,925 96,918,925
===========================================================================
Total Money Market Funds (Cost
$193,837,850) 193,837,850
===========================================================================
TOTAL INVESTMENTS-101.74% (Cost
$1,551,912,629) 1,411,149,491
===========================================================================
OTHER ASSETS LESS LIABILITIES-(1.74%) (24,150,059)
===========================================================================
NET ASSETS-100.00% $1,386,999,432
___________________________________________________________________________
===========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Conv. - Convertible Deb. - Debentures Gtd. - Guaranteed Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act. The Fund has no rights to demand
registration of this security. The market value of this security at 12/31/02
was $980,500, which represented 0.07% of the Fund's net assets. This
security is considered to be illiquid.
(c) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(d) Security fair valued in accordance with the procedures established by the
Board of Trustees and is considered to be illiquid.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. CORE EQUITY FUND
FS-67
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$1,551,912,629) $1,411,149,491
-------------------------------------------------------------
Receivables for:
Investments sold 16,210,972
-------------------------------------------------------------
Fund shares sold 20,801
-------------------------------------------------------------
Dividends 1,555,252
-------------------------------------------------------------
Amount due from advisor 17,068
-------------------------------------------------------------
Investment for deferred compensation plan 54,631
-------------------------------------------------------------
Other assets 7,014
=============================================================
Total assets 1,429,015,229
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 39,102,175
-------------------------------------------------------------
Fund shares reacquired 1,543,345
-------------------------------------------------------------
Deferred compensation plan 54,631
-------------------------------------------------------------
Accrued administrative services fees 1,111,712
-------------------------------------------------------------
Accrued distribution fees -- Series II 1,151
-------------------------------------------------------------
Accrued trustees' fees 2,291
-------------------------------------------------------------
Accrued transfer agent fees 9,019
-------------------------------------------------------------
Accrued operating expenses 191,473
=============================================================
Total liabilities 42,015,797
=============================================================
Net assets applicable to shares outstanding $1,386,999,432
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $1,385,050,101
_____________________________________________________________
=============================================================
Series II $ 1,949,331
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Series I 81,542,754
_____________________________________________________________
=============================================================
Series II 115,071
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 16.99
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 16.94
_____________________________________________________________
=============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$42,692) $ 20,698,808
-------------------------------------------------------------
Dividends from affiliated money market funds 3,069,565
-------------------------------------------------------------
Interest 28,714
=============================================================
Total investment income 23,797,087
=============================================================
EXPENSES:
Advisory fees 9,986,065
-------------------------------------------------------------
Administrative services fees 2,744,082
-------------------------------------------------------------
Custodian fees 79,923
-------------------------------------------------------------
Distribution fees -- Series II 3,059
-------------------------------------------------------------
Transfer agent fees 16,949
-------------------------------------------------------------
Trustees' fees 19,878
=============================================================
Total expenses 12,849,956
=============================================================
Less: Fees waived (26,617)
-------------------------------------------------------------
Expenses paid indirectly (688)
=============================================================
Net expenses 12,822,651
=============================================================
Net investment income 10,974,436
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 69,759,670
-------------------------------------------------------------
Foreign currencies (1,395)
=============================================================
69,758,275
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (368,832,068)
-------------------------------------------------------------
Foreign currencies 8,274
=============================================================
(368,823,794)
=============================================================
Net gain (loss) from investment securities
and foreign currencies (299,065,519)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(288,091,083)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. CORE EQUITY FUND
FS-68
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 10,974,436 $ 2,586,850
----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts 69,758,275 (392,380,514)
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (368,823,794) (199,092,964)
==============================================================================================
Net increase (decrease) in net assets resulting from
operations (288,091,083) (588,886,628)
==============================================================================================
Distributions to shareholders from net investment income:
Series I (5,105,648) (948,866)
----------------------------------------------------------------------------------------------
Series II (7,025) (176)
----------------------------------------------------------------------------------------------
Share transactions-net:
Series I (238,832,022) (7,547,466)
----------------------------------------------------------------------------------------------
Series II 1,760,027 396,298
==============================================================================================
Net increase (decrease) in net assets (530,275,751) (596,986,838)
==============================================================================================
NET ASSETS:
Beginning of year 1,917,275,183 2,514,262,021
==============================================================================================
End of year $1,386,999,432 $1,917,275,183
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $1,904,474,231 $2,141,546,226
----------------------------------------------------------------------------------------------
Undistributed net investment income 8,358,703 2,347,997
----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (385,070,590) (454,679,922)
----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (140,762,912) 228,060,882
==============================================================================================
$1,386,999,432 $1,917,275,183
______________________________________________________________________________________________
==============================================================================================
|
See Notes to Financial Statements.
AIM V.I. CORE EQUITY FUND
FS-69
Notes to Financial Statements
December 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Core Equity Fund (formerly 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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's primary investment objective 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net
AIM V.I. CORE EQUITY FUND
FS-70
realized and unrealized gain or loss from investments in the statement of operations.
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. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
H. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $26,617.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $2,744,082, of which AIM retained $274,762 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $21,632 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $3,059.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $5,610 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, 2002, the Fund received reductions in custodian fees of $688 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $688.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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. CORE EQUITY FUND
FS-71
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------------------------
Distributions paid from ordinary
income $5,112,673 $949,042
______________________________________________________________
==============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 14,215,583
-------------------------------------------------------------
Unrealized appreciation
(depreciation) -- investments (145,774,009)
-------------------------------------------------------------
Temporary book/tax differences (3,261,982)
-------------------------------------------------------------
Capital loss carryforward (371,505,954)
-------------------------------------------------------------
Post-October capital loss deferral (11,148,437)
-------------------------------------------------------------
Shares of beneficial interest 1,904,474,231
=============================================================
$1,386,999,432
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales and the treatment of defaulted bonds for tax purposes. The tax-basis unrealized appreciation (depreciation) on investments amount includes appreciation on foreign currencies of $226.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation, retirement plan expenses and the treatment of defaulted bonds for tax purposes.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
December 31, 2008 $ 852,667
-----------------------------------------------------------
December 31, 2009 370,653,287
===========================================================
$371,505,954
___________________________________________________________
===========================================================
|
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, 2002 was $1,660,222,608 and $2,026,242,309, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 45,493,583 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (191,267,818) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(145,774,235) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $1,556,923,726. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of bond premium amortization and foreign currency transactions on December 31, 2002, undistributed net investment income was increased by $148,943 and undistributed net realized gains (losses) decreased by $148,943.
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 2,711,007 $ 51,401,798 7,365,570 $ 166,787,363
-------------------------------------------------------------------------------------------------------------------------
Series II* 131,069 2,388,530 21,324 426,369
=========================================================================================================================
Issued as reinvestment of dividends:
Series I 299,627 5,105,648 48,068 948,866
-------------------------------------------------------------------------------------------------------------------------
Series II* 413 7,025 9 176
=========================================================================================================================
Reacquired:
Series I (16,363,086) (295,339,468) (8,516,539) (175,283,695)
-------------------------------------------------------------------------------------------------------------------------
Series II* (36,224) (635,528) (1,520) (30,247)
=========================================================================================================================
(13,257,194) $(237,071,995) (1,083,088) $ (7,151,168)
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
* Series II shares commenced sales on October 24, 2001.
AIM V.I. CORE EQUITY FUND
FS-72
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.20 $ 26.19 $ 31.59 $ 23.75 $ 18.87
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.12(a) 0.03(b) 0.01(a) 0.06(a) 0.26(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (3.27) (6.01) (4.56) 8.05 4.95
=================================================================================================================================
Total from investment operations (3.15) (5.98) (4.55) 8.11 5.21
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.06) (0.01) (0.04) (0.16) (0.09)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.81) (0.11) (0.24)
=================================================================================================================================
Total distributions (0.06) (0.01) (0.85) (0.27) (0.33)
=================================================================================================================================
Net asset value, end of period $ 16.99 $ 20.20 $ 26.19 $ 31.59 $ 23.75
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (15.58)% (22.83)% (14.56)% 34.25% 27.68%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,385,050 $1,916,875 $2,514,262 $2,443,264 $1,262,059
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 0.78%(d) 0.82% 0.84% 0.77% 0.65%
=================================================================================================================================
Ratio of net investment income to average net
assets 0.67%(d) 0.12% 0.04% 0.22% 1.34%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 113% 73% 75% 93% 140%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been remained unchanged and the ratio of net investment
income to average net assets would have been 0.13%. In accordance with
the AICPA Audit and Accounting Guide for Investment Companies, per share
and ratios for periods prior to January 1, 2001 have not been restated
to reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(d) Ratios are based on average daily net assets of $1,642,287,403.
SERIES II
-----------------------------------
OCTOBER 24, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
-------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 20.19 $18.97
-------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.07(a) 0.00
-------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.26) 1.23
=================================================================================================
Total from investment operations (3.19) 1.23
=================================================================================================
Less dividends from net investment income (0.06) (0.01)
=================================================================================================
Net asset value, end of period $ 16.94 $20.19
_________________________________________________________________________________________________
=================================================================================================
Total return(b) (15.79)% 6.49%
_________________________________________________________________________________________________
=================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,949 $ 400
_________________________________________________________________________________________________
=================================================================================================
Ratio of expenses to average net assets 1.03%(c) 1.03%(d)
=================================================================================================
Ratio of net investment income (loss) to average net assets 0.42%(c) (0.10)%(d)
_________________________________________________________________________________________________
=================================================================================================
Portfolio turnover rate 113% 73%
_________________________________________________________________________________________________
=================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total return for
all periods shown.
(c) Ratios are based on average daily net assets of $1,223,417.
(d) Annualized.
AIM V.I. CORE EQUITY FUND
FS-73
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, 2002, 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 years or periods in the three year period then ended and for the period December 29, 1999 (commencement of operations) 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, 2002 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, 2002, 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 years or periods in the three year period then ended and for the period December 29, 1999 (commencement of operations) through December 31, 1999 in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM VI DENT DEMOGRAPHIC TRENDS FUND
FS-74
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
-----------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-96.35%
Advertising-0.76%
Lamar Advertising Co.(a) 8,600 $ 289,390
=======================================================================
Airlines-0.52%
Ryanair Holdings PLC-ADR (Ireland)(a) 5,100 199,716
=======================================================================
Apparel Retail-2.18%
Gap, Inc. (The) 42,300 656,496
-----------------------------------------------------------------------
Too Inc.(a) 7,500 176,400
=======================================================================
832,896
=======================================================================
Apparel, Accessories & Luxury Goods-0.66%
Coach, Inc.(a) 7,700 253,484
=======================================================================
Application Software-1.77%
BEA Systems, Inc.(a) 12,000 137,640
-----------------------------------------------------------------------
Intuit Inc.(a) 6,000 281,520
-----------------------------------------------------------------------
PeopleSoft, Inc.(a) 14,100 258,030
=======================================================================
677,190
=======================================================================
Automobile Manufacturers-0.54%
Porsche A.G.-Pfd. (Germany) 500 207,850
=======================================================================
Banks-2.90%
Bank of America Corp. 4,800 333,936
-----------------------------------------------------------------------
Kookmin Bank (South Korea) 11,800 417,858
-----------------------------------------------------------------------
Synovus Financial Corp. 18,500 358,900
=======================================================================
1,110,694
=======================================================================
Biotechnology-3.39%
Amgen Inc.(a) 14,100 681,594
-----------------------------------------------------------------------
Charles River Laboratories International,
Inc.(a) 6,000 230,880
-----------------------------------------------------------------------
Gilead Sciences, Inc.(a) 11,300 384,200
=======================================================================
1,296,674
=======================================================================
Brewers-1.01%
Anheuser-Busch Cos., Inc. 8,000 387,200
=======================================================================
Broadcasting & Cable TV-1.39%
Clear Channel Communications, Inc.(a) 8,200 305,778
-----------------------------------------------------------------------
Westwood One, Inc.(a) 6,000 224,160
=======================================================================
529,938
=======================================================================
Catalog Retail-0.59%
USA Interactive(a) 9,900 226,314
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Computer & Electronics Retail-1.02%
CDW Computer Centers, Inc.(a) 8,900 $ 390,265
=======================================================================
Computer Hardware-2.58%
Dell Computer Corp.(a) 21,700 580,258
-----------------------------------------------------------------------
Hewlett-Packard Co. 23,400 406,224
=======================================================================
986,482
=======================================================================
Consumer Finance-1.10%
MBNA Corp. 22,100 420,342
=======================================================================
Data Processing Services-1.20%
Fiserv, Inc.(a) 13,500 458,325
=======================================================================
Department Stores-0.78%
Kohl's Corp.(a) 5,300 296,535
=======================================================================
Diversified Commercial Services-0.58%
Apollo Group, Inc.-Class A(a) 5,000 220,000
=======================================================================
Diversified Financial Services-7.24%
American Express Co. 10,100 357,035
-----------------------------------------------------------------------
Citigroup Inc. 18,000 633,420
-----------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 11,300 769,530
-----------------------------------------------------------------------
J.P. Morgan Chase & Co. 21,300 511,200
-----------------------------------------------------------------------
Janus Capital Group Inc. 15,800 206,506
-----------------------------------------------------------------------
SLM Corp. 2,800 290,808
=======================================================================
2,768,499
=======================================================================
Electronic Equipment & Instruments-1.32%
Molex Inc.-Class A 11,900 236,691
-----------------------------------------------------------------------
Thermo Electron Corp.(a) 13,300 267,596
=======================================================================
504,287
=======================================================================
Employment Services-1.02%
Robert Half International Inc.(a) 24,200 389,862
=======================================================================
Food Distributors-0.62%
Sysco Corp. 7,900 235,341
=======================================================================
Food Retail-0.61%
Whole Foods Market, Inc.(a)(b) 4,400 232,012
=======================================================================
General Merchandise Stores-1.68%
Family Dollar Stores, Inc. 8,100 252,801
-----------------------------------------------------------------------
Target Corp. 13,000 390,000
=======================================================================
642,801
=======================================================================
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-75
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Health Care Distributors & Services-0.77%
AdvancePCS(a) 13,300 $ 295,393
=======================================================================
Health Care Equipment-4.21%
Becton, Dickinson & Co. 6,900 211,761
-----------------------------------------------------------------------
Boston Scientific Corp.(a) 11,500 488,980
-----------------------------------------------------------------------
Medtronic, Inc. 9,500 433,200
-----------------------------------------------------------------------
Varian Medical Systems, Inc.(a) 5,600 277,760
-----------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 4,800 199,296
=======================================================================
1,610,997
=======================================================================
Health Care Facilities-0.60%
HCA Inc. 5,500 228,250
=======================================================================
Health Care Supplies-0.47%
Alcon, Inc. (Switzerland)(a) 4,600 181,470
=======================================================================
Home Improvement Retail-0.75%
Home Depot, Inc. (The) 12,000 287,520
=======================================================================
Hotels, Resorts & Cruise Lines-1.62%
Royal Caribbean Cruises Ltd. (Liberia) 14,200 237,140
-----------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 16,100 382,214
=======================================================================
619,354
=======================================================================
Household Products-1.64%
Procter & Gamble Co. (The) 7,300 627,362
=======================================================================
Integrated Telecommunication Services-0.77%
AT&T Corp. 11,300 295,043
=======================================================================
Internet Retail-1.64%
Amazon.com, Inc.(a) 14,500 273,905
-----------------------------------------------------------------------
eBay Inc.(a) 5,200 352,664
=======================================================================
626,569
=======================================================================
Internet Software & Services-0.76%
Yahoo! Inc.(a) 17,700 289,395
=======================================================================
IT Consulting & Services-1.90%
Accenture Ltd.-Class A(a) 12,000 215,880
-----------------------------------------------------------------------
Affiliated Computer Services, Inc.-Class A(a) 9,700 510,705
=======================================================================
726,585
=======================================================================
Life & Health Insurance-0.73%
AFLAC Inc. 9,300 280,116
=======================================================================
Managed Health Care-2.18%
Aetna Inc. 6,500 267,280
-----------------------------------------------------------------------
Caremark Rx, Inc.(a) 18,500 300,625
-----------------------------------------------------------------------
UnitedHealth Group Inc. 3,200 267,200
=======================================================================
835,105
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Motorcycle Manufacturers-0.72%
Harley-Davidson, Inc. 6,000 $ 277,200
=======================================================================
Movies & Entertainment-0.82%
Fox Entertainment Group, Inc.-Class A(a) 12,100 313,753
=======================================================================
Multi-Line Insurance-2.38%
American International Group, Inc. 5,600 323,960
-----------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 8,100 367,983
-----------------------------------------------------------------------
HCC Insurance Holdings, Inc. 8,900 218,940
=======================================================================
910,883
=======================================================================
Networking Equipment-3.19%
Cisco Systems, Inc.(a) 59,000 772,900
-----------------------------------------------------------------------
Juniper Networks, Inc.(a) 28,200 191,760
-----------------------------------------------------------------------
McDATA Corp.-Class A(a) 36,200 257,020
=======================================================================
1,221,680
=======================================================================
Packaged Foods & Meats-0.95%
Sara Lee Corp. 16,200 364,662
=======================================================================
Pharmaceuticals-10.99%
Allergan, Inc. 4,800 276,576
-----------------------------------------------------------------------
Forest Laboratories, Inc.(a) 4,500 441,990
-----------------------------------------------------------------------
Johnson & Johnson 9,600 515,616
-----------------------------------------------------------------------
Lilly (Eli) & Co. 4,400 279,400
-----------------------------------------------------------------------
Pfizer Inc. 21,700 663,369
-----------------------------------------------------------------------
Pharmacia Corp. 26,600 1,111,880
-----------------------------------------------------------------------
Taro Pharmaceutical Industries Ltd.
(Israel)(a) 5,200 195,520
-----------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 9,200 355,212
-----------------------------------------------------------------------
Wyeth 9,700 362,780
=======================================================================
4,202,343
=======================================================================
Publishing-0.49%
Tribune Co. 4,100 186,386
=======================================================================
Restaurants-1.13%
Brinker International, Inc.(a) 7,200 232,200
-----------------------------------------------------------------------
Starbucks Corp.(a) 9,900 201,762
=======================================================================
433,962
=======================================================================
Semiconductor Equipment-4.69%
Applied Materials, Inc.(a) 48,000 625,440
-----------------------------------------------------------------------
Entegris Inc.(a) 32,200 331,660
-----------------------------------------------------------------------
Lam Research Corp.(a) 52,300 564,840
-----------------------------------------------------------------------
Novellus Systems, Inc.(a) 9,700 272,376
=======================================================================
1,794,316
=======================================================================
Semiconductors-5.80%
Analog Devices, Inc.(a) 14,100 336,567
-----------------------------------------------------------------------
Intel Corp. 23,100 359,667
-----------------------------------------------------------------------
|
AIM VI DENT DEMOGRAPHIC TRENDS FUND
FS-76
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Semiconductors-(Continued)
Linear Technology Corp. 10,900 $ 280,348
-----------------------------------------------------------------------
Maxim Integrated Products, Inc. 8,300 274,232
-----------------------------------------------------------------------
Microchip Technology Inc. 14,100 344,745
-----------------------------------------------------------------------
Micron Technology, Inc.(a) 17,700 172,398
-----------------------------------------------------------------------
STMicroelectronics N.V.-New York Shares
(Netherlands) 23,000 448,730
=======================================================================
2,216,687
=======================================================================
Specialty Stores-2.10%
Bed Bath & Beyond Inc.(a) 8,100 279,693
-----------------------------------------------------------------------
Michaels Stores, Inc.(a) 7,900 247,270
-----------------------------------------------------------------------
Weight Watchers International, Inc.(a) 6,000 275,820
=======================================================================
802,783
=======================================================================
Systems Software-7.20%
Computer Associates International, Inc. 30,200 407,700
-----------------------------------------------------------------------
Microsoft Corp.(a) 29,800 1,540,660
-----------------------------------------------------------------------
Oracle Corp.(a) 48,300 521,640
-----------------------------------------------------------------------
Symantec Corp.(a) 7,000 283,150
=======================================================================
2,753,150
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Telecommunications Equipment-0.98%
Nokia Oyj-ADR (Finland) 24,200 $ 375,100
=======================================================================
Wireless Telecommunication Services-1.41%
AT&T Wireless Services Inc.(a) 32,200 181,930
-----------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 12,100 139,755
-----------------------------------------------------------------------
Vodafone Group PLC-ADR (United Kingdom) 11,900 215,628
=======================================================================
537,313
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $37,215,989) 36,849,474
=======================================================================
MONEY MARKET FUNDS-5.68%
STIC Liquid Assets Portfolio(c) 1,086,161 1,086,161
-----------------------------------------------------------------------
STIC Prime Portfolio(c) 1,086,161 1,086,161
=======================================================================
Total Money Market Funds (Cost
$2,172,322) 2,172,322
=======================================================================
TOTAL INVESTMENTS-102.03% (Cost $39,388,311) 39,021,796
=======================================================================
OTHER ASSETS LESS LIABILITIES-(2.03)% (776,966)
=======================================================================
NET ASSETS-100.00% $38,244,830
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Pfd. - Preferred |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 6.
(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-77
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$39,388,311) $39,021,796
------------------------------------------------------------
Foreign currencies, at value (cost $451) 451
------------------------------------------------------------
Receivables for:
Investments sold 341,409
------------------------------------------------------------
Fund shares sold 80,157
------------------------------------------------------------
Dividends 33,605
------------------------------------------------------------
Investment for deferred compensation plan 12,317
============================================================
Total assets 39,489,735
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 1,146,059
------------------------------------------------------------
Fund shares reacquired 21,171
------------------------------------------------------------
Options written (premiums received $5,713) 2,153
------------------------------------------------------------
Deferred compensation plan 12,317
------------------------------------------------------------
Accrued administrative services fees 27,945
------------------------------------------------------------
Accrued distribution fees -- Series II 3,804
------------------------------------------------------------
Accrued transfer agent fees 2,495
------------------------------------------------------------
Accrued operating expenses 28,961
============================================================
Total liabilities 1,244,905
============================================================
Net assets applicable to shares outstanding $38,244,830
____________________________________________________________
============================================================
NET ASSETS:
Series I $26,746,742
____________________________________________________________
============================================================
Series II $11,498,088
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Series I 7,049,630
____________________________________________________________
============================================================
Series II 3,038,788
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 3.79
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 3.78
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$2,429) $ 217,097
-------------------------------------------------------------
Dividends from affiliated money market funds 33,835
-------------------------------------------------------------
Interest 3,990
=============================================================
Total investment income 254,922
=============================================================
EXPENSES:
Advisory fees 346,076
-------------------------------------------------------------
Administrative services fees 146,671
-------------------------------------------------------------
Custodian fees 45,285
-------------------------------------------------------------
Distribution fees -- Series II 20,998
-------------------------------------------------------------
Transfer agent fees 18,401
-------------------------------------------------------------
Trustees' fees 8,834
-------------------------------------------------------------
Other 15,170
=============================================================
Total expenses 601,435
=============================================================
Less: Fees waived and expenses reimbursed (59,327)
-------------------------------------------------------------
Expenses paid indirectly (108)
=============================================================
Net expenses 542,000
=============================================================
Net investment income (loss) (287,078)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES CONTRACTS AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (14,480,666)
-------------------------------------------------------------
Foreign currencies (9,402)
-------------------------------------------------------------
Futures contracts 28,799
-------------------------------------------------------------
Option contracts written 65,709
=============================================================
(14,395,560)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (1,675,422)
-------------------------------------------------------------
Option contracts written 3,560
=============================================================
(1,671,862)
=============================================================
Net gain (loss) from investment securities,
foreign currencies, futures contracts and
option contracts (16,067,422)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(16,354,500)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM VI DENT DEMOGRAPHIC TRENDS FUND
FS-78
Statement of Changes In Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (287,078) $ (300,500)
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (14,395,560) (19,619,786)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (1,671,862) 4,534,865
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (16,354,500) (15,385,421)
==========================================================================================
Share transactions-net:
Series I 521,251 13,305,828
------------------------------------------------------------------------------------------
Series II 11,299,776 3,558,308
==========================================================================================
Net increase (decrease) in net assets (4,533,473) 1,478,715
==========================================================================================
NET ASSETS:
Beginning of year 42,778,303 41,299,588
==========================================================================================
End of year $ 38,244,830 $ 42,778,303
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 78,936,119 $ 67,407,808
------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (16,242) (12,478)
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (40,312,092) (25,925,934)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and option contracts (362,955) 1,308,907
==========================================================================================
$ 38,244,830 $ 42,778,303
__________________________________________________________________________________________
==========================================================================================
|
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-79
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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
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. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
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.
I. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees AIM VI DENT DEMOGRAPHIC TRENDS FUND
FS-80
and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. AIM has agreed to waive advisory fees of Series I and Series II shares to the extent necessary to limit the expenses (excluding Rule 12b-1 plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of each Series to 1.30%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $50,928.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $146,671, of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $12,893 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $12,599 after plan fees reimbursed by AIM Distributors of $8,399.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,704 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, 2002, the Fund received reductions in custodian fees of $108 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $108.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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, 2002 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-----------------------------------------------------------
Beginning of year -- $ --
-----------------------------------------------------------
Written 1,759 269,970
-----------------------------------------------------------
Closed (1,498) (213,871)
-----------------------------------------------------------
Exercised (150) (36,405)
-----------------------------------------------------------
Expired (70) (13,981)
===========================================================
End of year 41 $ 5,713
___________________________________________________________
===========================================================
|
Open call option contracts written at December 31, 2002 were as follows:
DECEMBER 31,
CONTRACT STRIKE NUMBER OF PREMIUMS 2002 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
--------------------------------------------------------------------------------------
Whole Foods
Market, Inc. Jan-03 $55 41 $5,713 $2,153 $3,560
______________________________________________________________________________________
======================================================================================
|
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-81
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
There were no ordinary income or long-term capital gain distributions paid during the years ended December 31, 2002 and 2001.
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (1,852,749)
-------------------------------------------------------------
Temporary book/tax differences (16,242)
-------------------------------------------------------------
Capital loss carryforward (37,729,259)
-------------------------------------------------------------
Post-October capital loss deferral (1,093,039)
-------------------------------------------------------------
Shares of beneficial interest 78,936,119
=============================================================
$ 38,244,830
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales. The tax-basis unrealized appreciation (depreciation) on investments amount includes appreciation on options written of $3,560.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
--------------------------------
December 31, 2008 $ 3,120,883
--------------------------------
December 31, 2009 21,006,614
--------------------------------
December 31, 2010 13,601,762
================================
$37,729,259
________________________________
================================
|
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, 2002 was $93,096,752 and $80,638,002, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,696,131 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (3,552,440) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(1,856,309) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $40,878,105. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of net operating loss, foreign currency transactions and other items on December 31, 2002, undistributed net investment income (loss) was increased by $283,314, undistributed net realized gains (losses) increased by $9,402 and shares of beneficial interest decreased by $292,716. This reclassification had no effect on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------------
Sold:
Series I 2,894,499 $ 13,398,396 3,450,817 $22,216,215
---------------------------------------------------------------------------------------------------------------------
Series II* 3,565,338 16,584,380 652,411 3,648,439
=====================================================================================================================
Reacquired:
Series I (2,862,278) (12,877,145) (1,465,801) (8,910,387)
---------------------------------------------------------------------------------------------------------------------
Series II* (1,162,675) (5,284,604) (16,286) (90,131)
=====================================================================================================================
2,434,884 $ 11,821,027 2,621,141 $16,864,136
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
* Series II shares commenced sales on November 7, 2001.
AIM VI DENT DEMOGRAPHIC TRENDS FUND
FS-82
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
------------------------------------------------------------------
DECEMBER 29, 1999
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED)
------------------------------------- TO DECEMBER 31,
2002 2001 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.59 $ 8.21 $ 10.00 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.05)(a) (0.07)(a) 0.00
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.77) (2.57) (1.72) 0.00
=================================================================================================================================
Total from investment operations (1.80) (2.62) (1.79) 0.00
=================================================================================================================================
Net asset value, end of period $ 3.79 $ 5.59 $ 8.21 $10.00
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (32.20)% (31.91)% (17.90)% 0.00%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $26,747 $39,226 $41,300 $1,000
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(c) 1.38% 1.40% 1.40%(d)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.43%(c) 1.44% 1.63% 12.58%(d)
=================================================================================================================================
Ratio of net investment income (loss) to average net assets (0.67)%(c) (0.79)% (0.69)% 2.96%(d)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 208% 144% 92% --
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $32,315,602.
(d) Annualized.
SERIES II
-----------------------------------------
NOVEMBER 7, 2001
YEAR ENDED (DATE SALES COMMENCED)
DECEMBER 31, TO DECEMBER 31,
2002 2001
---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.58 $ 5.33
---------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.01)(a)
---------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.76) 0.26
=========================================================================================================
Total from investment operations (1.80) 0.25
=========================================================================================================
Net asset value, end of period $ 3.78 $ 5.58
_________________________________________________________________________________________________________
=========================================================================================================
Total return(b) (32.26)% 4.69%
_________________________________________________________________________________________________________
=========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,498 $3,552
_________________________________________________________________________________________________________
=========================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.45%(c) 1.45%(d)
---------------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.68%(c) 1.61%(d)
=========================================================================================================
Ratio of net investment income (loss) to average net assets (0.82)%(c) (0.85)%(d)
_________________________________________________________________________________________________________
=========================================================================================================
Portfolio turnover rate 208% 144%
_________________________________________________________________________________________________________
=========================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $8,399,195.
(d) Annualized.
AIM V.I. DENT DEMOGRAPHIC TRENDS FUND
FS-83
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, 2002, 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 years or periods in the five year 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, 2002 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. Diversified Income Fund, as of December 31, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. DIVERSIFIED INCOME FUND
FS-84
Schedule of Investments
December 31, 2002
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
U.S. DOLLAR DENOMINATED BONDS & NOTES-67.81%
Aerospace & Defense-0.71%
Lockheed Martin Corp., Unsec. Gtd. Unsub.
Notes,
7.25%, 05/15/06 $ 225,000 $ 254,302
-----------------------------------------------------------------------
Raytheon Co., Notes,
6.75%, 08/15/07 225,000 249,359
=======================================================================
503,661
=======================================================================
Agricultural Products-0.37%
Archer-Daniels-Midland Co., Unsec. Unsub.
Deb.,
6.95%, 12/15/97 240,000 261,770
=======================================================================
Apparel Retail-0.41%
Big 5 Corp.-Series B, Sr. Unsec. Notes,
10.88%, 11/15/07 200,000 209,000
-----------------------------------------------------------------------
Gap, Inc. (The), Unsec. Unsub. Notes,
9.90%, 12/15/05 75,000 79,500
=======================================================================
288,500
=======================================================================
Automobile Manufacturers-0.98%
DaimlerChrysler N.A. Holding Corp.-Series D,
Gtd. Medium Term Notes, 3.40%, 12/15/04 150,000 151,953
-----------------------------------------------------------------------
General Motors Corp., Unsec. Deb.,
8.80%, 03/01/21 500,000 539,870
=======================================================================
691,823
=======================================================================
Banks-8.91%
African Development Bank (Luxembourg), Sr.
Unsec. Unsub. Yankee Notes, 3.25%, 07/29/05 225,000 231,473
-----------------------------------------------------------------------
Bank One Corp., Sr. Unsec. Unsub. Notes,
7.63%, 08/01/05 275,000 309,380
-----------------------------------------------------------------------
Bank United-Series A, Medium Term Notes,
8.00%, 03/15/09 300,000 349,233
-----------------------------------------------------------------------
Barclays O/S Investment Co. (Netherlands),
Unsec. Gtd. Unsub. Floating Rate Yankee
Notes,
1.63%, 05/14/03 500,000 422,937
-----------------------------------------------------------------------
BB&T Corp., RAPS, Sub. Notes,
6.38%, 06/30/05 300,000 325,872
-----------------------------------------------------------------------
Chase Manhattan Corp., Sub. Deb.,
7.88%, 07/15/06 125,000 142,255
-----------------------------------------------------------------------
Citicorp, Jr. Unsec. Sub. Notes,
6.38%, 01/15/06 200,000 216,958
-----------------------------------------------------------------------
Dresdner Funding Trust I, Bonds,
8.15%, 06/30/31 (Acquired 05/09/02; Cost
$318,291)(a) 300,000 302,892
-----------------------------------------------------------------------
European Investment Bank (Luxembourg), Euro
Notes, 4.63%, 03/01/07 200,000 214,576
-----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Banks-(Continued)
KeyBank N.A., Sr. Notes, 4.10%, 06/30/05 $ 210,000 $ 217,619
-----------------------------------------------------------------------
Lloyds Bank PLC (United Kingdom), Unsec. Sub.
Floating Rate Yankee Notes, 1.69%, 06/29/49 180,000 145,774
-----------------------------------------------------------------------
NBD Bank N.A. Michigan, Unsec. Putable Sub.
Deb.,
8.25%, 11/01/04 325,000 411,320
-----------------------------------------------------------------------
Santander Financial Issuances (Cayman
Islands), Unsec. Gtd. Sub. Yankee Notes,
7.00%, 04/01/06 100,000 106,921
-----------------------------------------------------------------------
St. Paul Bancorp. Inc., Sr. Unsec. Unsub.
Notes,
7.13%, 02/15/04 245,000 257,500
-----------------------------------------------------------------------
U.S. Bank N.A., Sub. Notes,
6.30%, 02/04/14 400,000 453,108
-----------------------------------------------------------------------
UBS Preferred Funding Trust I, Gtd. Bonds,
8.62%, 10/29/49 240,000 287,338
-----------------------------------------------------------------------
Union Planters Bank N.A., Unsec. Putable Sub.
Notes,
6.50%, 03/15/08 350,000 392,784
-----------------------------------------------------------------------
Wachovia Corp., Unsec. Putable Sub. Deb.,
6.55%, 10/15/05 100,000 109,077
-----------------------------------------------------------------------
7.50%, 04/15/05 800,000 964,960
-----------------------------------------------------------------------
Washington Mutual, Inc., Jr. Unsec. Sub.
Notes,
8.25%, 04/01/10 375,000 446,250
=======================================================================
6,308,227
=======================================================================
Brewers-0.36%
Anheuser-Busch Cos., Inc., Sr. Unsec. Deb.,
6.50%, 02/01/43 225,000 250,911
=======================================================================
Broadcasting & Cable TV-7.60%
Adelphia Communications Corp., Sr. Unsec.
Notes,
10.88%, 10/01/10(b) 350,000 135,625
-----------------------------------------------------------------------
British Sky Broadcasting Group PLC (United
Kingdom), Unsec. Gtd. Yankee Notes,
7.30%, 10/15/06 400,000 419,528
-----------------------------------------------------------------------
Charter Communications Holdings, LLC/Charter
Communications Holdings Capital Corp.,
Sr. Unsec. Sub. Notes, 10.75%, 10/01/09 145,000 65,975
-----------------------------------------------------------------------
CSC Holdings Inc.,
Sr. Unsec. Deb.,
7.88%, 02/15/18 500,000 447,500
-----------------------------------------------------------------------
Sr. Unsec. Notes,
7.25%, 07/15/08 900,000 843,750
-----------------------------------------------------------------------
7.88%, 12/15/07 1,000,000 970,000
-----------------------------------------------------------------------
Jones Intercable, Inc., Sr. Unsec. Notes,
8.88%, 04/01/07 125,000 133,502
-----------------------------------------------------------------------
Knology, Inc., Sr. Unsec. Notes, 12.00%,
11/30/09 (Acquired 01/06/98; Cost
$261,023)(a) 152,000 76,380
-----------------------------------------------------------------------
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-85
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Broadcasting & Cable TV-(Continued)
Lenfest Communications, Inc., Sr. Unsec. Sub.
Notes,
8.25%, 02/15/08 $ 800,000 $ 838,000
-----------------------------------------------------------------------
TCI Communications, Inc., Sr. Unsec. Deb.,
7.88%, 02/15/26 150,000 153,603
-----------------------------------------------------------------------
Time Warner Inc.,
Unsec. Deb., 9.15%, 02/01/23 600,000 684,672
-----------------------------------------------------------------------
Unsec. Notes, 7.75%, 06/15/05 150,000 159,771
-----------------------------------------------------------------------
Turner Broadcasting System, Inc., Sr. Notes,
8.38%, 07/01/13 400,000 447,212
=======================================================================
5,375,518
=======================================================================
Casinos & Gambling-0.69%
Boyd Gaming Corp., Sr. Unsec. Sub. Notes,
8.75%, 04/15/12 155,000 163,525
-----------------------------------------------------------------------
Mohegan Tribal Gaming Authority, Sr. Unsec.
Gtd. Sub. Notes, 8.00%, 04/01/12 200,000 210,500
-----------------------------------------------------------------------
Park Place Entertainment Corp., Sr. Unsec.
Notes,
7.50%, 09/01/09 110,000 112,750
=======================================================================
486,775
=======================================================================
Computer Hardware-0.71%
International Business Machines Corp., Deb.,
8.38%, 11/01/19 400,000 502,420
=======================================================================
Construction Materials-0.27%
MMI Products, Inc.-Series B, Sr. Unsec. Sub.
Notes,
11.25%, 04/15/07 210,000 194,250
=======================================================================
Consumer Finance-3.99%
CitiFinancial Credit Co.,
Notes, 6.63%, 06/01/15 250,000 283,575
-----------------------------------------------------------------------
Unsec. Notes, 6.75%, 07/01/07 150,000 169,029
-----------------------------------------------------------------------
Countrywide Home Loans, Inc.,
Unsec. Gtd. Notes, 6.85%, 06/15/04 100,000 106,243
-----------------------------------------------------------------------
Series K, Medium Term Notes, 3.50%,
12/19/05 125,000 125,769
-----------------------------------------------------------------------
Ford Motor Credit Co.,
Notes, 7.88%, 06/15/10 200,000 202,022
-----------------------------------------------------------------------
Unsec. GLOBALS Notes, 7.38%, 10/28/09 200,000 197,184
-----------------------------------------------------------------------
Unsec. Notes,
2.08%, 03/17/03 200,000 199,462
-----------------------------------------------------------------------
6.88%, 02/01/06 235,000 236,048
-----------------------------------------------------------------------
General Motors Acceptance Corp.,
Bonds, 6.15%, 04/05/07 125,000 126,869
-----------------------------------------------------------------------
Medium Term Notes,
5.25%, 05/16/05 230,000 231,414
-----------------------------------------------------------------------
6.38%, 01/30/04 250,000 257,710
-----------------------------------------------------------------------
Notes, 6.85%, 06/17/04 200,000 207,974
-----------------------------------------------------------------------
Unsec. Unsub. Notes, 7.63%, 06/15/04 125,000 131,075
-----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Consumer Finance-(Continued)
Household Finance Corp., Sr. Unsec. Notes,
6.50%, 01/24/06 $ 125,000 $ 132,009
-----------------------------------------------------------------------
8.00%, 05/09/05 200,000 217,514
=======================================================================
2,823,897
=======================================================================
Distillers & Vintners-0.58%
Constellation Brands, Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 8.13%, 01/15/12 130,000 135,200
-----------------------------------------------------------------------
Diageo PLC, Sr. Unsec. Gtd. Putable Notes,
7.45%, 04/15/05 225,000 276,163
=======================================================================
411,363
=======================================================================
Diversified Chemicals-0.13%
Equistar Chemicals LP/Equistar Funding Corp.,
Sr. Unsec. Gtd. Notes, 10.13%, 09/01/08 100,000 91,500
=======================================================================
Diversified Commercial Services-0.23%
United Rentals North America Inc., Sr. Notes,
10.75%, 04/15/08 (Acquired 12/17/02;
Cost $160,124)(a) 165,000 164,175
=======================================================================
Diversified Financial Services-8.29%
American General Finance Corp., Sr. Notes,
6.75%, 11/15/04 225,000 242,352
-----------------------------------------------------------------------
Associates Corp. of North America, Sr. Notes,
5.80%, 04/20/04 150,000 157,741
-----------------------------------------------------------------------
Auburn Hills Trust, Unsec. Gtd. Deb.,
12.38%, 05/01/20 450,000 685,179
-----------------------------------------------------------------------
CIT Group Inc.,
Sr. Medium Term Floating Rate Notes, 2.67%,
11/25/03 140,000 140,090
-----------------------------------------------------------------------
Sr. Notes, 7.13%, 10/15/04 75,000 78,993
-----------------------------------------------------------------------
Citigroup Capital II, Jr. Gtd. Sub. Bonds,
7.75%, 12/01/36 350,000 376,568
-----------------------------------------------------------------------
Citigroup Inc.,
Sr. Unsec. Notes, 4.13%, 06/30/05 125,000 130,590
-----------------------------------------------------------------------
Unsec. Sub. Notes, 6.63%, 06/15/32 550,000 597,036
-----------------------------------------------------------------------
Fidelity Investments, Bonds,
7.57%, 06/15/29 (Acquired
04/10/01-05/01/02; Cost $572,306)(a) 545,000 651,733
-----------------------------------------------------------------------
General Electric Capital Corp.-Series A,
Medium Term Notes,
5.00%, 06/15/07 125,000 132,677
-----------------------------------------------------------------------
6.80%, 11/01/05 75,000 83,363
-----------------------------------------------------------------------
Heller Financial, Inc.,
Sr. Unsec. Notes, 6.38%, 03/15/06 125,000 137,454
-----------------------------------------------------------------------
Unsec. Notes, 7.38%, 11/01/09 200,000 231,456
-----------------------------------------------------------------------
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-86
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Diversified Financial Services-(Continued)
John Hancock Global Funding II,
Notes, 6.50%, 03/01/11 (Acquired 07/24/02;
Cost $210,888)(a) $ 200,000 $ 215,064
-----------------------------------------------------------------------
Notes, 5.00%, 07/27/07 (Acquired 06/12/02;
Cost $224,876)(a) 225,000 235,359
-----------------------------------------------------------------------
Lehman Brothers Holdings Inc.,
Sr. Notes, 8.75%, 03/15/05 100,000 112,855
-----------------------------------------------------------------------
Series E, Medium Term Disc. Notes,
9.94%, 02/10/28(c) 1,300,000 184,574
-----------------------------------------------------------------------
Sr. Sub. Deb., 11.63%, 05/15/05 100,000 118,925
-----------------------------------------------------------------------
Morgan Stanley, Unsec. Notes,
6.30%, 01/15/06 200,000 216,950
-----------------------------------------------------------------------
Salomon Smith Barney Holdings Inc., Unsec.
Notes, 7.13%, 10/01/06 550,000 617,881
-----------------------------------------------------------------------
Swiss Bank Corp.-NY, Sub. Notes, 7.38%,
06/15/17 180,000 216,373
-----------------------------------------------------------------------
Washington Mutual Financial Corp., Sr. Unsec.
Notes, 8.25%, 06/15/05 100,000 113,328
-----------------------------------------------------------------------
Wells Fargo Financial, Inc., Notes, 6.13%,
02/15/06 175,000 190,501
=======================================================================
5,867,042
=======================================================================
Diversified Metals & Mining-0.56%
Rio Algom Ltd. (Canada), Unsec. Yankee Deb.,
7.05%, 11/01/05 370,000 398,734
=======================================================================
Electric Utilities-6.00%
AES Corp. (The), Sec. Notes, 10.00%, 07/15/05
(Acquired 12/13/02; Cost $230,932)(a) 245,000 233,975
-----------------------------------------------------------------------
Calpine Canada Energy Finance ULC (Canada),
Sr. Unsec. Gtd. Yankee Notes, 8.50%,
05/01/08 230,000 104,650
-----------------------------------------------------------------------
Cleveland Electric Illuminating Co. (The),
First Mortgage Bonds, 6.86%, 10/01/08 270,000 285,722
-----------------------------------------------------------------------
Duke Energy Corp., Bonds, 6.45%, 10/15/32 150,000 148,689
-----------------------------------------------------------------------
El Paso Electric Co.
Series D, Sr. Sec. First Mortgage Bonds,
8.90%, 02/01/06 400,000 400,968
-----------------------------------------------------------------------
Series E, Sr. Sec. First Mortgage Bonds,
9.40%, 05/01/11 150,000 150,100
-----------------------------------------------------------------------
Hydro-Quebec (Canada)
Gtd. Floating Rate Notes, 1.94%, 09/29/49 330,000 292,963
-----------------------------------------------------------------------
Gtd. Yankee Bonds, 9.40%, 02/01/21(d) 275,000 393,341
-----------------------------------------------------------------------
Mission Energy Holding Co., Sr. Sec. Notes,
13.50%, 07/15/08 150,000 36,750
-----------------------------------------------------------------------
Niagara Mohawk Power Corp.,
Sec. First Mortgage Bonds, 7.75%,
05/15/06(d) 500,000 563,140
-----------------------------------------------------------------------
Series H, Sr. Unsec. Disc. Notes, 8.50%,
07/01/10(e) 900,000 908,019
-----------------------------------------------------------------------
Public Service Company of New Mexico-Series
A, Sr. Unsec. Notes, 7.10%, 08/01/05 140,000 144,325
-----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Electric Utilities-(Continued)
Texas-New Mexico Power Co., Sr. Unsec. Notes,
6.25%, 01/15/09 $ 615,000 $ 584,342
=======================================================================
4,246,984
=======================================================================
Environmental Services-0.47%
Browning-Ferris Industries, Inc., Deb.,
9.25%, 05/01/21 350,000 334,250
=======================================================================
Food Distributors-0.20%
Roundy's, Inc. Sr. Sub. Notes, 8.88%,
06/15/12 (Acquired 12/12/02; Cost
$139,300)(a) 140,000 138,950
=======================================================================
Forest Products-0.12%
Louisiana-Pacific Corp., Sr. Unsec. Notes,
8.50%, 08/15/05 85,000 87,975
=======================================================================
Gas Utilities-0.75%
Kinder Morgan, Inc., Sr. Unsec. Notes, 6.80%,
03/01/08 375,000 409,380
-----------------------------------------------------------------------
Tennessee Gas Pipeline Co., Unsec. Deb.,
7.63%, 04/01/37 150,000 123,000
=======================================================================
532,380
=======================================================================
General Merchandise Stores-0.22%
Wal-Mart Stores, Inc., Unsec. Deb., 8.50%,
09/15/24 140,000 158,862
=======================================================================
Health Care Facilities-0.35%
Hanger Orthopedic Group, Inc., Sr. Unsec.
Gtd. Notes, 10.38%, 02/15/09 240,000 250,800
=======================================================================
Homebuilding-0.52%
K Hovnanian Enterprises, Inc., Sr. Unsec.
Gtd. Notes, 10.50%, 10/01/07 210,000 226,800
-----------------------------------------------------------------------
WCI Communities, Inc., Sr. Unsec. Gtd. Sub.
Notes, 9.13%, 05/01/12 155,000 140,275
=======================================================================
367,075
=======================================================================
Industrial Machinery-0.29%
Pall Corp., Notes, 6.00%, 08/01/12 (Acquired
08/01/02; Cost $199,898)(a) 200,000 208,408
=======================================================================
Integrated Oil & Gas-3.36%
BP Canada Finance Co. (Canada), Yankee Bonds,
3.38%, 10/31/07 500,000 505,675
-----------------------------------------------------------------------
Conoco Inc., Sr. Unsec. Notes, 5.90%,
04/15/04 100,000 105,267
-----------------------------------------------------------------------
Husky Oil Ltd. (Canada),
Sr. Unsec. Yankee Notes, 7.13%, 11/15/06 300,000 333,429
-----------------------------------------------------------------------
Yankee Bonds, 8.90%, 08/15/28 340,000 376,056
-----------------------------------------------------------------------
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-87
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Integrated Oil & Gas-(Continued)
Occidental Petroleum Corp.,
Sr. Putable Deb., 9.25%, 08/01/04 $ 500,000 $ 657,435
-----------------------------------------------------------------------
Sr. Unsec. Notes,
6.50%, 04/01/05 100,000 108,110
-----------------------------------------------------------------------
7.38%, 11/15/08 250,000 291,707
=======================================================================
2,377,679
=======================================================================
Integrated Telecommunication Services-2.07%
GTE Hawaiian Telephone Co., Inc.-Series A,
Unsec. Deb., 7.00%, 02/01/06 100,000 107,799
-----------------------------------------------------------------------
Sprint Capital Corp.,
Deb., 9.00%, 10/15/19 320,000 289,200
-----------------------------------------------------------------------
Gtd. Notes, 5.88%, 05/01/04 150,000 149,437
-----------------------------------------------------------------------
Sr. Unsec. Gtd. Notes,
5.70%, 11/15/03 175,000 174,344
-----------------------------------------------------------------------
6.00%, 01/15/07 200,000 189,250
-----------------------------------------------------------------------
Sr. Unsec. Unsub. Gtd. Notes, 6.13%,
11/15/08 300,000 276,375
-----------------------------------------------------------------------
Unsec. Gtd. Notes, 8.75%, 03/15/32 150,000 143,812
-----------------------------------------------------------------------
Verizon Global Funding Corp., Sr. Unsec.
Notes, 6.13%, 06/15/07 125,000 137,482
=======================================================================
1,467,699
=======================================================================
Leisure Facilities-0.09%
Hilton Hotels Corp., Sr. Unsec. Notes, 7.63%,
12/01/12 60,000 60,150
=======================================================================
Life & Health Insurance-0.87%
American General Corp., Unsec. Notes, 7.50%,
08/11/10 200,000 234,776
-----------------------------------------------------------------------
Americo Life, Inc., Sr. Sub. Notes, 9.25%,
06/01/05 75,000 75,000
-----------------------------------------------------------------------
Lincoln National Corp., Unsec. Deb., 9.13%,
10/01/24 70,000 79,677
-----------------------------------------------------------------------
Torchmark Corp., Notes, 7.88%, 05/15/23 200,000 223,868
=======================================================================
613,321
=======================================================================
Multi-Line Insurance-0.34%
AIG SunAmerica Global Financing IX, Bonds,
6.90%, 03/15/32 (Acquired 07/31/02; Cost
$219,398)(a) 210,000 240,765
=======================================================================
Oil & Gas Drilling-1.00%
Transocean Inc., Unsec. Notes, 6.95%,
04/15/08 620,000 709,646
=======================================================================
Oil & Gas Equipment & Services-0.74%
Smith International, Inc., Notes, 6.75%,
02/15/11 500,000 521,595
=======================================================================
Oil & Gas Exploration & Production-5.96%
Amerada Hess Corp., Unsec. Notes,
5.30%, 08/15/04 200,000 208,860
-----------------------------------------------------------------------
7.30%, 08/15/31 125,000 136,049
-----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Oil & Gas Exploration & Production-(Continued)
Anadarko Petroleum Corp., Unsec. Putable
Deb., 7.73%, 09/15/26 $ 200,000 $ 237,480
-----------------------------------------------------------------------
Burlington Resources Finance Co. (Canada),
Sr. Unsec. Gtd. Yankee Notes, 7.40%,
12/01/31 175,000 201,497
-----------------------------------------------------------------------
Canadian Oil Sands Ltd. (Canada), Sr. Yankee
Notes, 7.90%, 09/01/21 (Acquired
08/17/01-07/31/02; Cost $275,409)(a) 275,000 290,208
-----------------------------------------------------------------------
Chesapeake Energy Corp., Sr. Unsec. Gtd.
Notes, 8.38%, 11/01/08 160,000 166,800
-----------------------------------------------------------------------
Devon Energy Corp., Sr. Unsec. Deb., 7.95%,
04/15/32 100,000 120,216
-----------------------------------------------------------------------
Devon Financing Corp. ULC, Unsec. Gtd. Unsub.
Deb., 7.88%, 09/30/31 280,000 338,587
-----------------------------------------------------------------------
Louis Dreyfus Natural Gas Corp., Unsec.
Notes, 6.88%, 12/01/07 500,000 560,595
-----------------------------------------------------------------------
Newfield Exploration Co., Sr. Unsec. Unsub.
Notes, 7.63%, 03/01/11 765,000 810,900
-----------------------------------------------------------------------
Noble Energy, Inc., Sr. Unsec. Deb., 7.25%,
08/01/97 890,000 859,633
-----------------------------------------------------------------------
Union Pacific Resources Group Inc., Unsec.
Notes, 6.75%, 05/15/08 250,000 287,420
=======================================================================
4,218,245
=======================================================================
Oil & Gas Refining, Marketing &
Transportation-1.41%
Petroleos Mexicanos (Mexico),
Sr. Unsec. Gtd. Yankee Bonds, 9.38%,
12/02/08 325,000 375,781
-----------------------------------------------------------------------
Series P, Unsec. Putable Unsub. Yankee
Bonds,
9.50%, 03/15/06 550,000 621,891
=======================================================================
997,672
=======================================================================
Packaged Foods & Meats-0.11%
Dole Food Co., Inc., Sr. Unsec. Notes, 7.25%,
05/01/09 85,000 80,963
=======================================================================
Paper Products-0.19%
Appleton Papers Inc.-Series B, Sr. Unsec.
Gtd. Sub. Notes, 12.50%, 12/15/08 120,000 132,000
=======================================================================
Pharmaceuticals-0.50%
Johnson & Johnson, Unsec. Deb., 8.72%,
11/01/24 300,000 350,676
=======================================================================
Property & Casualty Insurance-0.51%
Allstate Financial Global Funding, Notes,
6.50%, 06/14/11 (Acquired 06/07/01; Cost
$324,503)(a) 325,000 358,270
=======================================================================
Publishing-1.50%
News America Holdings, Sr. Unsec. Gtd. Deb.,
8.00%, 10/17/16 750,000 852,983
-----------------------------------------------------------------------
News America Inc., Sr. Putable Deb., 6.75%,
01/09/10 150,000 154,214
-----------------------------------------------------------------------
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-88
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
Publishing-(Continued)
Tribune Co., Unsec. Conv. Sub. PHONES, 2.00%,
05/15/29 $ 700 $ 52,500
=======================================================================
1,059,697
=======================================================================
Railroads-1.85%
CSX Corp., Sr. Unsec. Putable Deb., 7.25%,
05/01/05 1,000,000 1,105,860
-----------------------------------------------------------------------
Railamerica Transportation Corp., Sr. Unsec.
Gtd. Sub. Notes, 12.88%, 08/15/10 200,000 201,000
=======================================================================
1,306,860
=======================================================================
Real Estate-2.40%
EOP Operating L.P.,
Sr. Unsec. Notes, 7.25%, 02/15/18 80,000 85,891
-----------------------------------------------------------------------
Unsec. Gtd. Notes, 6.75%, 02/15/12 80,000 86,304
-----------------------------------------------------------------------
Unsec. Notes, 6.50%, 01/15/04 125,000 129,476
-----------------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec. Notes,
7.50%, 08/15/07 500,000 525,230
-----------------------------------------------------------------------
Host Marriott L.P.
Series E, Sr. Sec. Gtd. Notes, 8.38%,
02/15/06 125,000 124,375
-----------------------------------------------------------------------
Series I, Unsec. Gtd. Notes, 9.50%,
01/15/07 200,000 204,000
-----------------------------------------------------------------------
iStar Financial Inc., Sr. Unsec. Notes,
8.75%, 08/15/08 100,000 105,500
-----------------------------------------------------------------------
Spieker Properties, Inc., Unsec. Unsub. Deb.,
7.35%, 12/01/17 400,000 435,408
=======================================================================
1,696,184
=======================================================================
Sovereign Debt-0.63%
Export Development Canada (Canada), Yankee
Bonds, 4.00%, 08/01/07 150,000 156,849
-----------------------------------------------------------------------
Region of Lombardy (Italy), Unsec. Yankee
Notes, 5.80%, 10/25/32 275,000 287,051
=======================================================================
443,900
=======================================================================
Specialty Stores-0.20%
CSK Auto, Inc., Sr. Unsec. Gtd. Notes,
12.00%, 06/15/06 130,000 139,750
=======================================================================
Trucking-0.08%
Avis Group Holdings, Inc., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 05/01/09 50,000 54,875
=======================================================================
Wireless Telecommunication Services-0.29%
AT&T Wireless Services Inc., Sr. Unsec.
Unsub. Notes, 8.75%, 03/01/31 210,000 206,588
=======================================================================
Total U.S. Dollar Denominated Bonds &
Notes (Cost $46,583,132) 47,982,785
=======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED BONDS &
NOTES-7.28%(f)
Canada-2.29%
Bell Mobility Cellular Inc. (Wireless
Telecommunication Services), Unsec. Deb.,
6.55%, 06/02/08 CAD 750,000 $ 509,215
-----------------------------------------------------------------------
Canadian Government (Sovereign Debt), Bonds,
6.63%, 10/03/07 NZD 750,000 404,328
-----------------------------------------------------------------------
Rogers Cablesystems Ltd. (Broadcasting &
Cable TV), Sr. Sec. Second Priority Deb.,
9.65%, 01/15/14 CAD 600,000 367,320
-----------------------------------------------------------------------
Westcoast Energy Inc. (Gas Utilities)-Series
V, Unsec. Deb., 6.45%, 12/18/06 CAD 500,000 338,296
=======================================================================
1,619,159
=======================================================================
Germany-2.61%
Bundesrepublik Deutschland (Sovereign Debt)
Series 2002, Bonds, 5.00%, 07/04/12 EUR 900,000 1,004,717
-----------------------------------------------------------------------
Kreditanstalt fuer Wiederaufbau (Banks), Sr.
Unsec. Unsub. Notes., 5.25%, 07/04/12 EUR 750,000 846,350
=======================================================================
1,851,067
=======================================================================
Netherlands-0.41%
Olivetti International Finance N.V.
(Integrated Telecommunication
Services)-Series E, Gtd. Medium Term Euro
Notes, 6.13%, 07/30/09 EUR 270,000 288,363
=======================================================================
United Kingdom-1.97%
British Sky Broadcasting Group PLC
(Broadcasting & Cable TV), Sr. Unsec. Gtd.
Unsub. Euro Bonds, 7.75%, 07/09/09 GBP 270,000 449,356
-----------------------------------------------------------------------
Sutton Bridge Financing Ltd. (Electric
Utilities), Gtd. Euro Bonds, 8.63%,
06/30/22 GBP 437,150 761,333
-----------------------------------------------------------------------
Treasury (Department of) (Sovereign Debt),
Bonds, 7.25%, 12/07/07 GBP 100,000 183,145
=======================================================================
1,393,834
=======================================================================
Total Non-U.S. Dollar Denominated Bonds &
Notes (Cost $4,843,536) 5,152,423
=======================================================================
SHARES
WARRANTS & OTHER EQUITY INTERESTS-0.89%
Broadcasting & Cable TV-0.00%
Knology Inc.-Wts., expiring 10/22/07
(Acquired 03/12/98; Cost $0)(a)(g)(h) 1,000 0
-----------------------------------------------------------------------
Knology, Inc., Series D-Conv. Pfd. (Acquired
03/12/98; Cost $0)(a)(g) 8,627 0
=======================================================================
0
=======================================================================
Railroads-0.00%
Railamerica Inc.-Wts., expiring 08/15/10
(Acquired 10/05/00; Cost $0)(a)(g) 200 1,526
=======================================================================
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-89
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Real Estate Investment Trusts-0.89%
First Republic Capital Corp.-Series A-Pfd.
(Acquired 05/26/99; Cost $600,000)(a) 600 $ 630,000
=======================================================================
Wireless Telecommunication Services-0.00%
NTELOS Inc.-Wts., expiring 08/15/10 (Acquired
11/15/00; Cost $0)(a)(g) 275 3
=======================================================================
Total Warrants & Other Equity Interests
(Cost $600,000) 631,529
=======================================================================
PRINCIPAL
AMOUNT
ASSET BACKED SECURITIES-4.24%
Airlines-1.55%
Air 2 US-Series C, Equipment Trust Ctfs.,
10.13%, 10/01/20 (Acquired 10/28/99; Cost
$536,088)(a) $ 536,088 83,094
-----------------------------------------------------------------------
Continental Airlines, Inc.-
Series 2000-1, Class A-1, Sr. Pass Through
Ctfs., 8.05%, 11/01/20 207,425 178,904
-----------------------------------------------------------------------
Series 2000-2, Class A-1, Sr. Sec. Pass
Through
Ctfs., 7.71%, 04/02/21 161,169 139,008
-----------------------------------------------------------------------
Series 974A, Pass Through Ctfs., 6.90%,
01/02/18 435,430 382,804
-----------------------------------------------------------------------
United Air Lines, Inc.-Series 2000-1, Class
A-2, Pass Through Ctfs., 7.73%, 07/01/10 400,000 315,000
=======================================================================
1,098,810
=======================================================================
Diversified Financial Services-2.29%
Citicorp Lease-Series 1999-1,
Class A1, Pass Through Ctfs., 7.22%,
06/15/05 (Acquired 05/08/02-06/19/02; Cost
$390,421)(a) 368,755 403,935
-----------------------------------------------------------------------
Class A2, Pass Through Ctfs., 8.04%,
12/15/19 (Acquired 06/01/00-08/20/02; Cost
$609,801)(a) 600,000 693,456
-----------------------------------------------------------------------
National Rural Utilities Cooperative Finance
Corp., Sr. Sec. Notes, 6.00%, 05/15/06 250,000 273,202
-----------------------------------------------------------------------
Premium Asset Trust-Series 2001-6, Sec.
Notes, 5.25%, 07/19/04 (Acquired 07/11/01;
Cost $239,683)(a) 240,000 250,557
=======================================================================
1,621,150
=======================================================================
Electric Utilities-0.40%
Beaver Valley II Funding Corp., Sec. SLOBS
Deb., 9.00%, 06/01/17 250,000 278,022
=======================================================================
Total Asset Backed Securities (Cost
$3,431,153) 2,997,982
=======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-7.80%
Federal Home Loan Mortgage Corp.
(FHLMC)-1.41%
Pass Through Ctfs.,
8.50%, 03/01/10 $ 9,250 $ 10,002
-----------------------------------------------------------------------
6.50%, 05/01/16 to 08/01/32 591,981 618,094
-----------------------------------------------------------------------
6.00%, 05/01/17 to 06/01/17 153,387 160,550
-----------------------------------------------------------------------
Pass Through Ctfs.,TBA,
6.00%, 01/01/33 202,000 209,371
=======================================================================
998,017
=======================================================================
Federal National Mortgage Association
(FNMA)-5.41%
Pass Through Ctfs.,
7.00%, 02/01/16 to 09/01/32 478,170 503,867
-----------------------------------------------------------------------
6.50%, 05/01/16 to 11/01/31 542,484 566,923
-----------------------------------------------------------------------
6.00%, 05/01/17 to 07/01/17 144,547 151,303
-----------------------------------------------------------------------
7.50%, 04/01/29 to 05/01/32 651,975 693,047
-----------------------------------------------------------------------
8.00%, 04/01/32 261,504 281,181
-----------------------------------------------------------------------
Pass Through Ctfs.,TBA,
6.00%, 01/01/33(i) 312,000 323,399
-----------------------------------------------------------------------
Unsec. Notes,
6.20%, 06/13/17 250,000 269,287
-----------------------------------------------------------------------
Unsec. Sub. Notes,
6.25%, 02/01/11 600,000 671,790
-----------------------------------------------------------------------
5.25%, 08/01/12 350,000 365,789
=======================================================================
3,826,586
=======================================================================
Government National Mortgage Association
(GNMA)-0.98%
Pass Through Ctfs.,
7.50%, 06/15/23 to 01/15/32 168,648 180,896
-----------------------------------------------------------------------
8.50%, 11/15/24 66,839 73,513
-----------------------------------------------------------------------
7.00%, 07/15/31 to 08/15/31 98,165 104,095
-----------------------------------------------------------------------
6.50%, 11/15/31 to 03/15/32 235,199 247,099
-----------------------------------------------------------------------
6.00%, 12/15/31 to 11/15/32 88,590 92,383
=======================================================================
697,986
=======================================================================
Total U.S. Government Agency Securities
(Cost $5,337,393) 5,522,589
=======================================================================
U.S. TREASURY SECURITIES-9.38%
U.S. Treasury Bills-0.43%
3.25%, 12/31/03 300,000 306,075
=======================================================================
|
AIM V.I. DIVERSIFIED INCOME FUND
FS-90
PRINCIPAL MARKET
AMOUNT VALUE
-----------------------------------------------------------------------
U.S. Treasury Notes-5.15%
4.63%, 05/15/06 $ 700,000 $ 755,188
-----------------------------------------------------------------------
6.13%, 08/15/07 700,000 805,259
-----------------------------------------------------------------------
4.75%, 11/15/08 1,050,000 1,146,568
-----------------------------------------------------------------------
6.50%, 02/15/10 400,000 478,488
-----------------------------------------------------------------------
5.75%, 08/15/10 400,000 460,336
=======================================================================
3,645,839
=======================================================================
U.S. Treasury Bonds-3.80%
7.25%, 05/15/16 1,400,000 1,794,786
-----------------------------------------------------------------------
7.50%, 11/15/16 500,000 654,800
-----------------------------------------------------------------------
6.25%, 08/15/23 200,000 235,194
=======================================================================
2,684,780
=======================================================================
Total U.S. Treasury Securities (Cost
$6,376,494) 6,636,694
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
MONEY MARKET FUNDS-1.69%
STIC Liquid Assets Portfolio(j) 598,301 $ 598,301
-----------------------------------------------------------------------
STIC Prime Portfolio(j) 598,301 598,301
=======================================================================
Total Money Market Funds (Cost
$1,196,602) 1,196,602
=======================================================================
TOTAL INVESTMENTS-99.09% (Cost $68,368,310) 70,120,604
=======================================================================
OTHER ASSETS LESS LIABILITIES-0.91% 645,167
=======================================================================
NET ASSETS-100.00% $70,765,771
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
CAD - Canadian Dollars Conv. - Convertible Ctfs. - Certificates Deb. - Debentures Disc. - Discounted EUR - Euro GBP - British Pound Sterling GLOBALS - Global Landmark Securities Gtd. - Guaranteed Jr. - Junior NZD - New Zealand Dollar Pfd. - Preferred PHONES - Participation Hybrid Option Notes RAPS - Redeemable and Putable Securities Sec. - Secured SLOBS - Secured Lease Obligation Securities Sr. - Senior Sub. - Subordinated TBA - To Be Announced Unsec. - Unsecured Unsub. - Unsubordinated Wts. - Warrants |
Notes to Schedule of Investments:
(a) Securities not registered under the Securities Act of 1933, as amended
(e.g., the security was purchased in a Rule 144A transaction or a Regulation
D transaction); these securities may be resold only pursuant to an exemption
from registration under the 1933 Act. The Fund has no rights to demand
registration of these securities. The aggregate market value of these
securities at 12/31/02 was $5,178,750, which represented 7.32% of the Fund's
net assets. Of these securities, 6.45% of the Fund's net assets are
considered to be illiquid.
(b) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the yield to maturity at issue.
(d) Secured by bond insurance provided by one of the following companies: Ambac
Assurance Corp. or MBIA Insurance Co.
(e) Discounted note at issue. The interest rate represents the coupon rate at
which the note will accrue at a specified future date.
(f) Foreign denominated security. Par value is denominated in currency
indicated.
(g) Non-income producing security 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 and may be considered illiquid.
(i) Security purchased on forward commitment basis. These securities are subject
to dollar roll transactions. See Note 1 Section C.
(j) 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-91
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $68,368,310) $70,120,604
------------------------------------------------------------
Foreign currencies, at value (cost $121,083) 128,454
------------------------------------------------------------
Receivables for:
Fund shares sold 38,179
------------------------------------------------------------
Dividends and interest 1,100,563
------------------------------------------------------------
Investment for deferred compensation plan 33,868
------------------------------------------------------------
Other assets 561
============================================================
Total assets 71,422,229
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 528,126
------------------------------------------------------------
Fund shares reacquired 28,218
------------------------------------------------------------
Deferred compensation plan 33,868
------------------------------------------------------------
Accrued administrative services fees 25,236
------------------------------------------------------------
Accrued distribution fees -- Series II 63
------------------------------------------------------------
Accrued transfer agent fees 3,017
------------------------------------------------------------
Accrued operating expenses 37,930
============================================================
Total liabilities 656,458
============================================================
Net assets applicable to shares outstanding $70,765,771
____________________________________________________________
============================================================
NET ASSETS:
Series I $70,641,578
____________________________________________________________
============================================================
Series II $ 124,193
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 8,210,002
____________________________________________________________
============================================================
Series II 14,469
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 8.60
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 8.58
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Interest $ 5,165,473
-------------------------------------------------------------
Dividends 72,996
-------------------------------------------------------------
Dividends from affiliated money market funds 31,743
=============================================================
Total investment income 5,270,212
=============================================================
EXPENSES:
Advisory fees 446,474
-------------------------------------------------------------
Administrative services fees 157,854
-------------------------------------------------------------
Custodian fees 31,503
-------------------------------------------------------------
Distribution fees -- Series II 81
-------------------------------------------------------------
Transfer agent fees 13,405
-------------------------------------------------------------
Trustees' fees 9,023
-------------------------------------------------------------
Other 38,278
=============================================================
Total expenses 696,618
=============================================================
Less: Fees waived (294)
-------------------------------------------------------------
Expenses paid indirectly (121)
=============================================================
Net expenses 696,203
=============================================================
Net investment income 4,574,009
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
FOREIGN CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (7,652,962)
-------------------------------------------------------------
Foreign currencies 1,764
-------------------------------------------------------------
Foreign currency contracts (52,403)
=============================================================
(7,703,601)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities 4,674,842
-------------------------------------------------------------
Foreign currencies 12,071
-------------------------------------------------------------
Foreign currency contracts (23,122)
=============================================================
4,663,791
=============================================================
Net gain (loss) from investment securities,
foreign currencies and foreign currency
contracts (3,039,810)
=============================================================
Net increase in net assets resulting from
operations $ 1,534,199
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
FS-92
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,574,009 $ 5,827,598
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and foreign currency contracts (7,703,601) (5,485,868)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies and foreign currency
contracts 4,663,791 2,576,613
==========================================================================================
Net increase in net assets resulting from operations 1,534,199 2,918,343
==========================================================================================
Distributions to shareholders from net investment income:
Series I (5,535,504) (5,585,065)
------------------------------------------------------------------------------------------
Series II (9,184) --
------------------------------------------------------------------------------------------
Share transactions-net:
Series I (5,226,934) (1,180,566)
------------------------------------------------------------------------------------------
Series II 128,395 --
==========================================================================================
Net increase (decrease) in net assets (9,109,028) (3,847,288)
==========================================================================================
NET ASSETS:
Beginning of year 79,874,799 83,722,087
==========================================================================================
End of year $ 70,765,771 $ 79,874,799
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 88,024,993 $ 93,666,892
------------------------------------------------------------------------------------------
Undistributed net investment income 4,379,513 5,424,619
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and foreign currency
contracts (23,402,982) (16,317,168)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and foreign currency
contracts 1,764,247 (2,899,544)
==========================================================================================
$ 70,765,771 $ 79,874,799
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
FS-93
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DOLLAR ROLL TRANSACTIONS -- The Fund may engage in dollar roll transactions with respect to mortgage back 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 institutions 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
AIM V.I. DIVERSIFIED INCOME FUND
FS-94
different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal 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. The return earned by the Fund with the proceeds of the dollar roll transaction may not exceed transaction costs. The difference between the selling price and the future repurchase price is recorded as an adjustment to interest income.
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 that 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. The Fund will segregate assets to cover its obligations under dollar roll transactions.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating life insurance companies annually and recorded on ex-dividend date.
E. 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
F. 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
G. 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.
H. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $294.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $157,854 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $8,349 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $81.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,704 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, 2002, the Fund received reductions in custodian fees of $121 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $121.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to
AIM V.I. DIVERSIFIED INCOME FUND
FS-95
the line of credit may borrow on a first come, first served basis. During the year ended December 31, 2002, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
---------------------------------------------------------------
Distribution paid from ordinary
income $5,544,688 $5,585,065
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 4,441,548
-------------------------------------------------------------
Unrealized appreciation -- investments 1,750,176
-------------------------------------------------------------
Temporary book/tax differences (47,964)
-------------------------------------------------------------
Capital loss carryforward (22,429,157)
-------------------------------------------------------------
Post-October capital loss deferral (973,825)
-------------------------------------------------------------
Shares of beneficial interest 88,024,993
=============================================================
$ 70,765,771
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable primarily to the tax treatment of bond premium amortization. The tax-basis unrealized appreciation on investments amount includes appreciation on foreign currencies of $11,953.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
December 31, 2005 $ 972,722
-----------------------------------------------------------
December 31, 2006 1,451,891
-----------------------------------------------------------
December 31, 2007 2,582,661
-----------------------------------------------------------
December 31, 2008 4,437,761
-----------------------------------------------------------
December 31, 2009 6,105,069
-----------------------------------------------------------
December 31, 2010 6,879,053
===========================================================
$22,429,157
___________________________________________________________
===========================================================
|
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, 2002 was $62,149,460 and $69,014,619, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 3,604,637 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,866,414) ============================================================= Net unrealized appreciation of investment securities $ 1,738,223 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $68,382,381. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of expired capital loss carryforward, tax treatment of bond premium amortization, foreign currency transactions and other items on December 31, 2002, undistributed net investment income was decreased by $74,427, undistributed net realized gains increased by $617,787 and shares of beneficial interest decreased by $543,360. This reclassification had no effect on the net assets of the Fund.
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------
Sold:
Series I 1,352,069 $ 12,168,430 1,522,060 $ 14,801,914
----------------------------------------------------------------------------------------------------------------------
Series II* 13,618 121,346 -- --
======================================================================================================================
Issued as reinvestment of dividends:
Series I 655,089 5,535,504 617,134 5,585,065
----------------------------------------------------------------------------------------------------------------------
Series II* 1,090 9,184 -- --
======================================================================================================================
Reacquired:
Series I (2,547,691) (22,930,868) (2,215,322) (21,567,545)
----------------------------------------------------------------------------------------------------------------------
Series II* (239) (2,135) -- --
======================================================================================================================
(526,064) $ (5,098,539) (76,128) $ (1,180,566)
______________________________________________________________________________________________________________________
======================================================================================================================
|
* Series II shares commenced sales on March 14, 2002.
AIM V.I. DIVERSIFIED INCOME FUND
FS-96
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.13 $ 9.49 $ 10.06 $ 10.94 $ 11.29
---------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.55(a) 0.67(a)(b) 0.76(a) 0.64 0.75
---------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.35) (0.35) (0.69) (0.85) (0.35)
===========================================================================================================================
Total from investment operations 0.20 0.32 0.07 (0.21) 0.40
===========================================================================================================================
Less distributions:
Dividends from net investment income (0.73) (0.68) (0.64) (0.67) (0.57)
---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- -- -- (0.18)
===========================================================================================================================
Total distributions (0.73) (0.68) (0.64) (0.67) (0.75)
===========================================================================================================================
Net asset value, end of period $ 8.60 $ 9.13 $ 9.49 $ 10.06 $ 10.94
___________________________________________________________________________________________________________________________
===========================================================================================================================
Total return(c) 2.30% 3.48% 0.80% (1.92)% 3.58%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $70,642 $79,875 $83,722 $99,509 $96,445
___________________________________________________________________________________________________________________________
===========================================================================================================================
Ratio of expenses to average net assets 0.94%(d) 0.93% 0.90% 0.83% 0.77%
===========================================================================================================================
Ratio of net investment income to average net assets 6.15%(d) 6.87%(b) 7.84% 7.20% 6.99%
___________________________________________________________________________________________________________________________
===========================================================================================================================
Portfolio turnover rate 86% 79% 74% 83% 50%
___________________________________________________________________________________________________________________________
===========================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investments
Companies and began amortizing premiums on debt securities. Had the fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.70 and the ratio of net investment income to
average net assets would have been 7.19%. In accordance with the AICPA
Audit Guide for Investment Companies, per share and ratios prior to
January 1, 2001 have not been restated to reflect this change in
presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(d) Ratios are based on average daily net assets of $74,380,010.
SERIES II
--------------
MARCH 14, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
----------------------------------------------------------------------------
Net asset value, beginning of period $ 8.97
----------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.42(a)
----------------------------------------------------------------------------
Net income (losses) on securities (both realized and
unrealized) (0.08)
============================================================================
Total from investment operations 0.34
============================================================================
Less dividends from net investment income (0.73)
============================================================================
Net asset value, end of period $ 8.58
____________________________________________________________________________
============================================================================
Total return(b) 3.90%
____________________________________________________________________________
============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 124
____________________________________________________________________________
============================================================================
Ratio of expenses to average net assets 1.19%(c)
============================================================================
Ratio of net investment income to average net assets 5.90%(c)
____________________________________________________________________________
============================================================================
Portfolio turnover rate 86%
____________________________________________________________________________
============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total return for
period shown.
(c) Ratios are annualized and based on average daily net assets of $40,338.
AIM V.I. DIVERSIFIED 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. Global Utilities Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2002, 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 years or periods in the five year 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, 2002 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, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. GLOBAL UTILITIES FUND
FS-98
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------
DOMESTIC STOCKS-72.13%
Diversified Metals & Mining-1.21%
Peabody Energy Corp. 8,700 $ 254,301
========================================================================
Electric Utilities-44.19%
American Electric Power Co., Inc. 8,000 218,640
------------------------------------------------------------------------
CenterPoint Energy, Inc. 29,100 247,350
------------------------------------------------------------------------
Cinergy Corp. 6,300 212,436
------------------------------------------------------------------------
CMS Energy Corp. 25,300 238,832
------------------------------------------------------------------------
Consolidated Edison, Inc. 9,200 393,944
------------------------------------------------------------------------
Constellation Energy Group, Inc. 12,300 342,186
------------------------------------------------------------------------
Dominion Resources, Inc. 4,000 219,600
------------------------------------------------------------------------
DTE Energy Co. 20,000 928,000
------------------------------------------------------------------------
Edison International(a) 7,200 85,320
------------------------------------------------------------------------
Entergy Corp. 8,800 401,192
------------------------------------------------------------------------
Exelon Corp. 5,200 274,404
------------------------------------------------------------------------
FirstEnergy Corp. 13,000 428,610
------------------------------------------------------------------------
FPL Group, Inc. 17,700 1,064,301
------------------------------------------------------------------------
Northeast Utilities 18,000 273,060
------------------------------------------------------------------------
OGE Energy Corp. 15,000 264,000
------------------------------------------------------------------------
PG&E Corp.(a) 10,200 141,780
------------------------------------------------------------------------
Pinnacle West Capital Corp. 29,800 1,015,882
------------------------------------------------------------------------
PPL Corp. 10,700 371,076
------------------------------------------------------------------------
Progress Energy, Inc. 5,000 216,750
------------------------------------------------------------------------
Public Service Enterprise Group Inc. 8,500 272,850
------------------------------------------------------------------------
Puget Energy, Inc. 13,500 297,675
------------------------------------------------------------------------
Southern Co. (The) 28,300 803,437
------------------------------------------------------------------------
TXU Corp. 11,600 216,688
------------------------------------------------------------------------
Wisconsin Energy Corp. 8,400 211,680
------------------------------------------------------------------------
Xcel Energy, Inc. 14,150 155,650
========================================================================
9,295,343
========================================================================
Gas Utilities-9.95%
KeySpan Corp. 8,000 281,920
------------------------------------------------------------------------
Kinder Morgan, Inc. 5,000 211,350
------------------------------------------------------------------------
NiSource Inc. 40,800 816,000
------------------------------------------------------------------------
Peoples Energy Corp. 6,000 231,900
------------------------------------------------------------------------
Sempra Energy 23,300 551,045
========================================================================
2,092,215
========================================================================
Industrial Conglomerates-0.97%
General Electric Co. 8,400 204,540
========================================================================
Integrated Telecommunication Services-6.93%
BellSouth Corp. 20,200 522,574
------------------------------------------------------------------------
SBC Communications Inc. 10,500 284,655
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Integrated Telecommunication Services-(Continued)
Verizon Communications Inc. 16,786 $ 650,457
========================================================================
1,457,686
========================================================================
Multi-Utilities & Unregulated Power-8.88%
Aquila, Inc.(a) 31,654 56,027
------------------------------------------------------------------------
Duke Energy Corp. 18,344 358,442
------------------------------------------------------------------------
Energy East Corp. 43,500 960,915
------------------------------------------------------------------------
Equitable Resources, Inc. 3,000 105,120
------------------------------------------------------------------------
MDU Resources Group, Inc. 4,100 105,821
------------------------------------------------------------------------
Mirant Corp.(a) 26,064 49,261
------------------------------------------------------------------------
Mirant Trust I-Series A, $3.13 Conv. Pfd. 3,200 53,120
------------------------------------------------------------------------
ONEOK, Inc. 5,500 105,600
------------------------------------------------------------------------
Reliant Resources, Inc.(a) 22,948 73,434
========================================================================
1,867,740
========================================================================
Total Domestic Stocks (Cost $17,599,412) 15,171,825
========================================================================
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-17.80%
Brazil-0.67%
Companhia Paranaense de Energia-Copel-ADR
(Electric Utilities) 50,200 141,062
========================================================================
France-2.11%
Suez S.A. (Multi-Utilities & Unregulated
Power) 19,000 329,895
------------------------------------------------------------------------
Total Fina Elf S.A. (Integrated Oil & Gas) 800 114,297
========================================================================
444,192
========================================================================
Germany-1.52%
E.ON A.G. (Electric Utilities) 7,920 319,674
========================================================================
Greece-0.80%
Public Power Corp.-GDR (Electric Utilities)
(Acquired 12/10/01-12/27/02; Cost
$140,316)(b)(c) 12,100 167,666
========================================================================
Italy-3.29%
ACEA S.p.A. (Multi-Utilities & Unregulated
Power) (Acquired 07/12/99-09/07/01; Cost
$453,977)(b) 50,000 221,497
------------------------------------------------------------------------
Snam Rete Gas S.p.A. (Gas Utilities)
(Acquired 12/03/01-12/27/02; Cost
$89,330)(b) 33,900 115,656
------------------------------------------------------------------------
Telecom Italia S.p.A. (Integrated
Telecommunication Services) 70,400 355,471
========================================================================
692,624
========================================================================
Spain-3.39%
Endesa, S.A. (Electric Utilities) 35,100 410,835
------------------------------------------------------------------------
Telefonica, S.A. (Integrated
Telecommunication Services)(a) 33,705 301,807
========================================================================
712,642
========================================================================
United Kingdom-6.02%
Kelda Group PLC (Water Utilities) 76,474 522,610
------------------------------------------------------------------------
|
AIM V.I. GLOBAL UTILITIES FUND
FS-99
MARKET
SHARES VALUE
------------------------------------------------------------------------
United Kingdom-(Continued)
National Grid Transco PLC (Multi-Utilities &
Unregulated Power) 26,813 $ 197,280
------------------------------------------------------------------------
United Utilities PLC (Multi-Utilities &
Unregulated Power) 21,600 217,238
------------------------------------------------------------------------
Vodafone Group PLC (Wireless
Telecommunication Services) 150,394 274,515
------------------------------------------------------------------------
Vodafone Group PLC-ADR (Wireless
Telecommunication Services) 3,000 54,360
========================================================================
1,266,003
========================================================================
Total Foreign Stocks & Other Equity
Interests (Cost $5,098,958) 3,743,863
========================================================================
PRINCIPAL
AMOUNT
U.S. DOLLAR DENOMINATED BONDS & NOTES-1.84%
Broadcasting & Cable TV-0.49%
TCI Communications, Inc., Sr. Unsec. Deb.,
7.88%, 02/15/26 $ 100,000 102,402
========================================================================
Computer Hardware-0.13%
Candescent Technologies Corp., Sr. Conv.
Unsec. Gtd. Sub. Deb., 8.00%, 05/01/03
(Acquired 04/17/98-04/19/01; Cost
$440,425)(b)(c)(d) 527,000 27,931
========================================================================
Electric Utilities-0.36%
Arizona Public Service Co., SLOBS, 8.00%,
12/30/15 75,000 76,562
========================================================================
Integrated Telecommunication Services-0.86%
AT&T Broadband Corp., Unsec. Gtd. Notes,
8.38%, 03/15/13 $ 159,000 $ 180,543
========================================================================
Total U.S. Dollar Denominated Bonds &
Notes (Cost $777,460) 387,438
========================================================================
|
PRINCIPAL MARKET
AMOUNT(E) VALUE
------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED BONDS-2.38%
United Kingdom-2.38%
National Grid Co. PLC (Multi-Utilities &
Unregulated Power), Conv. Bonds, 4.25%,
02/17/08 (Acquired 02/05/98; Cost
$397,800)(b) GBP 240,000 $ 441,146
------------------------------------------------------------------------
National Grid Co. PLC-Series RG
(Multi-Utilities & Unregulated Power),
Conv. Bonds 4.25%, 02/17/08 GBP 32,000 58,820
========================================================================
Total Non-U.S. Dollar Denominated Bonds
(Cost $453,924) 499,966
========================================================================
SHARES
MONEY MARKET FUNDS-7.49%
STIC Liquid Assets Portfolio(f) 788,445 788,445
------------------------------------------------------------------------
STIC Prime Portfolio(f) 788,445 788,445
========================================================================
Total Money Market Funds (Cost
$1,576,890) 1,576,890
========================================================================
TOTAL INVESTMENTS-101.64% (Cost $25,506,644) 21,379,982
========================================================================
OTHER ASSETS LESS LIABILITIES-(1.64%) (345,483)
========================================================================
NET ASSETS-100.00% $21,034,499
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Conv. - Convertible Deb. - Debentures GBP - British Pound Sterling GDR - Global Depositary Receipt Gtd. - Guaranteed Pfd. - Preferred SLOBS - Secured Lease Obligation Securities Sr. - Senior Sub. - Subordinated Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security not registered under the Securities Act of 1933, as amended (e.g.,
the security was purchased in a Rule 144A transaction or a Regulation D
transaction); the security may be resold only pursuant to an exemption from
registration under the 1933 Act. The Fund has no rights to demand
registration of these securities. The aggregate market value of these
securities at 12/31/02 was $973,896, which represented 4.63% of the Fund's
net assets. Of these securities, 2.23% of the Fund's net assets are
considered to be illiquid.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees and may be considered illiquid.
(d) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(e) Foreign denominated security. Par value is denominated in currency
indicated.
(f) 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-100
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$25,506,644) $21,379,982
------------------------------------------------------------
Foreign currencies, at value (cost $53,223) 56,386
------------------------------------------------------------
Receivables for:
Investments sold 1,143,840
------------------------------------------------------------
Fund shares sold 1,546
------------------------------------------------------------
Dividends and interest 59,722
------------------------------------------------------------
Investment for deferred compensation plan 30,831
============================================================
Total assets 22,672,307
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 1,559,547
------------------------------------------------------------
Fund shares reacquired 11,275
------------------------------------------------------------
Deferred compensation plan 30,831
------------------------------------------------------------
Accrued administrative services fees 8,125
------------------------------------------------------------
Accrued distribution fees -- Series II 37
------------------------------------------------------------
Accrued transfer agent fees 3,718
------------------------------------------------------------
Accrued operating expenses 24,275
============================================================
Total liabilities 1,637,808
============================================================
Net assets applicable to shares outstanding $21,034,499
____________________________________________________________
============================================================
NET ASSETS:
Series I $20,923,137
____________________________________________________________
============================================================
Series II $ 111,362
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Series I 2,149,472
____________________________________________________________
============================================================
Series II 11,452
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 9.73
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 9.72
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$15,531) $ 979,924
-------------------------------------------------------------
Dividends from affiliated money market funds 38,938
-------------------------------------------------------------
Interest 82,298
=============================================================
Total investment income 1,101,160
=============================================================
EXPENSES:
Advisory fees 180,490
-------------------------------------------------------------
Administrative services fees 93,944
-------------------------------------------------------------
Custodian fees 16,017
-------------------------------------------------------------
Distribution fee -- Series II 56
-------------------------------------------------------------
Transfer agent fees 10,802
-------------------------------------------------------------
Trustees' fees 8,768
-------------------------------------------------------------
Other 29,242
=============================================================
Total expenses 339,319
=============================================================
Less: Fees waived and expenses reimbursed (521)
-------------------------------------------------------------
Expenses paid indirectly (212)
=============================================================
Net expenses 338,586
=============================================================
Net investment income 762,574
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (6,753,541)
-------------------------------------------------------------
Foreign currencies 10,816
-------------------------------------------------------------
Option contracts written 78,521
=============================================================
(6,664,204)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (2,995,894)
-------------------------------------------------------------
Foreign currencies 1,337
=============================================================
(2,994,557)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (9,658,761)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(8,896,187)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
FS-101
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 762,574 $ 720,613
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and option contracts (6,664,204) (4,732,808)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (2,994,557) (10,714,354)
==========================================================================================
Net increase (decrease) in net assets resulting from
operations (8,896,187) (14,726,549)
==========================================================================================
Distributions to shareholders from net investment income:
Series I (735,979) (529,849)
------------------------------------------------------------------------------------------
Series II (3,622) --
------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Series I -- (3,464,881)
------------------------------------------------------------------------------------------
Share transactions-net:
Series I (6,268,289) 6,014,370
------------------------------------------------------------------------------------------
Series II 109,263 --
==========================================================================================
Net increase (decrease) in net assets (15,794,814) (12,706,909)
==========================================================================================
NET ASSETS:
Beginning of year 36,829,313 49,536,222
==========================================================================================
End of year $ 21,034,499 $ 36,829,313
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 35,858,835 $ 42,018,070
------------------------------------------------------------------------------------------
Undistributed net investment income 719,994 694,877
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and option contracts (11,418,450) (4,752,311)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies (4,125,880) (1,131,323)
==========================================================================================
$ 21,034,499 $ 36,829,313
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
FS-102
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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
AIM V.I. GLOBAL UTILITIES FUND
FS-103
fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
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. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
H. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. AIM has agreed to waive advisory fees of Series I and Series II shares to the extent necessary to limit the expenses (excluding Rule 12b-1 plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of each Series to 1.30%, which may be terminated or modified at any time. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $509.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $93,944 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $6,152 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $44 after plan fees reimbursed by AIM Distributors of $12.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,704 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, 2002, the Fund received reductions in custodian fees of $212 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $212.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to
AIM V.I. GLOBAL UTILITIES FUND
FS-104
the line of credit may borrow on a first come, first served basis. During the year ended December 31, 2002, 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, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------------------------------------------------
Beginning of year -- $ --
----------------------------------------------------------
Written 1,696 107,507
----------------------------------------------------------
Closed (76) (5,560)
----------------------------------------------------------
Exercised (240) (27,314)
----------------------------------------------------------
Expired (1,380) (74,633)
==========================================================
End of year -- $ --
__________________________________________________________
==========================================================
|
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------------------------
Distributions paid from:
Ordinary income $739,601 $2,521,868
--------------------------------------------------------------
Long-term capital gain -- 1,472,862
==============================================================
$739,601 $3,994,730
______________________________________________________________
==============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 765,386
-------------------------------------------------------------
Unrealized appreciation
(depreciation) -- investments (4,212,896)
-------------------------------------------------------------
Temporary book/tax differences (41,273)
-------------------------------------------------------------
Capital loss carryforward (11,289,222)
-------------------------------------------------------------
Post-October capital loss deferral (46,331)
-------------------------------------------------------------
Shares of beneficial interest 35,858,835
=============================================================
$ 21,034,499
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales and other differences. The tax-basis unrealized appreciation (depreciation) on investments amount includes appreciation on foreign currencies of $782.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------
December 31, 2009 $ 3,082,903
-------------------------------
December 31, 2010 8,206,319
===============================
$11,289,222
_______________________________
===============================
|
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, 2002 was $13,772,910 and $17,720,574, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,507,699 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (5,721,377) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(4,213,678) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $25,593,660. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of bond premium amortization and foreign currency transactions on December 31, 2002, undistributed net investment income was increased by $2,144, undistributed net realized gains decreased by $1,935 and shares of beneficial interest decreased by $209. This reclassification had no effect on the net assets of the Fund.
AIM V.I. GLOBAL UTILITIES FUND
FS-105
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------
Sold:
Series I 192,882 $ 2,309,033 732,845 $ 13,569,191
-----------------------------------------------------------------------------------------------------------------
Series II* 11,365 108,344 -- --
=================================================================================================================
Issued as reinvestment of dividends:
Series I 77,066 735,979 304,477 3,994,730
-----------------------------------------------------------------------------------------------------------------
Series II* 380 3,622 -- --
=================================================================================================================
Reacquired:
Series I (838,194) (9,313,301) (660,993) (11,549,551)
-----------------------------------------------------------------------------------------------------------------
Series II* (293) (2,703) -- --
=================================================================================================================
(556,794) $(6,159,026) 376,329 $ 6,014,370
_________________________________________________________________________________________________________________
=================================================================================================================
|
* Series II shares commenced sales on March 26, 2002.
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
2002 2001 2000 1999 1998
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.55 $ 21.16 $ 22.80 $ 17.36 $ 15.26
----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.31(a) 0.29(a)(b) 0.29(a) 0.32(a) 0.35
----------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.78) (6.25) (0.80) 5.49 2.15
============================================================================================================================
Total from investment operations (3.47) (5.96) (0.51) 5.81 2.50
============================================================================================================================
Less distributions:
Dividends from net investment income (0.35) (0.22) (0.23) (0.37) (0.28)
----------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.43) (0.90) -- (0.12)
============================================================================================================================
Total distributions (0.35) (1.65) (1.13) (0.37) (0.40)
============================================================================================================================
Net asset value, end of period $ 9.73 $ 13.55 $ 21.16 $ 22.80 $ 17.36
____________________________________________________________________________________________________________________________
============================================================================================================================
Total return(c) (25.53)% (27.93)% (2.28)% 33.56% 16.49%
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,923 $36,829 $49,536 $39,772 $28,134
____________________________________________________________________________________________________________________________
============================================================================================================================
Ratio of expenses to average net assets 1.22%(d) 1.07% 1.10% 1.14% 1.11%
============================================================================================================================
Ratio of net investment income to average net assets 2.75%(d) 1.59%(b) 1.23% 1.72% 2.46%
____________________________________________________________________________________________________________________________
============================================================================================================================
Portfolio turnover rate 54% 32% 50% 45% 32%
____________________________________________________________________________________________________________________________
============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premiums on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.30 and the ratio of net investment income to
average net assets would have been 1.63%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios for periods prior to January 1, 2001 have not been restated to
reflect this change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(d) Ratios are based on average daily net assets of $27,745,269.
AIM V.I. GLOBAL UTILITIES FUND
FS-106
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
--------------
MARCH 26, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.54
------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.19(a)
------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (3.66)
==============================================================================
Total from investment operations (3.47)
==============================================================================
Less distributions from net investment income (0.35)
==============================================================================
Net asset value, end of period $ 9.72
______________________________________________________________________________
==============================================================================
Total return(b) (25.55)%
______________________________________________________________________________
==============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 111
______________________________________________________________________________
==============================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.45%(c)
------------------------------------------------------------------------------
Without fee waivers and expense reimbursements 1.51%(c)
==============================================================================
Ratio of net investment income to average net assets 2.52%(c)
______________________________________________________________________________
==============================================================================
Portfolio turnover rate 54%
______________________________________________________________________________
==============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America is not annualized for periods
less than one year. Total returns do not reflect charges at the separate
account level which if included would reduce total return for the period
shown.
(c) Ratios are annualized and based on average daily net assets of $29,138.
AIM V.I. GLOBAL UTILITIES FUND
FS-107
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, 2002, 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 years or periods in the five year 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, 2002 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, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. GOVERNMENT SECURITIES FUND
FS-108
SCHEDULE OF INVESTMENTS
December 31, 2002
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-76.43%
FEDERAL FARM CREDIT BANK-6.47%
Bonds,
3.88%, 12/15/04 $ 842,000 $ 876,615
--------------------------------------------------------------------------
4.38%, 04/15/05 1,625,000 1,714,245
--------------------------------------------------------------------------
6.00%, 06/11/08 to 03/07/11 4,600,000 5,210,852
--------------------------------------------------------------------------
5.75%, 01/18/11 2,000,000 2,212,960
--------------------------------------------------------------------------
Medium Term Notes,
5.75%, 12/07/28 2,500,000 2,615,300
--------------------------------------------------------------------------
Unsec. Bonds,
7.25%, 06/12/07 13,625,000 16,050,114
==========================================================================
28,680,086
==========================================================================
FEDERAL HOME LOAN BANK-6.48%
Medium Term Notes,
8.17%, 12/16/04 400,000 449,352
--------------------------------------------------------------------------
Unsec. Bonds,
6.50%, 11/15/05 275,000 307,698
--------------------------------------------------------------------------
7.25%, 02/15/07 895,000 1,049,405
--------------------------------------------------------------------------
4.88%, 05/15/07 4,000,000 4,315,600
--------------------------------------------------------------------------
5.48%, 01/28/09 1,500,000 1,660,635
--------------------------------------------------------------------------
5.75%, 05/15/12 18,790,000 20,926,047
==========================================================================
28,708,737
==========================================================================
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC)-21.57%
Pass Through Ctfs.,
6.00%, 11/01/08 to 09/01/13 571,855 602,964
--------------------------------------------------------------------------
6.50%, 12/01/08 to 08/01/32 17,663,101 18,460,837
--------------------------------------------------------------------------
7.00%, 11/01/10 to 06/01/32 24,840,467 26,209,730
--------------------------------------------------------------------------
10.50%, 08/01/19 47,965 54,851
--------------------------------------------------------------------------
8.50%, 09/01/20 to 10/01/29 3,675,727 3,982,660
--------------------------------------------------------------------------
10.00%, 03/01/21 935,262 1,070,373
--------------------------------------------------------------------------
8.00%, 10/01/23 896,370 974,099
--------------------------------------------------------------------------
7.50%, 09/01/30 430,423 458,018
--------------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.00%, 01/01/33(a) 6,000,000 6,218,932
--------------------------------------------------------------------------
Unsec. Medium Term Notes,
4.50%, 02/27/06 6,845,000 6,874,981
--------------------------------------------------------------------------
6.00%, 05/25/12 to 06/27/17 10,059,000 10,560,532
--------------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC)-(CONTINUED)
Unsec. Notes,
5.25%, 01/15/06 $ 2,380,000 $ 2,584,704
--------------------------------------------------------------------------
5.13%, 10/15/08 to 07/15/12 6,600,000 7,133,746
--------------------------------------------------------------------------
5.00%, 07/30/09 8,800,000 9,081,336
--------------------------------------------------------------------------
5.63%, 03/15/11 1,200,000 1,328,268
==========================================================================
95,596,031
==========================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA)-34.44%
Pass Through Ctfs.,
7.00%, 03/01/04 to 05/01/32 9,594,878 10,165,264
--------------------------------------------------------------------------
7.50%, 11/01/09 to 05/01/32 5,603,218 5,954,422
--------------------------------------------------------------------------
6.50%, 10/01/10 to 08/01/32 28,618,120 29,940,401
--------------------------------------------------------------------------
10.00%, 03/01/16 291,912 326,967
--------------------------------------------------------------------------
6.00%, 07/01/17 2,672,996 2,797,935
--------------------------------------------------------------------------
8.50%, 11/01/17 to 12/01/26 4,747,598 5,172,041
--------------------------------------------------------------------------
8.00%, 09/01/22 to 06/01/32 38,504,621 41,417,289
--------------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.00%, 01/01/33(a) 11,550,000 11,971,971
--------------------------------------------------------------------------
Series B, Unsec. Medium Term Notes,
6.88%, 09/10/12 to 09/24/12 3,500,000 3,950,950
--------------------------------------------------------------------------
6.47%, 09/25/12 1,625,000 1,900,681
--------------------------------------------------------------------------
STRIPS,
7.37%, 10/09/19(b) 1,800,000 686,682
--------------------------------------------------------------------------
Unsec. Notes,
3.25%, 08/26/05 to 11/15/07 14,000,000 14,062,420
--------------------------------------------------------------------------
5.25%, 04/15/07 2,175,000 2,381,647
--------------------------------------------------------------------------
4.25%, 07/15/07 5,400,000 5,694,354
--------------------------------------------------------------------------
6.63%, 11/15/10 4,800,000 5,636,928
--------------------------------------------------------------------------
6.13%, 03/15/12 9,000,000 10,277,460
--------------------------------------------------------------------------
Unsec. Medium Term Notes,
7.38%, 03/28/05 300,000 336,333
==========================================================================
152,673,745
==========================================================================
FINANCIAL ASSISTANCE CORP.-0.02%
Series A03, Gtd. Bonds,
9.38%, 07/21/03 75,000 78,294
==========================================================================
|
AIM V.I. GOVERNMENT SECURITIES FUND
FS-109
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA)-4.27%
Pass Through Ctfs.,
9.50%, 08/15/03 to 09/15/16 $ 13,450 $ 15,078
--------------------------------------------------------------------------
7.50%, 03/15/08 to 08/15/28 1,966,809 2,100,089
--------------------------------------------------------------------------
9.00%, 09/15/08 to 10/15/16 47,243 51,975
--------------------------------------------------------------------------
11.00%, 10/15/15 11,211 13,110
--------------------------------------------------------------------------
10.50%, 09/15/17 to 11/15/19 8,113 9,459
--------------------------------------------------------------------------
10.00%, 06/15/19 284,407 327,162
--------------------------------------------------------------------------
6.50%, 12/15/23 to 06/15/32 6,061,082 6,369,277
--------------------------------------------------------------------------
8.00%, 07/15/24 to 07/15/26 1,449,862 1,583,793
--------------------------------------------------------------------------
7.00%, 04/15/28 to 05/15/32 5,034,545 5,341,215
--------------------------------------------------------------------------
Pass Through Ctfs., TBA,
6.00%, 01/01/33(a) 3,000,000 3,129,844
==========================================================================
18,941,002
==========================================================================
PRIVATE EXPORT FUNDING COMPANY-1.61%
Series G, Sec. Gtd. Notes,
6.67%, 09/15/09 2,701,000 3,171,703
--------------------------------------------------------------------------
Series J, Sec. Gtd. Notes,
7.65%, 05/15/06 1,500,000 1,747,725
--------------------------------------------------------------------------
Series UU, Sec. Gtd. Notes,
7.95%, 11/01/06 2,000,000 2,207,140
==========================================================================
7,126,568
==========================================================================
TENNESSEE VALLEY AUTHORITY-1.57%
Bonds,
4.88%, 12/15/16 1,600,000 1,724,576
--------------------------------------------------------------------------
Series A, Bonds,
5.63%, 01/18/11 4,800,000 5,236,272
==========================================================================
6,960,848
==========================================================================
Total U.S. Government Agency Securities
(Cost $330,247,703) 338,765,311
==========================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
--------------------------------------------------------------------------
U.S. TREASURY SECURITIES-21.86%
U.S. TREASURY NOTES-17.11%
6.75%, 05/15/05 $ 3,500,000 $ 3,903,165
--------------------------------------------------------------------------
4.63%, 05/15/06 6,375,000 6,877,605
--------------------------------------------------------------------------
4.38%, 05/15/07 19,000,000 20,408,280
--------------------------------------------------------------------------
3.25%, 08/15/07 10,000,000 10,252,200
--------------------------------------------------------------------------
4.88%, 02/15/12 22,041,000 23,956,142
--------------------------------------------------------------------------
4.38%, 08/15/12 10,000,000 10,463,800
==========================================================================
75,861,192
==========================================================================
U.S. TREASURY BONDS-4.50%
9.25%, 02/15/16 550,000 816,932
--------------------------------------------------------------------------
7.50%, 11/15/24 2,515,000 3,394,998
--------------------------------------------------------------------------
7.63%, 02/15/25 550,000 752,125
--------------------------------------------------------------------------
6.88%, 08/15/25 500,000 632,885
--------------------------------------------------------------------------
6.25%, 05/15/30 6,520,000 7,806,070
--------------------------------------------------------------------------
5.38%, 02/15/31 6,000,000 6,544,680
==========================================================================
19,947,690
==========================================================================
U.S. TREASURY STRIPS-0.25%
5.38%, 05/15/06(b) 750,000 694,958
--------------------------------------------------------------------------
6.79%, 11/15/18(b) 905,000 404,245
==========================================================================
1,099,203
==========================================================================
Total U.S. Treasury Securities (Cost
$93,962,837) 96,908,085
==========================================================================
SHARES
MONEY MARKET FUNDS-5.50%
STIT Government & Agency Portfolio (Cost
$24,390,740)(c) 24,390,740 24,390,740
==========================================================================
TOTAL INVESTMENTS-103.79% (Cost $448,601,280) 460,064,136
==========================================================================
OTHER ASSETS LESS LIABILITIES-(3.79%) (16,816,729)
==========================================================================
NET ASSETS-100.00% $443,247,407
__________________________________________________________________________
==========================================================================
|
Investment Abbreviations:
Ctfs. - Certificates Gtd. - Guaranteed Sec. - Secured STRIPS - Separately Traded Registered Interest and Principal Securities TBA - To Be Announced Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Security purchased on forward commitment basis. These securities are subject
to dollar roll transactions. See Note 1 Section C.
(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) 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-110
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2002
ASSETS:
Investments, at market value (cost
$448,601,280) $460,064,136
-------------------------------------------------------------
Receivables for:
Fund shares sold 798,593
-------------------------------------------------------------
Dividends and interest 3,857,894
-------------------------------------------------------------
Principal paydowns 183,809
-------------------------------------------------------------
Investment for deferred compensation plan 33,823
-------------------------------------------------------------
Other assets 131,115
=============================================================
Total assets 465,069,370
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 21,146,994
-------------------------------------------------------------
Fund shares reacquired 349,499
-------------------------------------------------------------
Interest expense 2,054
-------------------------------------------------------------
Deferred compensation plan 33,823
-------------------------------------------------------------
Accrued administrative services fees 221,776
-------------------------------------------------------------
Accrued distribution fees -- Series II 7,352
-------------------------------------------------------------
Accrued transfer agent fees 3,351
-------------------------------------------------------------
Accrued operating expenses 57,114
=============================================================
Total liabilities 21,821,963
=============================================================
Net assets applicable to shares outstanding $443,247,407
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $428,321,631
_____________________________________________________________
=============================================================
Series II $ 14,925,776
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 34,549,714
_____________________________________________________________
=============================================================
Series II 1,208,131
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 12.40
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 12.35
_____________________________________________________________
=============================================================
|
STATEMENT OF OPERATIONS
For the year ended December 31, 2002
INVESTMENT INCOME:
Interest $11,815,129
------------------------------------------------------------
Dividends from affiliated money market funds 740,027
============================================================
Total investment income 12,555,156
============================================================
EXPENSES:
Advisory fees 1,298,875
------------------------------------------------------------
Administrative services fees 614,299
------------------------------------------------------------
Custodian fees 62,983
------------------------------------------------------------
Distribution fees -- Series II 14,634
------------------------------------------------------------
Interest 35,970
------------------------------------------------------------
Transfer agent fees 27,352
------------------------------------------------------------
Trustees' fees 10,011
------------------------------------------------------------
Other 62,410
============================================================
Total expenses 2,126,534
============================================================
Less: Fees waived (7,105)
------------------------------------------------------------
Expenses paid indirectly (855)
============================================================
Net expenses 2,118,574
============================================================
Net investment income 10,436,582
============================================================
REALIZED AND UNREALIZED GAIN FROM INVESTMENT
SECURITIES:
Net realized gain from investment securities 3,331,182
------------------------------------------------------------
Change in net unrealized appreciation of
investment securities 10,126,375
============================================================
Net gain from investment securities 13,457,557
============================================================
Net increase in net assets resulting from
operations $23,894,139
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-111
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 10,436,582 $ 7,444,832
------------------------------------------------------------------------------------------
Net realized gain from investment securities 3,331,182 1,717,730
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 10,126,375 (200,646)
==========================================================================================
Net increase in net assets resulting from operations 23,894,139 8,961,916
==========================================================================================
Distributions to shareholders from net investment income:
Series I (7,651,576) (4,304,055)
------------------------------------------------------------------------------------------
Series II (254,364) (21,360)
------------------------------------------------------------------------------------------
Share transactions-net:
Series I 261,979,270 61,991,992
------------------------------------------------------------------------------------------
Series II 13,674,045 975,326
==========================================================================================
Net increase in net assets 291,641,514 67,603,819
==========================================================================================
NET ASSETS:
Beginning of year 151,605,893 84,002,074
==========================================================================================
End of year $443,247,407 $151,605,893
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $419,289,931 $143,636,616
------------------------------------------------------------------------------------------
Undistributed net investment income 11,461,567 7,860,269
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities 1,033,053 (1,227,473)
------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 11,462,856 1,336,481
==========================================================================================
$443,247,407 $151,605,893
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-112
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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. 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. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DOLLAR ROLL TRANSACTIONS -- 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 different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal 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. The return earned by the Fund with the proceeds of the dollar roll transaction may not exceed transaction costs. The difference between the selling price and the future repurchase price is recorded as an adjustment to interest income.
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 that 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. The Fund will segregate assets to cover its obligations under dollar roll transactions.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies annually and recorded on ex-dividend date.
E. 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
F. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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 $250 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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the
AIM V.I. GOVERNMENT SECURITIES FUND
FS-113
affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $7,105.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $614,299, of which AIM retained $62,172 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $16,195 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $14,634.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $3,057 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, 2002, the Fund received reductions in custodian fees of $855 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $855.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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, 2002 was $19,950,000 and averaged $3,230,414 per day with a weighted average interest rate of 1.11%.
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) $500,000,000 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,
2002, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from ordinary
income $7,905,940 $4,325,415
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 13,007,563
-------------------------------------------------------------
Undistributed long-term gain 193,623
-------------------------------------------------------------
Unrealized appreciation -- investments 11,316,245
-------------------------------------------------------------
Temporary book/tax differences (47,970)
-------------------------------------------------------------
Post-October capital loss deferral (511,985)
-------------------------------------------------------------
Shares of beneficial interest 419,289,931
=============================================================
$443,247,407
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable primarily to the tax deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
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, 2002 was $662,834,604 and $385,836,424, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $11,542,085 ------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (225,840) ============================================================ Net unrealized appreciation of investment securities $11,316,245 ____________________________________________________________ ============================================================ Cost of investments for tax purposes is $448,747,891. |
AIM V.I. GOVERNMENT SECURITIES FUND
FS-114
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of paydowns of securities on December 31, 2002, undistributed net investment income was increased by $1,070,656 and undistributed net realized gains decreased by $1,070,656. This reclassification had no effect on the net assets of the Fund.
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------------------------
Sold:
Series I 30,620,219 $ 373,370,909 11,782,921 $135,803,545
-----------------------------------------------------------------------------------------------------------------------
Series II* 1,327,628 16,134,310 83,825 996,647
=======================================================================================================================
Issued as reinvestment of dividends:
Series I 624,618 7,651,576 374,266 4,304,055
-----------------------------------------------------------------------------------------------------------------------
Series II* 20,832 254,364 1,859 21,360
=======================================================================================================================
Reacquired:
Series I (9,762,219) (119,043,215) (6,614,320) (78,115,608)
-----------------------------------------------------------------------------------------------------------------------
Series II* (222,409) (2,714,629) (3,604) (42,681)
=======================================================================================================================
22,608,669 $ 275,653,315 5,624,947 $ 62,967,318
_______________________________________________________________________________________________________________________
=======================================================================================================================
|
* Series II shares commenced sales on September 19, 2001.
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.53 $ 11.16 $ 10.63 $ 11.18 $ 10.67
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.49(a) 0.59(a)(b) 0.66(a) 0.63(a) 0.63(a)
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.61 0.12 0.41 (0.78) 0.20
=================================================================================================================================
Total from investment operations 1.10 0.71 1.07 (0.15) 0.83
=================================================================================================================================
Less dividends from net investment income (0.23) (0.34) (0.54) (0.40) (0.32)
=================================================================================================================================
Net asset value, end of period $ 12.40 $ 11.53 $ 11.16 $ 10.63 $ 11.18
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) 9.59% 6.41% 10.12% (1.32)% 7.73%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $428,322 $150,660 $84,002 $70,761 $58,185
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (including interest
expense) 0.81%(d) 1.08% 0.97% 0.90% 0.76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets (excluding interest
expense) 0.80%(d) 0.80% 0.85% 0.80% 0.76%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of net investment income to average net assets 4.01%(d) 5.09%(b) 6.03% 5.75% 5.70%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of interest expense to average net assets 0.01%(d) 0.28% 0.12% 0.10% --
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 170% 199% 87% 41% 78%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began recording paydown gains and losses as adjustments to
interest income. Had the Fund not recorded paydown gains and losses as
adjustments to interest income, the net investment income per share
would have been $0.62 and the ratio of investment income to average net
assets would have been 5.40%. Per share and ratios for periods prior to
January 1, 2001 have not been restated to reflect this change in
presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and does not reflect charges at
the separate account level which if included would reduce total returns
for all periods shown.
(d) Ratios are based on average daily net assets of $255,007,238.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-115
NOTE 10--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
-------------------------------------
SEPTEMBER 19, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.52 $11.84
---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.46(a) 0.16(a)
---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.60 (0.14)
===================================================================================================
Total from investment operations 1.06 0.02
===================================================================================================
Less dividends from net investment income (0.23) (0.34)
===================================================================================================
Net asset value, end of period $ 12.35 $11.52
___________________________________________________________________________________________________
===================================================================================================
Total return(b) 9.25% 0.22%
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $14,926 $ 946
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets (including interest
expense) 1.06%(c) 1.41%(d)
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets (excluding interest
expense) 1.05%(c) 1.13%(d)
___________________________________________________________________________________________________
===================================================================================================
Ratio of net investment income to average net assets 3.76%(c) 4.76%(d)
___________________________________________________________________________________________________
===================================================================================================
Ratio of interest expense to average net assets 0.01%(c) 0.28%(d)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 170% 199%
___________________________________________________________________________________________________
===================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
the periods shown.
(c) Ratios are based on average daily net assets of $5,853,778.
(d) Annualized.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-116
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, 2002, 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 years or periods in the five year 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, 2002 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, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. GROWTH FUND
FS-117
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
-----------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.99%
Advertising-0.75%
Omnicom Group Inc. 42,500 $ 2,745,500
=======================================================================
Aerospace & Defense-0.43%
United Technologies Corp. 25,000 1,548,500
=======================================================================
Airlines-0.70%
Ryanair Holdings PLC-ADR (Ireland)(a) 35,000 1,370,600
-----------------------------------------------------------------------
Southwest Airlines Co. 85,000 1,181,500
=======================================================================
2,552,100
=======================================================================
Apparel Retail-3.08%
Gap, Inc. (The) 500,000 7,760,000
-----------------------------------------------------------------------
Ross Stores, Inc. 35,000 1,483,650
-----------------------------------------------------------------------
TJX Cos., Inc. (The) 100,000 1,952,000
=======================================================================
11,195,650
=======================================================================
Application Software-0.55%
PeopleSoft, Inc.(a) 110,000 2,013,000
=======================================================================
Banks-2.43%
Bank of America Corp. 70,000 4,869,900
-----------------------------------------------------------------------
Fifth Third Bancorp 35,000 2,049,250
-----------------------------------------------------------------------
Synovus Financial Corp. 100,000 1,940,000
=======================================================================
8,859,150
=======================================================================
Biotechnology-2.26%
Amgen Inc.(a) 135,000 6,525,900
-----------------------------------------------------------------------
Gilead Sciences, Inc.(a) 50,000 1,700,000
=======================================================================
8,225,900
=======================================================================
Brewers-0.57%
Anheuser-Busch Cos., Inc. 42,500 2,057,000
=======================================================================
Broadcasting & Cable TV-1.02%
Clear Channel Communications, Inc.(a) 100,000 3,729,000
=======================================================================
Building Products-0.58%
Masco Corp. 100,000 2,105,000
=======================================================================
Catalog Retail-0.53%
USA Interactive(a) 85,000 1,943,100
=======================================================================
Computer & Electronics Retail-0.77%
CDW Computer Centers, Inc.(a) 63,500 2,784,475
=======================================================================
Computer Hardware-4.13%
Dell Computer Corp.(a) 210,000 5,615,400
-----------------------------------------------------------------------
Hewlett-Packard Co. 320,000 5,555,200
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Computer Hardware-(Continued)
International Business Machines Corp. 50,000 $ 3,875,000
=======================================================================
15,045,600
=======================================================================
Consumer Finance-1.05%
MBNA Corp. 200,000 3,804,000
=======================================================================
Data Processing Services-1.80%
First Data Corp. 55,000 1,947,550
-----------------------------------------------------------------------
Fiserv, Inc.(a) 70,000 2,376,500
-----------------------------------------------------------------------
Paychex, Inc. 80,000 2,232,000
=======================================================================
6,556,050
=======================================================================
Department Stores-1.31%
Kohl's Corp.(a) 85,000 4,755,750
=======================================================================
Derivatives-0.96%
Nasdaq-100 Index Tracking Stock(a) 143,500 3,501,400
=======================================================================
Diversified Financial Services-6.86%
American Express Co. 62,500 2,209,375
-----------------------------------------------------------------------
Citigroup Inc. 162,500 5,718,375
-----------------------------------------------------------------------
Fannie Mae 42,500 2,734,025
-----------------------------------------------------------------------
Freddie Mac 62,500 3,690,625
-----------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 80,000 5,448,000
-----------------------------------------------------------------------
J.P. Morgan Chase & Co. 125,000 3,000,000
-----------------------------------------------------------------------
SLM Corp. 21,000 2,181,060
=======================================================================
24,981,460
=======================================================================
Drug Retail-1.20%
CVS Corp. 57,500 1,435,775
-----------------------------------------------------------------------
Walgreen Co. 100,000 2,919,000
=======================================================================
4,354,775
=======================================================================
Electronic Equipment & Instruments-0.57%
Thermo Electron Corp.(a) 102,500 2,062,300
=======================================================================
Employment Services-0.53%
Robert Half International Inc.(a) 120,000 1,933,200
=======================================================================
Food Distributors-0.41%
Sysco Corp. 50,000 1,489,500
=======================================================================
Food Retail-0.36%
Whole Foods Market, Inc.(a)(b) 25,000 1,318,250
=======================================================================
General Merchandise Stores-2.83%
Family Dollar Stores, Inc. 50,000 1,560,500
-----------------------------------------------------------------------
Target Corp. 100,000 3,000,000
-----------------------------------------------------------------------
|
AIM V.I. GROWTH FUND
FS-118
MARKET
SHARES VALUE
-----------------------------------------------------------------------
General Merchandise Stores-(Continued)
Wal-Mart Stores, Inc. 113,500 $ 5,732,885
=======================================================================
10,293,385
=======================================================================
Health Care Distributors & Services-1.70%
AdvancePCS(a) 70,000 1,554,700
-----------------------------------------------------------------------
Cardinal Health, Inc. 50,000 2,959,500
-----------------------------------------------------------------------
Express Scripts, Inc.(a) 35,000 1,681,400
=======================================================================
6,195,600
=======================================================================
Health Care Equipment-2.90%
Becton, Dickinson & Co. 65,000 1,994,850
-----------------------------------------------------------------------
Boston Scientific Corp.(a) 92,500 3,933,100
-----------------------------------------------------------------------
Medtronic, Inc. 62,500 2,850,000
-----------------------------------------------------------------------
Zimmer Holdings, Inc.(a) 42,500 1,764,600
=======================================================================
10,542,550
=======================================================================
Health Care Facilities-0.80%
HCA Inc. 70,000 2,905,000
=======================================================================
Health Care Supplies-0.89%
Alcon, Inc. (Switzerland)(a) 82,500 3,254,625
=======================================================================
Home Improvement Retail-1.50%
Home Depot, Inc. (The) 150,000 3,594,000
-----------------------------------------------------------------------
Lowe's Cos., Inc. 50,000 1,875,000
=======================================================================
5,469,000
=======================================================================
Household Products-2.16%
Colgate-Palmolive Co. 35,000 1,835,050
-----------------------------------------------------------------------
Procter & Gamble Co. (The) 70,000 6,015,800
=======================================================================
7,850,850
=======================================================================
Housewares & Specialties-0.71%
Newell Rubbermaid Inc. 85,000 2,578,050
=======================================================================
Industrial Conglomerates-3.14%
General Electric Co. 220,000 5,357,000
-----------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 355,000 6,063,400
=======================================================================
11,420,400
=======================================================================
Industrial Gases-0.56%
Praxair, Inc. 35,000 2,021,950
=======================================================================
Industrial Machinery-0.54%
Danaher Corp. 30,000 1,971,000
=======================================================================
Integrated Telecommunication Services-0.50%
AT&T Corp. 70,000 1,827,700
=======================================================================
Internet Retail-1.59%
Amazon.com, Inc.(a) 180,000 3,400,200
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Internet Retail-(Continued)
eBay Inc.(a) 35,000 $ 2,373,700
=======================================================================
5,773,900
=======================================================================
Internet Software & Services-0.95%
Yahoo! Inc.(a) 212,500 3,474,375
=======================================================================
IT Consulting & Services-0.80%
Affiliated Computer Services, Inc.-Class A(a) 55,000 2,895,750
=======================================================================
Managed Health Care-3.85%
Aetna Inc. 97,500 4,009,200
-----------------------------------------------------------------------
Anthem, Inc.(a) 31,500 1,981,350
-----------------------------------------------------------------------
Caremark Rx, Inc.(a) 90,000 1,462,500
-----------------------------------------------------------------------
UnitedHealth Group Inc. 42,500 3,548,750
-----------------------------------------------------------------------
WellPoint Health Networks Inc.(a) 42,500 3,024,300
=======================================================================
14,026,100
=======================================================================
Motorcycle Manufacturers-0.54%
Harley-Davidson, Inc. 42,500 1,963,500
=======================================================================
Movies & Entertainment-0.82%
Fox Entertainment Group, Inc.-Class A(a) 115,000 2,981,950
=======================================================================
Multi-Line Insurance-2.03%
American International Group, Inc. 100,000 5,785,000
-----------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 35,000 1,590,050
=======================================================================
7,375,050
=======================================================================
Networking Equipment-1.94%
Cisco Systems, Inc.(a) 540,000 7,074,000
=======================================================================
Office Services & Supplies-0.35%
Avery Dennison Corp. 21,000 1,282,680
=======================================================================
Oil & Gas Drilling-0.74%
ENSCO International Inc. 50,000 1,472,500
-----------------------------------------------------------------------
Nabors Industries, Ltd. (Bermuda)(a) 35,000 1,234,450
=======================================================================
2,706,950
=======================================================================
Oil & Gas Equipment & Services-0.49%
Schlumberger Ltd. (Netherlands) 42,500 1,788,825
=======================================================================
Oil & Gas Exploration & Production-0.54%
Devon Energy Corp. 42,500 1,950,750
=======================================================================
Packaged Foods & Meats-0.77%
Sara Lee Corp. 125,000 2,813,750
=======================================================================
Personal Products-0.42%
Gillette Co. (The) 50,000 1,518,000
=======================================================================
Pharmaceuticals-10.93%
Forest Laboratories, Inc.(a) 28,500 2,799,270
-----------------------------------------------------------------------
|
AIM V.I. GROWTH FUND
FS-119
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Pharmaceuticals-(Continued)
Johnson & Johnson 120,000 $ 6,445,200
-----------------------------------------------------------------------
Lilly (Eli) & Co. 50,000 3,175,000
-----------------------------------------------------------------------
Merck & Co. Inc. 35,000 1,981,350
-----------------------------------------------------------------------
Pfizer Inc. 247,500 7,566,075
-----------------------------------------------------------------------
Pharmacia Corp. 247,500 10,345,500
-----------------------------------------------------------------------
Wyeth 200,000 7,480,000
=======================================================================
39,792,395
=======================================================================
Semiconductor Equipment-3.40%
Applied Materials, Inc.(a) 500,000 6,515,000
-----------------------------------------------------------------------
Lam Research Corp.(a) 139,800 1,509,840
-----------------------------------------------------------------------
Novellus Systems, Inc.(a) 155,000 4,352,400
=======================================================================
12,377,240
=======================================================================
Semiconductors-7.05%
Analog Devices, Inc.(a) 140,000 3,341,800
-----------------------------------------------------------------------
Intel Corp. 255,000 3,970,350
-----------------------------------------------------------------------
Linear Technology Corp. 125,000 3,215,000
-----------------------------------------------------------------------
Maxim Integrated Products, Inc. 50,000 1,652,000
-----------------------------------------------------------------------
Microchip Technology Inc. 155,000 3,789,750
-----------------------------------------------------------------------
Micron Technology, Inc.(a) 280,000 2,727,200
-----------------------------------------------------------------------
STMicroelectronics N.V.-New York Shares
(Netherlands) 170,000 3,316,700
-----------------------------------------------------------------------
Texas Instruments Inc. 100,000 1,501,000
-----------------------------------------------------------------------
Xilinx, Inc.(a) 105,000 2,163,000
=======================================================================
25,676,800
=======================================================================
Specialty Chemicals-0.37%
Ecolab Inc. 27,500 1,361,250
=======================================================================
Specialty Stores-1.31%
Bed Bath & Beyond Inc.(a) 105,000 3,625,650
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Specialty Stores-(Continued)
Weight Watchers International, Inc.(a) 25,000 $ 1,149,250
=======================================================================
4,774,900
=======================================================================
Systems Software-6.62%
Computer Associates International, Inc. 425,000 5,737,500
-----------------------------------------------------------------------
Microsoft Corp.(a) 285,000 14,734,500
-----------------------------------------------------------------------
Oracle Corp.(a) 335,000 3,618,000
=======================================================================
24,090,000
=======================================================================
Telecommunications Equipment-0.95%
Nokia Oyj-ADR (Finland) 140,000 2,170,000
-----------------------------------------------------------------------
QUALCOMM Inc.(a) 35,000 1,273,650
=======================================================================
3,443,650
=======================================================================
Wireless Telecommunication Services-1.45%
AT&T Wireless Services Inc.(a) 300,000 1,695,000
-----------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 140,000 1,617,000
-----------------------------------------------------------------------
Vodafone Group PLC-ADR (United Kingdom) 107,500 1,947,900
=======================================================================
5,259,900
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $370,012,748) 360,292,485
=======================================================================
MONEY MARKET FUNDS-1.10%
STIC Liquid Assets Portfolio(c) 2,006,606 2,006,606
-----------------------------------------------------------------------
STIC Prime Portfolio(c) 2,006,606 2,006,606
=======================================================================
Total Money Market Funds (Cost
$4,013,212) 4,013,212
=======================================================================
TOTAL INVESTMENTS-100.09% (Cost $374,025,960) 364,305,697
=======================================================================
OTHER ASSETS LESS LIABILITIES-(0.09%) (313,796)
=======================================================================
NET ASSETS-100.00% $363,991,901
_______________________________________________________________________
=======================================================================
|
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 6.
(c) 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-120
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$374,025,960) $364,305,697
-------------------------------------------------------------
Foreign currencies, at value (cost $157) 164
-------------------------------------------------------------
Receivables for:
Investments sold 7,738,368
-------------------------------------------------------------
Fund shares sold 79,214
-------------------------------------------------------------
Dividends 233,668
-------------------------------------------------------------
Amount due from advisor 7,192
-------------------------------------------------------------
Investment for deferred compensation plan 39,219
-------------------------------------------------------------
Other assets 2,095
=============================================================
Total assets 372,405,617
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Investments purchased 7,626,445
-------------------------------------------------------------
Fund shares reacquired 381,040
-------------------------------------------------------------
Options written (premiums received $66,748) 44,375
-------------------------------------------------------------
Deferred compensation plan 39,219
-------------------------------------------------------------
Accrued administrative services fees 188,996
-------------------------------------------------------------
Accrued distribution fees -- Series II 1,497
-------------------------------------------------------------
Accrued transfer agent fees 21,577
-------------------------------------------------------------
Accrued operating expenses 110,567
=============================================================
Total liabilities 8,413,716
=============================================================
Net assets applicable to shares outstanding $363,991,901
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $361,259,378
_____________________________________________________________
=============================================================
Series II $ 2,732,523
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 31,971,909
_____________________________________________________________
=============================================================
Series II 242,464
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 11.30
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 11.27
_____________________________________________________________
=============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$19,998) $ 3,118,241
-------------------------------------------------------------
Dividends from affiliated money market funds 174,666
-------------------------------------------------------------
Interest 874
=============================================================
Total investment income 3,293,781
=============================================================
EXPENSES:
Advisory fees 2,944,558
-------------------------------------------------------------
Administrative services fees 1,057,818
-------------------------------------------------------------
Custodian fees 118,457
-------------------------------------------------------------
Distribution fees -- Series II 4,017
-------------------------------------------------------------
Transfer agent fees 61,396
-------------------------------------------------------------
Trustees' fees 11,194
-------------------------------------------------------------
Other 78,171
=============================================================
Total expenses 4,275,611
=============================================================
Less: Fees waived (3,467)
-------------------------------------------------------------
Expenses paid indirectly (1,214)
=============================================================
Net expenses 4,270,930
=============================================================
Net investment income (loss) (977,149)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (110,851,446)
-------------------------------------------------------------
Foreign currencies 20,823
-------------------------------------------------------------
Option contracts written 597,839
=============================================================
(110,232,784)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (72,821,281)
-------------------------------------------------------------
Foreign currencies 2,169
-------------------------------------------------------------
Option contracts written 22,373
=============================================================
(72,796,739)
=============================================================
Net gain (loss) from investment securities,
foreign currencies and option contracts (183,029,523)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(184,006,672)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
FS-121
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
--------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (977,149) $ (1,177,497)
--------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures contracts and option
contracts (110,232,784) (324,556,814)
--------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and option
contracts (72,796,739) 16,460,008
============================================================================================
Net increase (decrease) in net assets resulting from
operations (184,006,672) (309,274,303)
============================================================================================
Distributions to shareholders from net investment income:
Series I -- (1,436,399)
--------------------------------------------------------------------------------------------
Series II -- (1,390)
--------------------------------------------------------------------------------------------
Share transactions-net:
Series I (56,986,625) 33,201,050
--------------------------------------------------------------------------------------------
Series II 2,733,286 580,648
============================================================================================
Net increase (decrease) in net assets (238,260,011) (276,930,394)
============================================================================================
NET ASSETS:
Beginning of year 602,251,912 879,182,306
============================================================================================
End of year $ 363,991,901 $ 602,251,912
____________________________________________________________________________________________
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 835,403,662 $ 890,606,504
--------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (65,948) (59,125)
--------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures contracts and
option contracts (461,648,148) (351,394,541)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and option contracts (9,697,665) 63,099,074
============================================================================================
$ 363,991,901 $ 602,251,912
____________________________________________________________________________________________
============================================================================================
|
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-
AIM V.I. GROWTH FUND
FS-122
size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
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. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
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
AIM V.I. GROWTH FUND
FS-123
contracts may not correlate with changes in the value of the securities being hedged. Risks also include to varying degrees, the risk of loss in excess of the variation margin disclosed in the statement of Assets and Liabilities.
I. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $3,467.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $1,057,818 of which AIM retained $101,341 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $30,366 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $4,017.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $3,602 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, 2002, the Fund received reductions in custodian fees of $1,214 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $1,214.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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, 2002 are summarized as follows:
CALL OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------------------------------------------------
Beginning of year -- $ --
-------------------------------------------------------------
Written 6,346 1,287,439
-------------------------------------------------------------
Closed (5,613) (1,096,745)
-------------------------------------------------------------
Exercised (208) (55,898)
-------------------------------------------------------------
Expired (275) (68,048)
=============================================================
End of year 250 $ 66,748
_____________________________________________________________
=============================================================
|
Open call option contracts written at December 31, 2002 were as follows:
DECEMBER 31,
CONTRACT STRIKE NUMBER OF PREMIUMS 2002 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
-------------------------------------------------------------------------------------
Whole Foods
Market, Inc. Feb-03 $55 250 $66,748 $44,375 $22,373
_____________________________________________________________________________________
=====================================================================================
|
AIM V.I. GROWTH FUND
FS-124
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------------------------
Distributions paid from ordinary income $ -- $1,437,789
______________________________________________________________
==============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $ (24,329,093)
-------------------------------------------------------------
Temporary book/tax differences (65,948)
-------------------------------------------------------------
Capital loss carryforward (432,300,347)
-------------------------------------------------------------
Post-October capital loss deferral (14,716,373)
-------------------------------------------------------------
Shares of beneficial interest 835,403,662
=============================================================
$ 363,991,901
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable to the tax deferral of losses on wash sales. The tax-basis unrealized appreciation (depreciation) on investments includes appreciation on foreign currencies of $225 and option contracts written of $22,373.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
December 31, 2008 $ 4,002,102
-----------------------------------------------------------
December 31, 2009 325,071,012
-----------------------------------------------------------
December 31, 2010 103,227,233
===========================================================
$432,300,347
___________________________________________________________
===========================================================
|
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, 2002 was $902,304,319 and $922,539,690, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 21,532,602 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (45,884,293) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(24,351,691) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $388,657,388. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of net operating losses and foreign
currency transactions on December 31, 2002, undistributed net investment income
(loss) was increased by $970,326, undistributed net realized gains (losses)
decreased by $20,823 and shares of beneficial interest decreased by $949,503.
This reclassification had no effect on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 7,814,827 $ 106,412,883 8,864,865 $ 166,073,915
-------------------------------------------------------------------------------------------------------------------------
Series II* 533,384 6,154,426 38,052 599,422
=========================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 89,663 1,436,399
-------------------------------------------------------------------------------------------------------------------------
Series II* -- -- 87 1,390
=========================================================================================================================
Reacquired:
Series I (12,601,423) (163,399,508) (7,625,551) (134,309,264)
-------------------------------------------------------------------------------------------------------------------------
Series II* (327,826) (3,421,140) (1,233) (20,164)
=========================================================================================================================
(4,581,038) $ (54,253,339) 1,365,883 $ 33,781,698
_________________________________________________________________________________________________________________________
=========================================================================================================================
|
* Series II shares commenced sales on September 19, 2001.
AIM V.I. GROWTH FUND
FS-125
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
2002 2001 2000 1999 1998
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 16.37 $ 24.81 $ 32.25 $ 24.80 $ 19.83
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a) (0.03)(a) 0.03 0.01(a) 0.08
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.04) (8.37) (6.60) 8.63 6.57
===============================================================================================================================
Total from investment operations (5.07) (8.40) (6.57) 8.64 6.65
===============================================================================================================================
Less distributions:
Dividends from net investment income -- (0.04) 0.00 (0.06) (0.09)
-------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- -- (0.87) (1.13) (1.59)
===============================================================================================================================
Total distributions -- (0.04) (0.87) (1.19) (1.68)
===============================================================================================================================
Net asset value, end of period $ 11.30 $ 16.37 $ 24.81 $ 32.25 $ 24.80
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) (30.97)% (33.86)% (20.49)% 35.24% 34.12%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $361,259 $601,648 $879,182 $704,096 $371,915
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 0.91%(c) 0.88% 0.83% 0.73% 0.72%
===============================================================================================================================
Ratio of net investment income (loss) to average net assets (0.21)%(c) (0.17)% 0.11% 0.04% 0.41%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 195% 239% 162% 101% 133%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(c) Ratios are based on average daily net assets of $468,319,600.
SERIES II
--------------------------------------
SEPTEMBER 19, 2001
YEAR ENDED (DATE SALES COMMENCED)
DECEMBER 31, TO DECEMBER 31,
2002 2001
----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.36 $14.67
----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.02)(a)
----------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (5.03) 1.75
====================================================================================================
Total from investment operations (5.09) 1.73
====================================================================================================
Less dividends from net investment income -- (0.04)
====================================================================================================
Net asset value, end of period $11.27 $16.36
____________________________________________________________________________________________________
====================================================================================================
Total return(b) (31.11)% 11.79%
____________________________________________________________________________________________________
====================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,733 $ 604
____________________________________________________________________________________________________
====================================================================================================
Ratio of expenses to average net assets 1.16%(c) 1.17%(d)
====================================================================================================
Ratio of net investment income (loss) to average net assets (0.46)%(c) (0.46)%(d)
____________________________________________________________________________________________________
====================================================================================================
Portfolio turnover rate 195% 239%
____________________________________________________________________________________________________
====================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $1,606,748.
(d) Annualized.
AIM V.I. GROWTH FUND
FS-126
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, 2002, 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 years or periods in the four year 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, 2002 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, 2002, 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 years or periods in the four year 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.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. HIGH YIELD FUND
FS-127
Schedule of Investments
December 31, 2002
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
BONDS & NOTES-90.47%
Advertising-0.34%
Lamar Media Corp., Sr. Sub. Notes, 7.25%,
01/01/13 (Acquired 12/17/02; Cost
$20,000)(a) $ 20,000 $ 20,400
----------------------------------------------------------------------
RH Donnelley Finance Corp. I, Sr. Notes,
8.88%, 12/15/10 (Acquired 11/26/02; Cost
$60,000)(a) 60,000 64,500
======================================================================
84,900
======================================================================
Aerospace & Defense-0.59%
Dunlop Standard Aerospace Holdings PLC
(United Kingdom), Sr. Unsec. Sub. Yankee
Notes, 11.88%, 05/15/09 145,000 148,625
======================================================================
Airlines-0.62%
Air Canada (Canada), Sr. Unsec. Yankee Notes,
10.25%, 03/15/11 95,000 53,675
----------------------------------------------------------------------
Northwest Airlines Inc., Sr. Unsec. Gtd.
Notes, 8.88%, 06/01/06 160,000 101,600
======================================================================
155,275
======================================================================
Alternative Carriers-0.15%
LCI International, Inc. Sr. Notes, 7.25%,
06/15/07 75,000 37,875
======================================================================
Apparel Retail-2.46%
Big 5 Corp.-Series B, Sr. Unsec. Notes,
10.88%, 11/15/07 200,000 209,000
----------------------------------------------------------------------
Gap, Inc. (The), Unsec. Unsub. Notes, 9.90%,
12/15/05 225,000 238,500
----------------------------------------------------------------------
Mothers Work, Inc., Sr. Unsec. Gtd. Notes,
11.25%, 08/01/10 160,000 171,200
======================================================================
618,700
======================================================================
Apparel, Accessories & Luxury Goods-1.58%
Perry Ellis International Inc.-Series B, Sr.
Sec. Notes, 9.50%, 03/15/09 40,000 41,500
----------------------------------------------------------------------
Russell Corp., Sr. Unsec. Gtd. Notes, 9.25%,
05/01/10 60,000 64,950
----------------------------------------------------------------------
Samsonite Corp., Sr. Unsec. Sub Notes,
10.75%, 06/15/08 250,000 203,750
----------------------------------------------------------------------
William Carter Co. (The)-Series B, Sr. Unsec.
Gtd. Sub. Notes, 10.88%, 08/15/11 80,000 87,600
======================================================================
397,800
======================================================================
Auto Parts & Equipment-0.31%
Dura Operating Corp.-Series B, Sr. Unsec.
Gtd. Notes, 8.63%, 04/15/12 10,000 10,150
----------------------------------------------------------------------
Intermet Corp., Sr. Unsec. Gtd. Notes, 9.75%,
06/15/09 75,000 67,875
======================================================================
78,025
======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Banks-0.62%
Western Financial Bank, Unsec. Sub. Deb.,
9.63%, 05/15/12 $160,000 $ 156,000
======================================================================
Broadcasting & Cable TV-13.59%
Acme Communications, Inc.-Series B, Sr.
Unsec. Unsub. Gtd. Disc. Notes, 10.88%,
09/30/04 390,000 399,750
----------------------------------------------------------------------
Adelphia Communications Corp.
Series B, Sr. Unsec. Notes, 9.88%,
03/01/07(b) 140,000 54,250
----------------------------------------------------------------------
Sr. Unsec. Notes, 10.88%, 10/01/10(b) 195,000 75,562
----------------------------------------------------------------------
Allbritton Communications Co., Sr. Sub.
Notes, 7.75%, 12/15/12 (Acquired 12/06/02;
Cost $115,000)(a) 115,000 115,575
----------------------------------------------------------------------
Alliance Atlantis Communications Inc.
(Canada), Sr. Sub. Yankee Notes, 13.00%,
12/15/09 175,000 188,125
----------------------------------------------------------------------
Charter Communications Holdings, LLC/Charter
Communications Holdings Capital Corp.,
Sr. Unsec. Sub. Disc. Notes, 9.92%,
04/01/11(c) 95,000 33,725
----------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 10.75%, 10/01/09 95,000 43,225
----------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 11.13%, 01/15/11 40,000 18,200
----------------------------------------------------------------------
Comcast UK Cable Partners Ltd. (Bermuda), Sr.
Unsec. Yankee Disc. Deb., 11.20%,
11/15/07(c) 200,000 143,000
----------------------------------------------------------------------
Cox Communication Inc. Unsec. Notes, 7.13%,
10/01/12 45,000 49,900
----------------------------------------------------------------------
CSC Holdings Inc.-Series B, Sr. Unsec. Unsub.
Notes, 7.63%, 04/01/11 295,000 279,512
----------------------------------------------------------------------
EchoStar DBS Corp., Sr. Unsec. Notes, 10.38%,
10/01/07 95,000 102,837
----------------------------------------------------------------------
Granite Broadcasting Corp., Sr. Sub. Notes,
10.38%, 05/15/05 45,000 38,925
----------------------------------------------------------------------
Gray Television Inc., Sr. Unsec. Gtd. Sub.
Notes, 9.25%, 12/15/11 60,000 64,800
----------------------------------------------------------------------
Insight Midwest, L.P., Sr. Unsec. Notes,
10.50%, 11/01/10 190,000 185,250
----------------------------------------------------------------------
Knology, Inc., Sr. Unsec. Notes, 12.00%,
11/30/09 (Acquired 04/26/00; Cost
$180,312)(a) 105,000 52,762
----------------------------------------------------------------------
LBI Media Inc., Sr. Gtd. Sub. Notes, 10.13%,
07/15/12 (Acquired 06/28/02; Cost
$140,000)(a) 140,000 147,000
----------------------------------------------------------------------
LIN Holdings Corp., Sr. Unsec. Disc. Notes,
10.00%, 03/01/08(c) 175,000 179,375
----------------------------------------------------------------------
Mediacomm LLC, Sr. Unsec. Notes, 9.50%,
01/15/13 240,000 217,200
----------------------------------------------------------------------
Nextmedia Operating Inc., Sr. Unsec. Gtd.
Sub. Notes, 10.75%, 07/01/11 85,000 89,675
----------------------------------------------------------------------
Pegasus Communications Corp.-Series B, Sr.
Notes, 9.63%, 10/15/05 320,000 180,800
----------------------------------------------------------------------
Radio One, Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 8.88%, 07/01/11 200,000 215,500
----------------------------------------------------------------------
|
AIM V.I. HIGH YIELD FUND
FS-128
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Broadcasting & Cable TV-(Continued)
Salem Communications Holding Corp.-Series B,
Sr. Unsec. Gtd. Sub. Notes, 9.00%, 07/01/11 $190,000 $ 199,500
----------------------------------------------------------------------
Sinclair Broadcast Group, Inc.
Sr. Gtd. Sub. Notes, 8.00%, 03/15/12
(Acquired 10/25/02; Cost $35,175)(a) 35,000 36,487
----------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Notes, 8.75%, 12/15/11 95,000 102,125
----------------------------------------------------------------------
Spanish Broadcasting System, Inc., Sr. Unsec.
Gtd. Sub. Notes, 9.63%, 11/01/09 165,000 172,012
----------------------------------------------------------------------
United Pan-Europe Communications N.V.
(Netherlands)-Series B, Sr. Unsec. Yankee
Notes,
11.25%, 02/01/10(b) 210,000 17,325
----------------------------------------------------------------------
11.50%, 02/01/10(b) 150,000 12,375
======================================================================
3,414,772
======================================================================
Building Products-0.44%
Associated Materials Inc., Sr. Unsec. Gtd.
Sub. Notes, 9.75%, 04/15/12 40,000 42,200
----------------------------------------------------------------------
Atrium Cos., Inc.-Series B, Sr. Gtd. Sub.
Notes, 10.50%, 05/01/09 70,000 68,600
======================================================================
110,800
======================================================================
Casinos & Gambling-4.77%
Ameristar Casinos, Inc., Sr. Unsec. Gtd. Sub.
Notes, 10.75%, 02/15/09 220,000 240,900
----------------------------------------------------------------------
Boyd Gaming Corp.,
Sr. Unsec. Gtd. Notes, 9.25%, 08/01/09 110,000 119,350
----------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 9.50%, 07/15/07 75,000 78,750
----------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 8.75%, 04/15/12 125,000 131,875
----------------------------------------------------------------------
Herbst Gaming, Inc.-Series B, Sr. Sec. Notes,
10.75%, 09/01/08 150,000 157,500
----------------------------------------------------------------------
Hollywood Casino Corp., Sr. Unsec. Gtd.
Mortgage Notes, 11.25%, 05/01/07 155,000 168,950
----------------------------------------------------------------------
Hollywood Casino Corp./Shreveport Capital
Corp., Sr. Unsec. Gtd. Mortgage Notes,
13.00%, 08/01/06 81,000 83,025
----------------------------------------------------------------------
Mohegan Tribal Gaming Authority, Sr. Unsec.
Gtd. Sub. Notes, 8.00%, 04/01/12 40,000 42,100
----------------------------------------------------------------------
Park Place Entertainment Corp., Sr. Unsec.
Notes, 7.50%, 09/01/09 100,000 102,500
----------------------------------------------------------------------
Venetian Casino Resort LLC, 2nd Mortgage
Notes, 11.00%, 06/15/10 (Acquired 05/22/02;
Cost $70,000)(a) 70,000 73,500
======================================================================
1,198,450
======================================================================
Commodity Chemicals-0.42%
ISP Chemco Inc.-Series B, Sr. Unsec. Gtd.
Sub. Notes, 10.25%, 07/01/11 45,000 46,800
----------------------------------------------------------------------
Methanex Corp. (Canada), Sr. Unsec. Yankee
Notes, 8.75%, 08/15/12 55,000 58,300
======================================================================
105,100
======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Construction & Engineering-0.70%
Schuff Steel Co., Sr. Unsec. Gtd. Sub. Notes,
10.50%, 06/01/08 $220,000 $ 177,100
======================================================================
Construction, Farm Machinery & Heavy
Trucks-0.69%
Terex Corp., Sr. Unsec. Gtd. Sub. Notes,
9.25%, 07/15/11 190,000 173,850
======================================================================
Construction Materials-0.79%
MMI Products, Inc.-Series B, Sr. Unsec. Sub.
Notes, 11.25%, 04/15/07 215,000 198,875
======================================================================
Department Stores-0.70%
JC Penney Co. Inc., Unsec. Notes, 7.60%,
04/01/07 175,000 176,094
======================================================================
Distillers & Vintners-0.83%
Constellation Brands, Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 8.13%, 01/15/12 200,000 208,000
======================================================================
Distributors-0.15%
AmeriGas Partners, L.P., Sr. Unsec. Notes,
8.88%, 05/20/11 35,000 36,575
======================================================================
Diversified Chemicals-1.55%
Equistar Chemicals LP/Equistar Funding Corp.,
Sr. Unsec. Gtd. Notes, 10.13%, 09/01/08 110,000 100,650
----------------------------------------------------------------------
FMC Corp., Sr. Sec. Notes, 10.25%, 11/01/09
(Acquired 10/09/02; Cost $148,158)(a) 150,000 162,750
----------------------------------------------------------------------
Huntsman International LLC, Sr. Unsec. Gtd.
Notes, 9.88%, 03/01/09 125,000 126,250
======================================================================
389,650
======================================================================
Diversified Commercial Services-0.28%
United Rentals North America Inc., Sr. Notes,
10.75%, 04/15/08 (Acquired 12/17/02; Cost
$67,932)(a) 70,000 69,650
======================================================================
Drug Retail-0.66%
Rite Aid Corp., Sr. Unsec. Unsub. Notes,
7.13%, 01/15/07 200,000 167,000
======================================================================
Electric Utilities-1.21%
AES Corp. (The), Sec. Notes, 10.00%, 07/15/05
(Acquired 12/13/02; Cost $82,004)(a) 87,000 83,085
----------------------------------------------------------------------
Calpine Canada Energy Finance ULC (Canada),
Sr. Unsec. Gtd. Yankee Notes, 8.50%,
05/01/08 165,000 75,075
----------------------------------------------------------------------
CMS Energy Corp., Sr. Unsec. Unsub. Notes,
8.90%, 07/15/08 85,000 76,075
----------------------------------------------------------------------
Mission Energy Holding Co., Sr. Sec. Notes,
13.50%, 07/15/08 285,000 69,825
======================================================================
304,060
======================================================================
Electrical Components & Equipment-1.02%
Flextronics International Ltd. (Singapore),
Sr. Unsec. Sub. Yankee Notes, 9.88%,
07/01/10 125,000 135,625
----------------------------------------------------------------------
|
AIM V.I. HIGH YIELD FUND
FS-129
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Electrical Components & Equipment-(Continued)
Sanmina-SCI Corp., Sr. Sec. Notes, 10.38%,
01/15/10 (Acquired 12/18/02; Cost
$120,000)(a) $120,000 $ 121,500
======================================================================
257,125
======================================================================
Electronic Equipment & Instruments-1.40%
Fisher Scientific International Inc., Sr.
Unsec. Sub. Notes, 8.13%, 05/01/12 150,000 155,625
----------------------------------------------------------------------
Knowles Electronics Inc., Sr. Unsec. Gtd.
Sub. Notes, 13.13%, 10/15/09 140,000 79,100
----------------------------------------------------------------------
PerkinElmer, Inc., Sr. Sub. Notes, 8.88%,
01/15/13 (Acquired 12/13/02; Cost
$59,504)(a) 60,000 59,400
----------------------------------------------------------------------
Solectron Corp., Sr. Unsec. Notes, 9.63%,
02/15/09 60,000 58,800
======================================================================
352,925
======================================================================
Employment Services-0.28%
MSX International, Inc., Sr. Unsec. Gtd. Sub.
Notes, 11.38%, 01/15/08 175,000 69,125
======================================================================
Environmental Services-0.60%
Allied Waste North America Inc.-Series B, Sr.
Gtd. Sub. Notes, 8.50%, 12/01/08 150,000 151,500
======================================================================
Fertilizers & Agricultural Chemicals-0.19%
IMC Global Inc.-Series B, Sr. Unsec. Gtd.
Notes, 11.25%, 06/01/11 45,000 49,050
======================================================================
Food Distributors-0.86%
Fleming Cos., Inc.-Series D, Sr. Unsec. Gtd.
Sub. Notes, 10.63%, 07/31/07 115,000 76,475
----------------------------------------------------------------------
Roundy's, Inc.-Series B, Sr. Unsec. Gtd. Sub.
Notes, 8.88%, 06/15/12 140,000 138,950
======================================================================
215,425
======================================================================
Forest Products-1.93%
Louisiana-Pacific Corp.
Sr. Unsec. Notes, 8.50%, 08/15/05 130,000 134,550
----------------------------------------------------------------------
Sr. Unsec. Sub. Notes, 10.88%, 11/15/08 100,000 108,500
----------------------------------------------------------------------
Millar Western Forest Products Ltd. (Canada),
Sr. Unsec. Yankee Notes, 9.88%, 05/15/08 250,000 241,250
======================================================================
484,300
======================================================================
General Merchandise Stores-0.74%
Pantry, Inc. (The), Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 10/15/07 210,000 185,850
======================================================================
Health Care Distributors & Services-0.57%
AmerisourceBergen Corp., Sr. Notes, 7.25%,
11/15/12 (Acquired 11/12/02; Cost
$70,000)(a) 70,000 72,275
----------------------------------------------------------------------
NDCHealth Corp., Sr. Sub. Notes, 10.50%,
12/01/12 (Acquired 11/18/02-11/21/02; Cost
$69,688)(a) 70,000 70,525
======================================================================
142,800
======================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Health Care Equipment-1.85%
CONMED Corp., Sr. Unsec. Gtd. Sub. Notes,
9.00%, 03/15/08 $110,000 $ 114,950
----------------------------------------------------------------------
Medquest Inc., Sr. Sub. Notes, 11.88%,
08/15/12 (Acquired 08/08/02; Cost
$117,445)(a) 120,000 119,400
----------------------------------------------------------------------
Radiologix, Inc.-Series B, Sr. Unsec. Gtd.
Notes, 10.50%, 12/15/08 85,000 66,725
----------------------------------------------------------------------
Vicar Operating, Inc., Sr. Unsec. Gtd. Notes,
9.88%, 12/01/09 150,000 164,250
======================================================================
465,325
======================================================================
Health Care Facilities-3.41%
Hanger Orthopedic Group, Inc.
Sr. Gtd. Sub. Notes, 11.25%, 06/15/09 250,000 258,750
----------------------------------------------------------------------
Sr. Unsec. Gtd. Notes, 10.38%, 02/15/09 50,000 52,250
----------------------------------------------------------------------
Select Medical Corp., Sr. Unsec. Sub. Notes,
9.50%, 06/15/09 250,000 260,000
----------------------------------------------------------------------
Triad Hospitals, Inc.-Series B, Sr. Unsec.
Gtd. Notes, 8.75%, 05/01/09 75,000 80,625
----------------------------------------------------------------------
United Surgical Partners International, Inc.,
Sr. Unsec. Gtd. Sub. Notes, 10.00%,
12/15/11 200,000 206,000
======================================================================
857,625
======================================================================
Health Care Supplies-0.65%
DJ Orthopedics LLC, Sr. Unsec. Gtd. Sub.
Notes, 12.63%, 06/15/09 165,000 164,175
======================================================================
Home Furnishings-0.84%
Sealy Mattress Co.-Series B, Sr. Gtd. Sub.
Notes, 9.88%, 12/15/07 190,000 185,250
----------------------------------------------------------------------
Winsloew Furniture, Inc.-Series B, Sr. Unsec.
Gtd. Sub. Notes, 12.75%, 08/15/07 30,000 24,750
======================================================================
210,000
======================================================================
Homebuilding-3.14%
Beazer Homes USA, Inc., Sr. Unsec. Gtd. Notes
8.38%, 04/15/12 80,000 82,800
----------------------------------------------------------------------
K Hovnanian Enterprises, Inc., Sr. Unsec.
Gtd. Notes, 10.50%, 10/01/07 105,000 113,400
----------------------------------------------------------------------
Schuler Homes, Inc., Sr. Unsec. Gtd. Notes,
9.00%, 04/15/08 200,000 205,000
----------------------------------------------------------------------
10.50%, 07/15/11 50,000 51,250
----------------------------------------------------------------------
Technical Olympic USA, Inc., Sr. Notes,
9.00%, 07/01/10 (Acquired 06/14/02; Cost
$175,000)(a) 175,000 169,750
----------------------------------------------------------------------
WCI Communities Inc., Sr. Unsec. Gtd. Sub.
Notes, 10.63%, 02/15/11 170,000 165,750
======================================================================
787,950
======================================================================
Hotels, Resorts & Cruise Lines-3.37%
HMH Properties Inc., Sr. Sec. Gtd. Notes,
7.88%, 08/01/08 55,000 53,350
----------------------------------------------------------------------
|
AIM V.I. HIGH YIELD FUND
FS-130
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Hotels, Resorts & Cruise Lines-(Continued)
Intrawest Corp. (Canada), Sr. Unsec. Yankee
Notes, 10.50%, 02/01/10 $255,000 $ 266,475
----------------------------------------------------------------------
John Q. Hammons Hotels, Inc., Sr. 1st
Mortgage Notes, 8.88%, 05/15/12 80,000 81,000
----------------------------------------------------------------------
Kerzner International Ltd. (Bahamas), Sr.
Unsec. Gtd. Sub. Notes, 8.88%, 08/15/11 125,000 128,750
----------------------------------------------------------------------
Royal Caribbean Cruises Ltd. (Liberia), Sr.
Unsec. Unsub. Notes, 8.75%, 02/02/11 200,000 184,000
----------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc.,
Notes, 7.88%, 05/01/12 (Acquired 04/11/02;
Cost $134,302)(a) 135,000 133,988
======================================================================
847,563
======================================================================
Household Appliances-0.39%
Salton, Inc., Sr. Unsec. Gtd. Sub. Notes,
10.75%, 12/15/05 100,000 98,000
======================================================================
Industrial Gases-0.68%
Constar International Inc., Sr. Sub. Notes,
11.00%, 12/01/12 170,000 169,575
======================================================================
Industrial Machinery-0.50%
Actuant Corp., Sr. Unsec. Gtd. Sub. Notes,
13.00%, 05/01/09 17,000 19,975
----------------------------------------------------------------------
Manitowoc Co. Inc. (The), Sr. Sub. Notes,
10.50%, 08/01/12 (Acquired
08/02/02-11/04/02; Cost $65,063)(a) 65,000 67,925
----------------------------------------------------------------------
National Waterworks Inc., Sr. Sub. Notes,
10.50%, 12/01/12 (Acquired 11/14/02; Cost
$35,000)(a) 35,000 36,925
======================================================================
124,825
======================================================================
Integrated Oil & Gas-1.22%
El Paso Energy Partners, L.P.,
Sr. Unsec. Gtd. Sub. Notes, 8.50%, 06/01/11
(Acquired 05/14/02-10/11/02; Cost
$231,356)(a) 240,000 222,000
----------------------------------------------------------------------
Series B, Sr. Unsec. Gtd. Sub. Notes,
8.50%, 06/01/11 90,000 83,250
======================================================================
305,250
======================================================================
Integrated Telecommunication Services-1.25%
Madison River Capital LLC/Madison River
Finance Corp., Sr. Unsec. Notes, 13.25%,
03/01/10 180,000 105,300
----------------------------------------------------------------------
PTC International Finance II S.A.
(Luxembourg), Sr. Unsec. Gtd. Sub. Yankee
Notes, 11.25%, 12/01/09 195,000 207,675
======================================================================
312,975
======================================================================
Leisure Facilities-1.12%
Hilton Hotels Corp., Sr. Unsec. Notes, 7.63%,
12/01/12 100,000 100,250
----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Leisure Facilities-(Continued)
Six Flags, Inc., Sr. Unsec. Notes,
9.50%, 02/01/09 $ 45,000 $ 43,538
----------------------------------------------------------------------
9.75%, 06/15/07 140,000 137,200
======================================================================
280,988
======================================================================
Marine-0.14%
Stena A.B. (Sweden), Sr. Notes, 9.63%,
12/01/12 (Acquired 11/22/02; Cost
$35,000)(a) 35,000 36,225
======================================================================
Metal & Glass Containers-2.56%
AEP Industries Inc., Sr. Unsec. Sub. Notes,
9.88%, 11/15/07 30,000 28,650
----------------------------------------------------------------------
Anchor Glass Container Corp., Sr. Sec. Sub.
First Mortgage Notes, 11.25%, 04/01/05 100,000 98,500
----------------------------------------------------------------------
Ball Corp., Sr. Notes, 6.88%, 12/15/12
(Acquired 12/05/02; Cost $45,000)(a) 45,000 45,450
----------------------------------------------------------------------
Greif Brothers Corp., Sr. Unsec. Gtd. Sub.
Notes, 8.88%, 08/01/12 150,000 159,750
----------------------------------------------------------------------
Jarden Corp., Sr. Unsec. Gtd. Sub. Notes,
9.75%, 05/01/12 110,000 112,750
----------------------------------------------------------------------
Owens-Brockway, Sr. Sec. Notes, 8.75%,
11/15/12 (Acquired 11/05/02; Cost
$100,000)(a) 100,000 102,000
----------------------------------------------------------------------
Plastipak Holdings Inc., Sr. Unsec. Gtd.
Notes, 10.75%, 09/01/11 85,000 90,100
----------------------------------------------------------------------
Stone Container Corp., Sr. Unsec. Notes,
8.38%, 07/01/12 5,000 5,150
======================================================================
642,350
======================================================================
Movies & Entertainment-0.99%
AMC Entertainment Inc., Sr. Unsec. Sub.
Notes, 9.50%, 02/01/11 250,000 247,500
======================================================================
Multi-Utilities & Unregulated Power-0.27%
Transcontinental Gas Pipe Line, Notes, 6.13%,
01/15/05 70,000 67,200
======================================================================
Office Services & Supplies-0.28%
Falcon Products, Inc.-Series B, Sr. Unsec.
Gtd. Sub. Notes, 11.38%, 06/15/09 100,000 70,500
======================================================================
Oil & Gas Drilling-1.01%
Pride International, Inc., Sr. Unsec. Notes,
10.00%, 06/01/09 235,000 254,975
======================================================================
Oil & Gas Equipment & Services-1.38%
Grant Prideco Escrow Corp., Sr. Notes, 9.00%,
12/15/09 (Acquired 11/25/02; Cost
$50,000)(a) 50,000 52,250
----------------------------------------------------------------------
Hanover Equipment Trust-Series 2001-A, Sr.
Sec. Notes, 8.50%, 09/01/08 (Acquired
08/05/02-10/24/02; Cost $123,425)(a) 145,000 141,375
----------------------------------------------------------------------
SESI, LLC, Sr. Unsec. Gtd. Notes, 8.88%,
05/15/11 150,000 153,750
======================================================================
347,375
======================================================================
|
AIM V.I. HIGH YIELD FUND
FS-131
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Oil & Gas Exploration & Production-2.22%
Chesapeake Energy Corp.
Sr. Notes, 7.75%, 01/15/15 (Acquired
12/13/02; Cost $59,416)(a) $ 60,000 $ 60,000
----------------------------------------------------------------------
Sr. Unsec. Gtd. Notes, 8.38%, 11/01/08 50,000 52,125
----------------------------------------------------------------------
Comstock Resources, Inc., Sr. Unsec. Gtd.
Notes, 11.25%, 05/01/07 65,000 69,225
----------------------------------------------------------------------
Frontier Oil Corp., Sr. Unsec. Sub. Notes,
11.75%, 11/15/09 245,000 253,575
----------------------------------------------------------------------
Swift Energy Co., Sr. Unsec. Sub. Notes,
9.38%, 05/01/12 50,000 48,750
----------------------------------------------------------------------
Westport Resources Corp., Sr. Sub. Notes,
8.25%, 11/01/11 (Acquired 12/11/02; Cost
$72,100)(a) 70,000 73,500
======================================================================
557,175
======================================================================
Oil & Gas Refining, Marketing &
Transportation-1.51%
Tesoro Petroleum Corp., Sr. Unsec. Sub.
Notes, 9.63%, 04/01/12 25,000 16,375
----------------------------------------------------------------------
Texas Petrochemical Corp., Sr. Unsec. Sub.
Notes, 11.13%, 07/01/06 155,000 95,325
----------------------------------------------------------------------
Western Gas Resources, Inc., Sr. Unsec. Gtd.
Sub. Notes, 10.00%, 06/15/09 250,000 268,750
======================================================================
380,450
======================================================================
Packaged Foods & Meats-0.23%
Dole Food Co., Inc., Sr. Unsec. Notes, 7.25%,
05/01/09 60,000 57,150
======================================================================
Paper Packaging-0.53%
Graphic Packaging Corp., Unsec. Gtd. Sub.
Notes, 8.63%, 02/15/12 125,000 132,500
======================================================================
Paper Products-1.29%
Appleton Papers Inc.-Series B, Sr. Unsec.
Gtd. Sub. Notes, 12.50%, 12/15/08 115,000 126,500
----------------------------------------------------------------------
Tembec Industries Inc. (Canada), Sr. Unsec.
Gtd. Yankee Notes, 7.75%, 03/15/12 200,000 198,000
======================================================================
324,500
======================================================================
Personal Products-1.64%
Armkel LLC, Sr. Sub. Notes, 9.50%, 08/15/09 70,000 76,125
----------------------------------------------------------------------
Elizabeth Arden, Inc., Sr. Sec. Notes,
11.75%, 02/01/11 190,000 195,700
----------------------------------------------------------------------
Herbalife International, Inc., Sr. Sub.
Notes, 11.75%, 07/15/10 (Acquired
06/21/02-10/18/02; Cost $133,469)(a) 140,000 140,000
======================================================================
411,825
======================================================================
Pharmaceuticals-1.64%
aaiPharma Inc., Sr. Sub. Unsec. Gtd. Notes,
11.00%, 04/01/10 240,000 241,200
----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Pharmaceuticals-(Continued)
Biovail Corp. (Canada), Sr. Sub. Yankee
Notes, 7.88%, 04/01/10 $170,000 $ 170,850
======================================================================
412,050
======================================================================
Publishing-1.41%
American Media Operations, Inc.-Series B, Sr.
Unsec. Gtd. Sub. Notes, 10.25%, 05/01/09 150,000 156,000
----------------------------------------------------------------------
Dex Media East LLC, Sr. Notes, 9.88%,
11/15/09 (Acquired 10/13/02; Cost
$100,000)(a) 100,000 108,000
----------------------------------------------------------------------
PRIMEDIA Inc., Sr. Unsec. Gtd. Notes, 8.88%,
05/15/11 100,000 91,250
======================================================================
355,250
======================================================================
Railroads-2.18%
Kansas City Southern Railway, Sr. Unsec. Gtd.
Notes, 9.50%, 10/01/08 200,000 221,000
----------------------------------------------------------------------
Railamerica Transportation Corp., Sr. Unsec.
Gtd. Sub. Notes, 12.88%, 08/15/10 175,000 175,875
----------------------------------------------------------------------
TFM S.A. de C.V. (Mexico), Sr. Unsec. Gtd.
Disc. Yankee Deb., 11.75%, 06/15/09(c) 155,000 151,900
======================================================================
548,775
======================================================================
Real Estate-2.02%
Host Marriott LP-Series G, Sr. Gtd. Notes,
9.25%, 10/01/07 175,000 176,750
----------------------------------------------------------------------
iStar Financial Inc., Sr. Unsec. Notes,
8.75%, 08/15/08 145,000 152,975
----------------------------------------------------------------------
MeriStar Hospitality Corp., Sr. Unsec. Gtd.
Notes, 9.13%, 01/15/11 155,000 135,625
----------------------------------------------------------------------
RFS Partnership LP, Sr. Unsec. Gtd. Notes,
9.75%, 03/01/12 40,000 41,000
======================================================================
506,350
======================================================================
Restaurants-0.35%
Perkins Family Restaurants, L.P.-Series B,
Sr. Unsec. Notes, 10.13%, 12/15/07 100,000 88,500
======================================================================
Semiconductors-0.32%
ON Semiconductor Corp., Sr. Sec. Gtd. Notes,
12.00%, 05/15/08 (Acquired
05/01/02-06/11/02; Cost $104,986)(a) 110,000 80,850
======================================================================
Specialty Chemicals-1.06%
K & F Industries, Inc. Sr. Sub. Notes, 9.63%,
12/15/10 (Acquired 12/13/02; Cost
$40,000)(a) 40,000 41,000
----------------------------------------------------------------------
Macdermid Inc., Sr. Unsec. Gtd. Sub. Notes,
9.13%, 07/15/11 50,000 53,750
----------------------------------------------------------------------
Millennium America, Inc.
Sr. Notes, 9.25%, 06/15/08 (Acquired
06/20/02; Cost $56,375)(a) 55,000 57,613
----------------------------------------------------------------------
Sr. Unsec. Gtd. Sub. Notes, 9.25%, 06/15/08 50,000 52,313
----------------------------------------------------------------------
OM Group, Inc., Sr. Unsec. Gtd. Sub. Notes,
9.25%, 12/15/11 115,000 62,675
======================================================================
267,351
======================================================================
|
AIM V.I. HIGH YIELD FUND
FS-132
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Specialty Stores-2.71%
Advance Stores Co., Inc.-Series B, Sr. Unsec.
Gtd. Sub. Notes, 10.25%, 04/15/08 $150,000 $ 159,000
----------------------------------------------------------------------
CSK Auto, Inc., Sr. Unsec. Gtd. Notes,
12.00%, 06/15/06 80,000 86,000
----------------------------------------------------------------------
Petco Animal Supplies Inc., Sr. Unsec. Gtd.
Sub. Notes, 10.75%, 11/01/11 200,000 215,500
----------------------------------------------------------------------
Petro Stopping Centers LP, Sr. Unsec. Notes,
10.50%, 02/01/07 75,000 70,500
----------------------------------------------------------------------
United Rentals, Inc.-Series B, Sr. Unsec.
Gtd. Notes, 10.75%, 04/15/08 150,000 149,250
======================================================================
680,250
======================================================================
Telecommunications Equipment-0.49%
Filtronic PLC (United Kingdom), Sr. Unsec.
Yankee Notes, 10.00%, 12/01/05 135,000 123,525
======================================================================
Textiles-0.64%
Cabot Safety Corp., Sr. Sub. Notes, 12.50%,
07/15/05 160,000 160,800
======================================================================
Trucking-1.81%
Avis Group Holdings, Inc., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 05/01/09 215,000 235,963
----------------------------------------------------------------------
North American Van Lines, Sr. Unsec. Gtd.
Sub. Notes, 13.38%, 12/01/09 220,000 218,350
======================================================================
454,313
======================================================================
Wireless Telecommunication Services-2.33%
AirGate PCS, Inc., Sr. Sub. Disc. Notes,
13.50%, 10/01/09(c)(d) 130,000 14,950
----------------------------------------------------------------------
Alamosa Holdings, Inc., Sr. Unsec. Gtd. Disc.
Notes, 12.88%, 02/15/10(c) 45,000 8,325
----------------------------------------------------------------------
Horizon PCS, Inc., Sr. Unsec. Gtd. Disc.
Notes, 14.00%, 10/01/10(c) 120,000 9,000
----------------------------------------------------------------------
iPCS, Inc., Sr. Unsec. Disc. Notes, 14.00%,
07/15/10(c) 130,000 7,150
----------------------------------------------------------------------
IWO Holdings, Inc., Sr. Unsec. Gtd. Notes,
14.00%, 01/15/11 240,000 46,800
----------------------------------------------------------------------
Nextel Communications, Inc., Sr. Unsec.
Notes, 9.50%, 02/01/11 240,000 220,800
----------------------------------------------------------------------
NTELOS Inc., Sr. Unsec. Notes, 13.00%,
08/15/10 155,000 44,175
----------------------------------------------------------------------
SBA Communications Corp., Sr. Unsec. Notes,
10.25%, 02/01/09 150,000 82,125
----------------------------------------------------------------------
Spectrasite Holdings, Inc., Sr. Disc. Notes,
12.00%, 07/15/08(c) 145,000 47,125
----------------------------------------------------------------------
Spectrasite Holdings, Inc., Sr. Unsec. Disc.
Notes, 11.25%, 04/15/09(c) 30,000 9,150
----------------------------------------------------------------------
Tritel PCS Inc., Sr. Unsec. Gtd. Sub. Notes,
10.38%, 01/15/11 72,000 76,500
----------------------------------------------------------------------
|
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------
Wireless Telecommunication Services-(Continued)
UbiquiTel Operating Co., Sr. Unsec. Gtd.
Disc. Sub. Notes, 14.00%, 04/15/10(c) $192,000 $ 12,480
----------------------------------------------------------------------
US Unwired Inc.-Series B, Sr. Unsec. Gtd.
Sub. Disc. Notes, 13.38%, 11/01/09(c) 90,000 5,850
======================================================================
584,430
======================================================================
Total Bonds & Notes (Cost $24,503,193) 22,731,696
======================================================================
SHARES
WARRANTS & OTHER EQUITY INTERESTS-0.96%
Broadcasting & Cable TV-0.94%
CSC Holdings Inc.-Series M, PIK Pfd. 2,500 235,000
----------------------------------------------------------------------
Knology, Inc.-Series D, Conv. Pfd. (Acquired
11/07/02; Cost $0)(a) 5,972 0
----------------------------------------------------------------------
ONO Finance PLC (United Kingdom)-Rts.,
expiring 05/31/09(e) 550 1
======================================================================
235,001
======================================================================
Construction Materials-0.00%
Dayton Superior-Wts., expiring 06/15/09
(Acquired 08/07/00; Cost $0)(a)(e) 220 110
======================================================================
General Merchandise Stores-0.01%
Travelcenters of America Inc.-Wts., expiring
05/01/09 (Acquired 01/29/01; Cost $0)(a)(e) 300 3,075
======================================================================
Home Furnishings-0.00%
Winsloew Escrow Corp.-Wts., expiring 08/15/07
(Acquired 12/06/99; Cost $0)(a)(e) 30 315
======================================================================
Railroads-0.01%
Railamerica Inc.-Wts., expiring 08/15/10
(Acquired 10/05/00; Cost $0)(a)(e) 175 1,335
======================================================================
Wireless Telecommunication Services-0.00%
Horizon PCS, Inc.-Wts., expiring 10/01/10
(Acquired 05/02/01; Cost $0)(a)(e) 500 0
----------------------------------------------------------------------
iPCS, Inc.-Wts., expiring 07/15/10 (Acquired
01/29/01; Cost $0)(a)(e) 100 25
----------------------------------------------------------------------
IWO Holdings Inc.-Wts., expiring 01/15/11
(Acquired 08/24/01-09/04/01; Cost
$2,600)(a)(e) 240 60
----------------------------------------------------------------------
NTELOS Inc.-Wts., expiring 08/15/10 (Acquired
11/15/00; Cost $0)(a)(e) 300 3
----------------------------------------------------------------------
Ubiquitel Inc.-Wts., expiring 04/15/10
(Acquired 08/10/00; Cost $0)(a)(e) 300 113
======================================================================
201
======================================================================
Total Warrants & Other Equity Interests
(Cost $261,725) 240,037
======================================================================
|
AIM V.I. HIGH YIELD FUND
FS-133
MARKET
SHARES VALUE
----------------------------------------------------------------------
MONEY MARKET FUNDS-6.40%
STIC Liquid Assets Portfolio(f) 804,499 $ 804,499
----------------------------------------------------------------------
STIC Prime Portfolio(f) 804,499 804,499
======================================================================
Total Money Market Funds (Cost
$1,608,998) 1,608,998
======================================================================
TOTAL INVESTMENTS-97.83% (Cost $26,373,916) 24,580,731
======================================================================
OTHER ASSETS LESS LIABILITIES-2.17% 545,237
======================================================================
NET ASSETS-100.00% $25,125,968
______________________________________________________________________
======================================================================
|
Investment Abbreviations:
Conv. - Convertible Deb. - Debentures Disc. - Discounted Gtd. - Guaranteed Pfd. - Preferred PIK - Payment in Kind Rts. - Rights Sec. - Secured Sr. - Senior Sub. - Subordinated Unsec. - Unsecured Unsub. - Unsubordinated Wts. - Warrants |
Notes to Schedule of Investments:
(a) Securities not registered under the Securities Act of 1933, as amended
(e.g., the security was purchased in a Rule 144A transaction or a Regulation
D transaction); the securities may be resold only pursuant to an exemption
from registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 12/31/02 was $2,842,696,
which represented 11.31% of the Fund's net assets. Of these securities, less
than 0.00% of the Fund's net assets are considered to be illiquid.
(b) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(c) Discounted bond at issue. The interest rate represents the coupon rate at
which the bond will accrue at a specified future date.
(d) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit includes warrants to purchase
common or preferred shares of the issuer.
(e) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(f) 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-134
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $26,373,916) $24,580,731
------------------------------------------------------------
Receivables for:
Investments sold 43,840
------------------------------------------------------------
Fund shares sold 1,499
------------------------------------------------------------
Dividends and interest 576,489
------------------------------------------------------------
Investment for deferred compensation plan 19,437
============================================================
Total assets 25,221,996
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 38,636
------------------------------------------------------------
Deferred compensation plan 19,437
------------------------------------------------------------
Accrued administrative services fees 17,990
------------------------------------------------------------
Accrued distribution fees -- Series II 38
------------------------------------------------------------
Accrued transfer agent fees 1,765
------------------------------------------------------------
Accrued operating expenses 18,162
============================================================
Total liabilities 96,028
============================================================
Net assets applicable to shares outstanding $25,125,968
____________________________________________________________
============================================================
NET ASSETS:
Series I $24,983,652
____________________________________________________________
============================================================
Series II $ 142,316
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 4,998,679
____________________________________________________________
============================================================
Series II 28,496
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 5.00
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 4.99
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Interest $ 3,034,659
------------------------------------------------------------
Dividends 28,032
------------------------------------------------------------
Dividends from affiliated money market funds 15,871
============================================================
Total investment income 3,078,562
============================================================
EXPENSES:
Advisory fees 167,345
------------------------------------------------------------
Administrative services fees 117,619
------------------------------------------------------------
Custodian fees 20,713
------------------------------------------------------------
Distribution fees -- Series II 114
------------------------------------------------------------
Transfer agent fees 9,753
------------------------------------------------------------
Trustees' fees 8,520
------------------------------------------------------------
Other 24,769
============================================================
Total expenses 348,833
============================================================
Less: Fees waived and expenses reimbursed (203)
------------------------------------------------------------
Expenses paid indirectly (276)
============================================================
Net expenses 348,354
============================================================
Net investment income 2,730,208
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from investment
securities (8,153,576)
------------------------------------------------------------
Change in net unrealized appreciation of
investment securities 3,638,095
============================================================
Net gain (loss) from investment securities (4,515,481)
============================================================
Net increase (decrease) in net assets resulting
from operations $(1,785,273)
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
FS-135
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
-----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,730,208 $ 3,307,145
-----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (8,153,576) (6,354,746)
-----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 3,638,095 1,271,997
=========================================================================================
Net increase (decrease) in net assets resulting from
operations (1,785,273) (1,775,604)
=========================================================================================
Distributions to shareholders from net investment income:
Series I -- (3,500,180)
-----------------------------------------------------------------------------------------
Share transactions-net:
Series I (2,028,474) 7,923,261
-----------------------------------------------------------------------------------------
Series II 141,011 --
=========================================================================================
Net increase (decrease) in net assets (3,672,736) 2,647,477
=========================================================================================
NET ASSETS:
Beginning of year 28,798,704 26,151,227
=========================================================================================
End of year $ 25,125,968 $28,798,704
_________________________________________________________________________________________
=========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 42,267,377 $44,154,693
-----------------------------------------------------------------------------------------
Undistributed net investment income 2,543,233 (308,871)
-----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (17,891,457) (9,615,838)
-----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (1,793,185) (5,431,280)
=========================================================================================
$ 25,125,968 $28,798,704
_________________________________________________________________________________________
=========================================================================================
|
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
FS-136
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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. Premiums and discounts are amortized and/or accreted for financial reporting purposes.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) which is distributed to shareholders. Therefore,
AIM V.I. HIGH YIELD FUND
FS-137
no provision for federal income taxes is recorded in the financial statements.
E. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. AIM has agreed to waive advisory fees of Series I and Series II shares to the extent necessary to limit the expenses (excluding Rule 12b-1 plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of each Series to 1.30%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $157.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $117,619 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $6,074 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the period March 26, 2002 (date sales commenced) through December 31, 2002, the Series II shares paid $68 after plan fees reimbursed by AIM Distributors of $46.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,704 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, 2002, the Fund received reductions in custodian fees of $276 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $276.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
-------------------------------------------------------------
Distributions paid from ordinary income $ -- $3,500,180
_____________________________________________________________
=============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 2,569,755
-------------------------------------------------------------
Unrealized appreciation
(depreciation) -- investments (1,944,866)
-------------------------------------------------------------
Temporary book/tax differences (25,760)
-------------------------------------------------------------
Capital loss carryforward (17,135,207)
-------------------------------------------------------------
Post-October capital loss deferral (605,331)
-------------------------------------------------------------
Shares of beneficial interest 42,267,377
=============================================================
$ 25,125,968
_____________________________________________________________
=============================================================
|
AIM V.I. HIGH YIELD FUND
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales, bond premium amortization and defaulted bond adjustments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
December 31, 2006 $ 247,107
-----------------------------------------------------------
December 31, 2007 545,518
-----------------------------------------------------------
December 31, 2008 2,010,706
-----------------------------------------------------------
December 31, 2009 5,842,381
-----------------------------------------------------------
December 31, 2010 8,489,495
===========================================================
$17,135,207
___________________________________________________________
===========================================================
|
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, 2002 was $18,703,328 and $19,351,646, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 856,962 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (2,801,828) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(1,944,866) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $26,525,597. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of bond premium amortization and defaulted bond adjustments on December 31, 2002, undistributed net investment income was increased by $121,896, undistributed net realized gains decreased by $122,043 and shares of beneficial interest increased by $147. This reclassification had no effect on the net assets of the Fund.
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------------
Sold:
Series I 1,454,744 $ 7,353,977 2,277,266 $ 14,617,884
---------------------------------------------------------------------------------------------------------------------
Series II* 33,073 162,657 -- --
=====================================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 660,415 3,500,180
=====================================================================================================================
Reacquired:
Series I (1,877,404) (9,382,451) (1,633,796) (10,194,803)
---------------------------------------------------------------------------------------------------------------------
Series II* (4,577) (21,646) -- --
=====================================================================================================================
(394,164) $(1,887,463) 1,303,885 $ 7,923,261
_____________________________________________________________________________________________________________________
=====================================================================================================================
|
* Series II shares commenced sales on March 26, 2002.
AIM V.I. HIGH YIELD FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
---------------------------------------------------------------------
MAY 1, 1998
(DATE OPERATIONS
YEAR ENDED DECEMBER 31, COMMENCED) TO
---------------------------------------------- DECEMBER 31,
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.31 $ 6.35 $ 9.02 $ 8.84 $10.00
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.51(a) 0.70(b) 0.91 1.03(a) 0.39
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.82) (1.01) (2.64) (0.10) (1.15)
=================================================================================================================================
Total from investment operations (0.31) (0.31) (1.73) 0.93 (0.76)
=================================================================================================================================
Less dividends from net investment income -- (0.73) (0.94) (0.75) (0.40)
=================================================================================================================================
Net asset value, end of period $ 5.00 $ 5.31 $ 6.35 $ 9.02 $ 8.84
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(c) (5.84)% (4.85)% (19.14)% 10.52% (7.61)%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $24,984 $28,799 $26,151 $25,268 $7,966
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(d) 1.21% 1.13% 1.14% 1.13%(e)
---------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.30%(d) 1.29% 1.19% 1.42% 2.50%(e)
=================================================================================================================================
Ratio of net investment income to average net assets 10.20%(d) 11.39%(b) 11.44% 11.07% 9.75%(e)
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 74% 64% 72% 127% 39%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) As required, effective January 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment
Companies and began amortizing premium on debt securities. Had the Fund
not amortized premiums on debt securities, the net investment income per
share would have been $0.71 and the ratio of net investment income to
average net assets would have been 11.44%. In accordance with the AICPA
Audit and Accounting Guide for Investment Companies, per share and
ratios prior to January 1, 2001 have not been restated to reflect this
change in presentation.
(c) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(d) Ratios are based on average daily net assets of $26,729,639.
(e) Annualized.
SERIES II
--------------
MARCH 26, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
----------------------------------------------------------------------------
Net asset value, beginning of period $ 5.27
----------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.38(a)
----------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (0.66)
============================================================================
Total from investment operations (0.28)
============================================================================
Net asset value, end of period $ 4.99
____________________________________________________________________________
============================================================================
Total return(b) (5.31)%
____________________________________________________________________________
============================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 142
____________________________________________________________________________
============================================================================
Ratio of expenses to average net assets:
With fee waivers and expense reimbursements 1.45%(c)
----------------------------------------------------------------------------
Without fee waivers and expense reimbursements 1.55%(c)
============================================================================
Ratio of net investment income to average net assets 10.05%(c)
____________________________________________________________________________
============================================================================
Portfolio turnover rate 74%
____________________________________________________________________________
============================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are annualized and based on average daily net assets of $59,371.
AIM V.I. HIGH YIELD FUND
FS-140
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 Growth Fund, formerly 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, 2002, 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 years or periods in the five year 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, 2002 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 Growth Fund, as of December 31, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. INTERNATIONAL GROWTH FUND
FS-141
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
-----------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.56%
Australia-2.00%
Amcor Ltd. (Paper Packaging) 362,300 $ 1,726,056
-----------------------------------------------------------------------
BHP Billiton Ltd. (Diversified Metals &
Mining) 375,200 2,137,016
-----------------------------------------------------------------------
BHP Steel Ltd. (Steel)(a) 48,860 88,559
-----------------------------------------------------------------------
James Hardie Industries N.V. (Construction
Materials) 284,000 1,088,474
=======================================================================
5,040,105
=======================================================================
Canada-9.59%
Canadian National Railway Co. (Railroads) 82,500 3,424,994
-----------------------------------------------------------------------
Canadian Pacific Railway Ltd. (Railroads) 106,000 2,100,178
-----------------------------------------------------------------------
EnCana Corp. (Oil & Gas Exploration &
Production) 108,800 3,375,693
-----------------------------------------------------------------------
Loblaw Cos. Ltd. (Food Retail) (Acquired
11/10/00-11/14/02; Cost $5,580,868)(b) 170,700 5,809,793
-----------------------------------------------------------------------
Manulife Financial Corp. (Life & Health
Insurance) 40,300 881,514
-----------------------------------------------------------------------
Petro-Canada (Integrated Oil & Gas) 74,000 2,302,086
-----------------------------------------------------------------------
Royal Bank of Canada (Banks) 43,600 1,604,287
-----------------------------------------------------------------------
Suncor Energy, Inc. (Integrated Oil & Gas) 248,400 3,902,481
-----------------------------------------------------------------------
Thomson Corp. (The) (Publishing) 29,600 790,739
=======================================================================
24,191,765
=======================================================================
Finland-0.31%
Nokia Oyj (Telecommunications Equipment) 50,000 795,186
=======================================================================
France-11.07%
Accor S.A. (Hotels, Resorts & Cruise Lines) 37,500 1,136,092
-----------------------------------------------------------------------
Aventis S.A. (Pharmaceuticals) 56,300 3,061,428
-----------------------------------------------------------------------
BNP Paribas S.A. (Banks) 68,700 2,800,335
-----------------------------------------------------------------------
L'Oreal S.A. (Personal Products) 10,400 792,057
-----------------------------------------------------------------------
Pernod Ricard (Distillers & Vinters)(a) 14,530 1,407,840
-----------------------------------------------------------------------
PSA Peugeot Citroen (Automobile
Manufacturers) 31,825 1,298,246
-----------------------------------------------------------------------
Publicis Groupe (Advertising) 41,870 887,851
-----------------------------------------------------------------------
Renault S.A. (Automobile Manufacturers)(a) 72,390 3,402,895
-----------------------------------------------------------------------
Sanofi-Synthelabo S.A. (Pharmaceuticals) 58,150 3,555,753
-----------------------------------------------------------------------
Total Fina Elf S.A. (Integrated Oil & Gas) 42,825 6,118,450
-----------------------------------------------------------------------
Vinci S.A. (Construction & Engineering) 61,650 3,475,308
=======================================================================
27,936,255
=======================================================================
Germany-4.94%
Altana A.G. (Pharmaceuticals) 144,735 6,609,197
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Germany-(Continued)
Bayerische Motoren Werke A.G. (Automobile
Manufacturers) 67,600 $ 2,052,253
-----------------------------------------------------------------------
Porsche A.G.-Pfd. (Automobile Manufacturers) 9,170 3,811,978
=======================================================================
12,473,428
=======================================================================
Hong Kong-1.22%
Cheung Kong (Holdings) Ltd. (Real Estate
Management & Development) 178,000 1,158,364
-----------------------------------------------------------------------
CK Life Sciences International Holdings, Inc.
(Biotechnology)(a) 7,120 1,278
-----------------------------------------------------------------------
CNOOC Ltd.-ADR (Oil & Gas Exploration &
Production) 39,300 1,023,765
-----------------------------------------------------------------------
Sun Hung Kai Properties Ltd. (Real Estate
Management & Development) 151,000 894,557
=======================================================================
3,077,964
=======================================================================
India-1.92%
Infosys Technologies Ltd. (IT Consulting &
Services) 48,779 4,853,638
=======================================================================
Ireland-3.33%
Allied Irish Banks PLC (Banks) 89,000 1,200,547
-----------------------------------------------------------------------
Bank of Ireland (Banks) 507,600 5,216,632
-----------------------------------------------------------------------
Ryanair Holdings PLC-ADR (Airlines)(a) 50,500 1,977,580
=======================================================================
8,394,759
=======================================================================
Israel-2.59%
Teva Pharmaceutical Industries Ltd.-ADR
(Pharmaceuticals) 169,000 6,525,090
=======================================================================
Italy-6.85%
Autostrade-Concessioni e Costruzioni
Autostrade S.p.A. (Highways & Railtracks) 424,200 4,221,481
-----------------------------------------------------------------------
Banco Popolare di Verona e Novara Scrl
(Banks) 262,100 2,924,733
-----------------------------------------------------------------------
Eni S.p.A. (Integrated Oil & Gas) 441,700 7,024,670
-----------------------------------------------------------------------
UniCredito Italiano S.p.A. (Banks) 775,600 3,102,049
=======================================================================
17,272,933
=======================================================================
Japan-16.88%
Canon Inc. (Office Electronics) 95,000 3,575,247
-----------------------------------------------------------------------
Eisai Co., Ltd. (Pharmaceuticals) 37,000 830,183
-----------------------------------------------------------------------
Fujisawa Pharmaceutical Co., Ltd.
(Pharmaceuticals) (Acquired
09/07/01-09/11/01; Cost $2,646,839)(b) 132,000 3,017,302
-----------------------------------------------------------------------
|
AIM V.I. INTERNATIONAL GROWTH FUND
FS-142
MARKET
SHARES VALUE
-----------------------------------------------------------------------
Japan-(Continued)
Hirose Electric Co., Ltd. (Electronic
Equipment & Instruments) 39,400 $ 3,005,380
-----------------------------------------------------------------------
Honda Motor Co., Ltd. (Automobile
Manufacturers) 59,300 2,191,766
-----------------------------------------------------------------------
Hoya Corp. (Electronic Equipment &
Instruments) 67,700 4,736,578
-----------------------------------------------------------------------
Kao Corp. (Household Products) 95,000 2,083,561
-----------------------------------------------------------------------
Keyence Corp. (Electronic Equipment &
Instruments) 18,200 3,164,218
-----------------------------------------------------------------------
Nidec Corp. (Electronic Equipment &
Instruments) 29,700 1,850,389
-----------------------------------------------------------------------
Nissan Motor Co., Ltd. (Automobile
Manufacturers) 306,700 2,391,111
-----------------------------------------------------------------------
Nitto Denko Corp. (Specialty Chemicals) 139,600 3,972,620
-----------------------------------------------------------------------
Ricoh Co., Ltd. (Office Electronics) 152,000 2,491,635
-----------------------------------------------------------------------
Rohm Co. Ltd. (Semiconductors)(a) 12,600 1,602,913
-----------------------------------------------------------------------
SEGA Corp. (Consumer Electronics)(a) 156,700 1,543,582
-----------------------------------------------------------------------
Toyota Motor Corp. (Automobile Manufacturers) 87,700 2,355,403
-----------------------------------------------------------------------
Trend Micro Inc. (Application Software)(a) 101,300 1,731,332
-----------------------------------------------------------------------
Yamanouchi Pharmaceutical Co., Ltd.
(Pharmaceuticals) 70,400 2,038,948
=======================================================================
42,582,168
=======================================================================
Mexico-2.06%
America Movil S.A. de C.V.-Series L-ADR
(Wireless Telecommunication Services) 74,736 1,073,209
-----------------------------------------------------------------------
Grupo Financiero BBVA Bancomer, S.A. de C.V.-
Class B (Banks)(a) 2,098,300 1,600,535
-----------------------------------------------------------------------
Telefonos de Mexico S.A. de C.V.-Series L-ADR
(Integrated Telecommunication Services) 35,836 1,146,035
-----------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V.-Series V
(General Merchandise Stores) 714,500 1,389,727
=======================================================================
5,209,506
=======================================================================
Netherlands-2.99%
Koninklijke (Royal) KPN N.V. (Integrated
Telecommunications Services)(a) 456,700 2,972,409
-----------------------------------------------------------------------
VNU N.V. (Publishing) 98,200 2,561,673
-----------------------------------------------------------------------
Wolters Kluwer N.V.-Dutch Ctfs. (Publishing) 115,200 2,007,458
=======================================================================
7,541,540
=======================================================================
Portugal-1.18%
Portugal Telecom, SGPS, S.A. (Integrated
Telecommunication Services) 432,900 2,976,561
=======================================================================
Singapore-0.00%
United Overseas Bank Ltd. (Banks) 1 7
=======================================================================
South Korea-2.80%
Kookmin Bank (Banks) 71,020 2,514,936
-----------------------------------------------------------------------
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
South Korea-(Continued)
Kookmin Bank-ADR (Banks) 17,500 $ 618,625
-----------------------------------------------------------------------
Samsung Electronics Co., Ltd. (Electronic
Equipment & Instruments) 14,900 3,944,690
=======================================================================
7,078,251
=======================================================================
Spain-5.57%
Altadis, S.A. (Tobacco) 127,740 2,915,227
-----------------------------------------------------------------------
Banco Popular Espanol S.A. (Banks) 154,600 6,324,494
-----------------------------------------------------------------------
Industria de Diseno Textil, S.A. (Apparel
Retail) (Acquired 06/05/01-11/04/02; Cost
$2,901,810)(b) 167,800 3,965,093
-----------------------------------------------------------------------
Repsol YPF, S.A. (Integrated Oil & Gas)(a) 64,000 846,518
=======================================================================
14,051,332
=======================================================================
Sweden-0.95%
Svenska Cellulosa A.B.-Class B (Paper
Products) 71,100 2,407,311
=======================================================================
Switzerland-1.67%
Nestle S.A. (Packaged Foods & Meats) 10,200 2,162,675
-----------------------------------------------------------------------
UBS A.G. (Banks) 42,400 2,061,857
=======================================================================
4,224,532
=======================================================================
Taiwan-0.95%
Far Eastern Textile Ltd.-GDR (Industrial
Machinery) (Acquired 11/12/99-11/15/99;
Cost $230,556)(b)(c) 19,347 67,328
-----------------------------------------------------------------------
Far Eastern Textile Ltd.-GDR REGS (Industrial
Machinery) 32,210 112,091
-----------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR (Semiconductors)(a) 313,000 2,206,650
=======================================================================
2,386,069
=======================================================================
Thailand-0.01%
Siam Commercial Bank PCL (Banks)(a) 32,800 21,864
=======================================================================
United Kingdom-16.68%
BT Group PLC (Integrated Telecommunication
Services) 452,000 1,420,596
-----------------------------------------------------------------------
Centrica PLC (Gas Utilities) 1,142,000 3,147,458
-----------------------------------------------------------------------
Imperial Tobacco Group PLC (Tobacco) 214,000 3,638,848
-----------------------------------------------------------------------
Man Group PLC (Diversified Financial
Services) 114,100 1,631,199
-----------------------------------------------------------------------
Next PLC (Department Stores) 113,450 1,346,713
-----------------------------------------------------------------------
Reckitt Benckiser PLC (Household Products) 354,900 6,892,721
-----------------------------------------------------------------------
Rentokil Initial PLC (Diversified Commercial
Services) 1,225,700 4,346,148
-----------------------------------------------------------------------
Royal Bank of Scotland Group PLC (Banks) 189,780 4,551,463
-----------------------------------------------------------------------
Shell Transport & Trading Co. PLC (Integrated
Oil & Gas) 360,900 2,379,074
-----------------------------------------------------------------------
|
AIM V.I. INTERNATIONAL GROWTH FUND
FS-143
MARKET
SHARES VALUE
-----------------------------------------------------------------------
United Kingdom-(Continued)
Shire Pharmaceuticals Group PLC
(Pharmaceuticals)(a) 85,500 $ 547,773
-----------------------------------------------------------------------
Smith & Nephew PLC (Health Care Supplies) 363,275 2,227,860
-----------------------------------------------------------------------
Tesco PLC (Food Retail) 473,700 1,481,163
-----------------------------------------------------------------------
Unilever PLC (Packaged Foods & Meats) 509,700 4,855,118
-----------------------------------------------------------------------
Vodafone Group PLC (Wireless
Telecommunication Services) 1,071,000 1,954,904
-----------------------------------------------------------------------
William Morrison Supermarkets PLC (Food
Retail) 479,000 1,667,581
=======================================================================
42,088,619
=======================================================================
Total Common Stocks & Other Equity
Interests (Cost $227,403,938) 241,128,883
=======================================================================
MONEY MARKET FUNDS-3.78%
STIC Liquid Assets Portfolio(d) 4,762,632 4,762,632
-----------------------------------------------------------------------
STIC Prime Portfolio(d) 4,762,632 4,762,632
=======================================================================
Total Money Market Funds (Cost
$9,525,264) 9,525,264
=======================================================================
TOTAL INVESTMENTS-99.34% (excluding
investments purchased with cash collateral
from securities loans) (Cost $236,929,202) 250,654,147
_______________________________________________________________________
=======================================================================
|
MARKET
SHARES VALUE
-----------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL
FROM SECURITIES LOANS
MONEY MARKET FUNDS-17.43%
STIC Liquid Assets Portfolio(d)(e) 21,993,496 $ 21,993,496
-----------------------------------------------------------------------
STIC Prime Portfolio(d)(e) 21,993,495 21,993,495
=======================================================================
Total Money Market Funds (purchased with
cash collateral from securities loans)
(Cost $43,986,991) 43,986,991
=======================================================================
TOTAL INVESTMENTS-116.77% (Cost
$280,916,193)(f) 294,641,138
=======================================================================
OTHER ASSETS LESS LIABILITIES-(16.77)% (42,310,289)
=======================================================================
NET ASSETS-100.00% $252,330,849
_______________________________________________________________________
=======================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt Ctfs. - Certificates GDR - Global Depositary Receipt Pfd. - Preferred REGS - Regulation S |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Securities not registered under the Securities Act of 1933, as amended
(e.g., the security was purchased in a Rule 144A transaction or a Regulation
D transaction); the securities may be resold only pursuant to an exemption
from registration under the 1933 Act. The Fund has no rights to demand
registration of these securities. The aggregate market value of these
securities at 12/31/02 was $12,859,516, which represented 5.10% of the
Fund's net assets. Of these securities, 0.03% of the Fund's net assets is
considered to be illiquid.
(c) Security fair valued in accordance with the procedures established by the
Board of Trustees and may be considered illiquid.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
(e) The security has been segregated to satisfy the forward commitment to return
the cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned.
(f) Lippo Bank security and Companhia Vale Do Rio Doce security were received
through corporate actions and as of 12/31/02 they have no market value and
no cost basis.
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-144
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$280,916,193)* $294,641,138
-------------------------------------------------------------
Foreign currencies, at value (cost $30,077) 29,981
-------------------------------------------------------------
Receivables for:
Investments sold 1,165,869
-------------------------------------------------------------
Fund shares sold 161,095
-------------------------------------------------------------
Dividends 667,476
-------------------------------------------------------------
Investment for deferred compensation plan 36,815
-------------------------------------------------------------
Other assets 1,578
=============================================================
Total assets 296,703,952
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 134,099
-------------------------------------------------------------
Deferred compensation plan 36,815
-------------------------------------------------------------
Collateral upon return of securities loaned 43,986,991
-------------------------------------------------------------
Accrued administrative services fees 135,936
-------------------------------------------------------------
Accrued distribution fees -- Series II 7,771
-------------------------------------------------------------
Accrued transfer agent fees 4,908
-------------------------------------------------------------
Accrued operating expenses 66,583
=============================================================
Total liabilities 44,373,103
=============================================================
Net assets applicable to shares outstanding $252,330,849
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $247,579,932
_____________________________________________________________
=============================================================
Series II $ 4,750,917
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 19,818,243
_____________________________________________________________
=============================================================
Series II 381,645
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 12.49
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 12.45
_____________________________________________________________
=============================================================
|
* At December 31, 2002, securities with an aggregate market value of $42,060,548 were on loan to brokers. Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$503,941) $ 4,391,567
-------------------------------------------------------------
Dividends from affiliated money market funds 461,416
-------------------------------------------------------------
Interest 5,180
-------------------------------------------------------------
Security lending income 30,168
=============================================================
Total investment income 4,888,331
=============================================================
EXPENSES:
Advisory fees 2,402,352
-------------------------------------------------------------
Administrative services fees 713,741
-------------------------------------------------------------
Custodian fees 303,076
-------------------------------------------------------------
Distribution fees -- Series II 21,354
-------------------------------------------------------------
Transfer agent fees 40,303
-------------------------------------------------------------
Trustees' fees 10,397
-------------------------------------------------------------
Other 70,561
=============================================================
Total expenses 3,561,784
=============================================================
Less: Fees waived and expenses reimbursed (7,252)
-------------------------------------------------------------
Expenses paid indirectly (45)
=============================================================
Net expenses 3,554,487
=============================================================
Net investment income 1,333,844
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (39,366,045)
-------------------------------------------------------------
Foreign currencies 90,964
=============================================================
(39,275,081)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (1,916,831)
-------------------------------------------------------------
Foreign currencies 69,447
=============================================================
(1,847,384)
=============================================================
Net gain (loss) from investment securities and
foreign currencies (41,122,465)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(39,788,621)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-145
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
-------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,333,844 $ 1,808,874
-------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (39,275,081) (59,734,446)
-------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (1,847,384) (39,141,363)
===========================================================================================
Net increase (decrease) in net assets resulting from
operations (39,788,621) (97,066,935)
===========================================================================================
Distributions to shareholders from net investment income:
Series I (1,721,606) (1,213,852)
-------------------------------------------------------------------------------------------
Series II (128,621) (878)
-------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Series I -- (9,492,226)
-------------------------------------------------------------------------------------------
Series II -- (6,863)
-------------------------------------------------------------------------------------------
Share transactions-net:
Series I (53,650,629) 17,970,375
-------------------------------------------------------------------------------------------
Series II (281,070) 375,523
===========================================================================================
Net increase (decrease) in net assets (95,570,547) (89,434,856)
===========================================================================================
NET ASSETS:
Beginning of year 347,901,396 437,336,252
===========================================================================================
End of year $ 252,330,849 $347,901,396
___________________________________________________________________________________________
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 357,683,858 $411,615,557
-------------------------------------------------------------------------------------------
Undistributed net investment income 1,371,560 1,796,978
-------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (120,499,342) (81,133,296)
-------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 13,774,773 15,622,157
===========================================================================================
$ 252,330,849 $347,901,396
___________________________________________________________________________________________
===========================================================================================
|
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-146
Notes to Financial Statements
December 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. International Growth Fund, formerly named AIM V.I. International Equity Fund, (the "Fund") is a series portfolio of AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-147
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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
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. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $5,019.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $713,741 of which AIM retained $75,067 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $26,562 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $19,121 after plan fees reimbursed by AIM Distributors of $2,233.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $3,259 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, 2002, the Fund received reductions in custodian fees of $45 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $45.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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. INTERNATIONAL GROWTH FUND
FS-148
NOTE 6--PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's total assets. Such loans are secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Cash collateral pursuant to these loans is invested in short-term money market instruments or affiliated money market funds. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. It is the Fund's policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day. Therefore, the value of the collateral may be temporarily less than the value of the securities on loan.
At December 31, 2002, securities with an aggregate value of $42,060,548 were on loan to brokers. The loans were secured by cash collateral of $43,986,991 received by the Fund and subsequently invested in affiliated money market funds as follows: $21,993,496 in STIC Liquid Assets Portfolio and $21,993,495 in STIC Prime Portfolio. For the year ended December 31, 2002, the Fund received fees of $30,168 for securities lending.
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from:
Ordinary income $1,850,227 $ 1,215,955
---------------------------------------------------------------
Long-term capital gain -- 9,497,864
===============================================================
$1,850,227 $10,713,819
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 1,429,741
-------------------------------------------------------------
Unrealized appreciation -- investments 10,573,489
-------------------------------------------------------------
Temporary book/tax differences (58,181)
-------------------------------------------------------------
Capital loss carryforward (112,849,132)
-------------------------------------------------------------
Post-October capital loss deferral (4,448,926)
-------------------------------------------------------------
Shares of beneficial interest 357,683,858
=============================================================
$ 252,330,849
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation difference is attributable primarily to the tax deferral of losses on wash sales. The tax-basis unrealized appreciation on investments amount includes appreciation on foreign currencies of $49,828.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-------------------------------------
December 31, 2005 $ 4,875,195
-------------------------------------
December 31, 2006 531,810
-------------------------------------
December 31, 2007 1,051,669
-------------------------------------
December 31, 2008 1,361,405
-------------------------------------
December 31, 2009 59,139,792
-------------------------------------
December 31, 2010 45,889,261
=====================================
$112,849,132
_____________________________________
=====================================
|
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, 2002 was $211,181,811 and $260,045,434, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 24,822,441 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (14,298,780) ============================================================= Net unrealized appreciation of investment securities $ 10,523,661 _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $284,117,477. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions on December 31, 2002, undistributed net investment income was increased by $90,965 and undistributed net realized gains (losses) decreased by $90,965. This reclassification had no effect on the net assets of the Fund.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-149
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 90,761,628 $ 1,234,674,746 102,758,144 $ 1,708,284,020
-------------------------------------------------------------------------------------------------------------------------------
Series II* 51,994,896 669,355,587 26,232 393,590
===============================================================================================================================
Issued as reinvestment of dividends:
Series I 139,401 1,721,606 741,419 10,706,078
-------------------------------------------------------------------------------------------------------------------------------
Series II* 10,449 128,621 536 7,741
===============================================================================================================================
Reacquired:
Series I (94,385,310) (1,290,046,981) (101,934,106) (1,701,019,723)
-------------------------------------------------------------------------------------------------------------------------------
Series II* (51,648,761) (669,765,278) (1,707) (25,808)
===============================================================================================================================
(3,127,697) $ (53,931,699) 1,590,518 $ 18,345,898
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
* Series II shares commenced sales on September 19, 2001.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-150
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
2002 2001 2000 1999 1998
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.91 $ 20.12 $ 29.29 $ 19.62 $ 17.13
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.06(a) 0.08(a) 0.18 0.08(a) 0.15
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.40) (4.83) (7.88) 10.59 2.50
===============================================================================================================================
Total from investment operations (2.34) (4.75) (7.70) 10.67 2.65
===============================================================================================================================
Less distributions:
Dividends from net investment income (0.08) (0.05) (0.06) (0.19) (0.16)
-------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.41) (1.41) (0.81) --
===============================================================================================================================
Total distributions (0.08) (0.46) (1.47) (1.00) (0.16)
===============================================================================================================================
Net asset value, end of period $ 12.49 $ 14.91 $ 20.12 $ 29.29 $ 19.62
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Total return(b) (15.67)% (23.53)% (26.40)% 55.04% 15.49%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $247,580 $347,528 $437,336 $454,060 $240,314
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Ratio of expenses to average net assets 1.09%(c) 1.05% 1.02% 0.97% 0.91%
===============================================================================================================================
Ratio of net investment income to average net assets 0.41%(c) 0.46% 0.83% 0.38% 0.80%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
Portfolio turnover rate 71% 109% 88% 97% 76%
_______________________________________________________________________________________________________________________________
===============================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(c) Ratios are based on average daily net assets of $316,794,532.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-151
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
----------------------------------
SEPTEMBER 19,
2001
YEAR (DATE SALES
ENDED COMMENCED)
DECEMBER 31, TO DECEMBER 31,
2002 2001
------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.90 $14.42
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03(a) 0.01(a)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (2.40) 0.93
================================================================================================
Total from investment operations (2.37) 0.94
================================================================================================
Less distributions:
Dividends from net investment income (0.08) (0.05)
------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.41)
================================================================================================
Total distributions (0.08) (0.46)
================================================================================================
Net asset value, end of period $ 12.45 $14.90
________________________________________________________________________________________________
================================================================================================
Total return(b) (15.89)% 6.63%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 4,751 $ 374
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers and/or expense reimbursements 1.31%(c) 1.30%(d)
------------------------------------------------------------------------------------------------
Without fee waivers and/or expense reimbursements 1.34%(c) 1.30%(d)
================================================================================================
Ratio of net investment income to average net assets 0.19%(c) 0.22%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 71% 109%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $8,541,502.
(d) Annualized.
AIM V.I. INTERNATIONAL GROWTH FUND
FS-152
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. Mid Cap Core Equity Fund, formerly AIM V.I. Mid Cap Equity Fund, a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2002, 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 September 10, 2001 (commencement of operations) through December 31, 2001. 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, 2002 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. Mid Cap Core Equity Fund, as of December 31, 2002, 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 September 10, 2001 (commencement of operations) through December 31, 2001 in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. MID CAP CORE EQUITY FUND
FS-153
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-80.30%
Advertising-1.27%
Omnicom Group Inc. 13,700 $ 885,020
========================================================================
Aerospace & Defense-2.00%
Northrop Grumman Corp. 6,700 649,900
------------------------------------------------------------------------
Raytheon Co. 24,100 741,075
========================================================================
1,390,975
========================================================================
Application Software-1.25%
PeopleSoft, Inc.(a) 47,400 867,420
========================================================================
Banks-0.90%
Marshall & Ilsley Corp. 11,700 320,346
------------------------------------------------------------------------
TCF Financial Corp. 7,000 305,830
========================================================================
626,176
========================================================================
Computer & Electronics Retail-1.40%
Best Buy Co., Inc.(a) 40,200 970,830
========================================================================
Construction Materials-0.71%
Martin Marietta Materials, Inc. 16,200 496,692
========================================================================
Data Processing Services-4.65%
Ceridian Corp.(a) 110,200 1,589,084
------------------------------------------------------------------------
Certegy Inc.(a) 37,600 923,080
------------------------------------------------------------------------
Convergys Corp.(a) 47,600 721,140
========================================================================
3,233,304
========================================================================
Diversified Chemicals-0.93%
Engelhard Corp. 29,000 648,150
========================================================================
Diversified Financial Services-1.19%
Principal Financial Group, Inc. 27,400 825,562
========================================================================
Electric Utilities-2.39%
FPL Group, Inc. 4,700 282,611
------------------------------------------------------------------------
Wisconsin Energy Corp. 54,800 1,380,960
========================================================================
1,663,571
========================================================================
Electrical Components & Equipment-1.02%
Rockwell Automation, Inc. 34,100 706,211
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Electronic Equipment & Instruments-8.51%
Amphenol Corp.-Class A(a) 24,100 $ 915,800
------------------------------------------------------------------------
Diebold, Inc. 16,800 692,496
------------------------------------------------------------------------
Mettler-Toledo International Inc.
(Switzerland)(a) 25,600 820,736
------------------------------------------------------------------------
Millipore Corp.(a) 17,600 598,400
------------------------------------------------------------------------
Molex Inc.-Class A 25,800 513,162
------------------------------------------------------------------------
Roper Industries, Inc. 22,700 830,820
------------------------------------------------------------------------
Vishay Intertechnology, Inc.(a) 26,200 292,916
------------------------------------------------------------------------
Waters Corp.(a) 57,200 1,245,816
========================================================================
5,910,146
========================================================================
Environmental Services-1.76%
Republic Services, Inc.(a) 58,300 1,223,134
========================================================================
Food Retail-2.32%
Kroger Co. (The)(a) 58,700 906,915
------------------------------------------------------------------------
Safeway Inc.(a) 30,100 703,136
========================================================================
1,610,051
========================================================================
Footwear-1.28%
NIKE, Inc.-Class B 20,000 889,400
========================================================================
Forest Products-0.81%
Louisiana-Pacific Corp.(a) 69,900 563,394
========================================================================
General Merchandise Stores-1.93%
BJ's Wholesale Club, Inc.(a) 34,600 633,180
------------------------------------------------------------------------
Family Dollar Stores, Inc. 22,600 705,346
========================================================================
1,338,526
========================================================================
Health Care Distributors & Services-1.77%
IMS Health Inc. 76,900 1,230,400
========================================================================
Health Care Equipment-3.90%
Apogent Technologies Inc.(a) 65,600 1,364,480
------------------------------------------------------------------------
Bard (C.R.), Inc. 11,400 661,200
------------------------------------------------------------------------
Beckman Coulter, Inc. 23,100 681,912
========================================================================
2,707,592
========================================================================
Home Furnishings-1.30%
Mohawk Industries, Inc.(a) 15,904 905,733
========================================================================
|
AIM V.I. MID CAP CORE EQUITY FUND
FS-154
MARKET
SHARES VALUE
------------------------------------------------------------------------
Household Appliances-1.90%
Black & Decker Corp. (The) 15,300 $ 656,217
------------------------------------------------------------------------
Whirlpool Corp. 12,700 663,194
========================================================================
1,319,411
========================================================================
Household Products-1.68%
Clorox Co. (The) 7,500 309,375
------------------------------------------------------------------------
Dial Corp. (The) 42,000 855,540
========================================================================
1,164,915
========================================================================
Housewares & Specialties-0.63%
Fortune Brands, Inc. 9,400 437,194
========================================================================
Industrial Machinery-6.47%
Dover Corp. 56,000 1,632,960
------------------------------------------------------------------------
Flowserve Corp.(a) 32,900 486,591
------------------------------------------------------------------------
ITT Industries, Inc. 6,500 394,485
------------------------------------------------------------------------
Kennametal Inc. 14,500 499,960
------------------------------------------------------------------------
Pentair, Inc. 21,100 729,005
------------------------------------------------------------------------
SPX Corp.(a) 20,100 752,745
========================================================================
4,495,746
========================================================================
IT Consulting & Services-0.99%
Affiliated Computer Services, Inc.-Class A(a) 13,100 689,715
========================================================================
Leisure Products-2.59%
Brunswick Corp. 68,500 1,360,410
------------------------------------------------------------------------
Mattel, Inc. 22,900 438,535
========================================================================
1,798,945
========================================================================
Metal & Glass Containers-1.01%
Pactiv Corp.(a) 32,100 701,706
========================================================================
Office Electronics-0.84%
Zebra Technologies Corp.-Class A(a) 10,200 584,460
========================================================================
Office Services & Supplies-1.44%
Herman Miller, Inc. 54,400 1,000,960
========================================================================
Oil & Gas Drilling-0.69%
Noble Corp. (Cayman Islands)(a) 13,700 481,555
========================================================================
Oil & Gas Equipment & Services-2.18%
BJ Services Co.(a) 16,400 529,884
------------------------------------------------------------------------
Cooper Cameron Corp.(a) 10,400 518,128
------------------------------------------------------------------------
Weatherford International Ltd. (Bermuda)(a) 11,700 467,181
========================================================================
1,515,193
========================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
Oil & Gas Refining, Marketing &
Transportation-1.09%
Valero Energy Corp. 20,500 $ 757,270
========================================================================
Packaged Foods & Meats-0.98%
Campbell Soup Co. 29,000 680,630
========================================================================
Personal Products-1.24%
Avon Products, Inc. 16,000 861,920
========================================================================
Pharmaceuticals-1.85%
Teva Pharmaceutical Industries Ltd.-ADR
(Israel) 22,400 864,864
------------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 14,900 421,223
========================================================================
1,286,087
========================================================================
Property & Casualty Insurance-2.51%
ACE Ltd. (Cayman Islands) 31,700 930,078
------------------------------------------------------------------------
MGIC Investment Corp. 12,500 516,250
------------------------------------------------------------------------
XL Capital Ltd.-Class A (Cayman Islands) 3,900 301,275
========================================================================
1,747,603
========================================================================
Railroads-0.60%
Norfolk Southern Corp. 20,700 413,793
========================================================================
Restaurants-1.86%
Jack in the Box Inc.(a) 33,600 580,944
------------------------------------------------------------------------
Outback Steakhouse, Inc. 20,700 712,908
========================================================================
1,293,852
========================================================================
Semiconductor Equipment-0.78%
Novellus Systems, Inc.(a) 19,200 539,136
========================================================================
Semiconductors-1.60%
Microchip Technology Inc. 22,750 556,238
------------------------------------------------------------------------
Xilinx, Inc.(a) 27,000 556,200
========================================================================
1,112,438
========================================================================
Specialty Chemicals-0.94%
Rohm & Haas Co. 20,200 656,096
========================================================================
Specialty Stores-0.70%
Barnes & Noble, Inc.(a) 26,800 484,276
========================================================================
Systems Software-3.39%
BMC Software, Inc.(a) 38,000 650,180
------------------------------------------------------------------------
Computer Associates International, Inc. 126,300 1,705,050
========================================================================
2,355,230
========================================================================
|
AIM V.I. MID CAP CORE EQUITY FUND
FS-155
MARKET
SHARES VALUE
------------------------------------------------------------------------
Telecommunications Equipment-1.05%
Advanced Fibre Communications, Inc.(a) 43,600 $ 727,248
========================================================================
Total Common Stocks & Other Equity
Interests (Cost $58,597,635) 55,797,666
========================================================================
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENTS-4.75%
Barclays Capital Inc. (United Kingdom) 1.25%,
01/02/03 (Cost $3,301,331)(b)(c) $3,301,331 3,301,331
========================================================================
MARKET
SHARES VALUE
------------------------------------------------------------------------
MONEY MARKET FUNDS-21.53%
STIC Liquid Assets Portfolio(d) 7,477,972 $ 7,477,972
------------------------------------------------------------------------
|
MARKET
SHARES VALUE
------------------------------------------------------------------------
STIC Prime Portfolio(d) 7,477,972 $ 7,477,972
========================================================================
Total Money Market Funds (Cost
$14,955,944) 14,955,944
========================================================================
TOTAL INVESTMENTS-106.58% (Cost $76,854,910) 74,054,941
========================================================================
OTHER ASSETS LESS LIABILITIES-(6.58%) (4,570,143)
========================================================================
NET ASSETS-100.00% $69,484,798
________________________________________________________________________
========================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) 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.
(c) Joint repurchase agreement entered into 12/31/02 with a maturing value of
$299,552,541 and collateralized by U.S. Government obligations with an
aggregate market value of $305,523,605.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. MID CAP CORE EQUITY FUND
FS-156
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $76,854,910) $74,054,941
------------------------------------------------------------
Receivables for:
Investments sold 109,134
------------------------------------------------------------
Fund shares sold 486,001
------------------------------------------------------------
Dividends and interest 44,502
------------------------------------------------------------
Investment for deferred compensation plan 3,662
============================================================
Total assets 74,698,240
____________________________________________________________
============================================================
LIABILITIES:
Payables for:
Investments purchased 5,159,162
------------------------------------------------------------
Fund shares reacquired 3,411
------------------------------------------------------------
Deferred compensation plan 3,662
------------------------------------------------------------
Accrued administrative services fees 30,499
------------------------------------------------------------
Accrued distribution fees -- Series II 425
------------------------------------------------------------
Accrued trustees' fees 875
------------------------------------------------------------
Accrued transfer agent fees 358
------------------------------------------------------------
Accrued operating expenses 15,050
============================================================
Total liabilities 5,213,442
============================================================
Net assets applicable to shares outstanding $69,484,798
____________________________________________________________
============================================================
NET ASSETS:
Series I $68,271,155
____________________________________________________________
============================================================
Series II $ 1,213,643
____________________________________________________________
============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 7,165,787
____________________________________________________________
============================================================
Series II 127,635
____________________________________________________________
============================================================
Series I:
Net asset value per share $ 9.53
____________________________________________________________
============================================================
Series II:
Net asset value per share $ 9.51
____________________________________________________________
============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$481) $ 252,249
-------------------------------------------------------------
Dividends from affiliated money market funds 120,585
-------------------------------------------------------------
Interest 3,413
=============================================================
Total investment income 376,247
=============================================================
EXPENSES:
Advisory fees 253,827
-------------------------------------------------------------
Administrative services fees 125,138
-------------------------------------------------------------
Custodian fees 36,151
-------------------------------------------------------------
Distribution fees -- Series II 2,038
-------------------------------------------------------------
Transfer agent fees 7,920
-------------------------------------------------------------
Trustees' fees 9,668
-------------------------------------------------------------
Other 22,157
=============================================================
Total expenses 456,899
=============================================================
Less: Fees waived and expenses reimbursed (1,688)
-------------------------------------------------------------
Expenses paid indirectly (29)
=============================================================
Net expenses 455,182
=============================================================
Net investment income (loss) (78,935)
=============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES:
Net realized gain (loss) from net investment
securities (1,713,107)
=============================================================
Change in net unrealized appreciation
(depreciation) of investment securities (3,274,673)
=============================================================
Net gain (loss) from investment securities (4,987,780)
=============================================================
Net increase (decrease) in net assets resulting
from operations $(5,066,715)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. MID CAP CORE EQUITY FUND
FS-157
Statement of Changes in Net Assets
For the year ended December 31, 2002 and the period September 10, 2001 (date operations commenced) through December 31, 2001
2002 2001
----------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (78,935) $ (1,427)
----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (1,713,107) 990
----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (3,274,673) 474,704
========================================================================================
Net increase (decrease) in net assets resulting from
operations (5,066,715) 474,267
========================================================================================
Distributions to shareholders from net investment income:
Series I -- (11,467)
----------------------------------------------------------------------------------------
Series II -- (575)
----------------------------------------------------------------------------------------
Share transactions-net:
Series I 63,740,733 9,072,944
----------------------------------------------------------------------------------------
Series II 775,016 500,595
========================================================================================
Net increase in net assets 59,449,034 10,035,764
========================================================================================
NET ASSETS:
Beginning of year 10,035,764 --
========================================================================================
End of year $69,484,798 $10,035,764
________________________________________________________________________________________
========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $74,002,736 $ 9,562,045
----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (4,818) (1,093)
----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (1,713,151) 108
----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (2,799,969) 474,704
========================================================================================
$69,484,798 $10,035,764
________________________________________________________________________________________
========================================================================================
|
See Notes to Financial Statements.
AIM V.I. MID CAP CORE EQUITY FUND
FS-158
Notes to Financial Statements
December 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Mid Cap Core Equity Fund, formerly AIM V.I. Mid Cap Equity Fund, (the "Fund") is a series portfolio of AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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.
AIM V.I. MID CAP CORE EQUITY FUND
FS-159
The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
F. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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 0.725% of the first $500 million of the Fund's average daily net assets, plus 0.70% of the Fund's average daily net assets on the next $500 million, plus 0.675% of the Fund's average daily net assets on the next $500 million, plus 0.65% of the Fund's average daily net assets in excess of $1.5 billion. AIM has agreed to waive advisory fees of Series I and Series II shares to the extent necessary to limit the expenses (excluding Rule 12b-1 plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of each Series to 1.30%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $873.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $125,138 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $5,991 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $1,223 after plan fees reimbursed by AIM Distributors of $815.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,704 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, 2002, the Fund received reductions in custodian fees of $29 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $29.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
-------------------------------------------------------------
Distributions paid from ordinary income $ -- $12,042
_____________________________________________________________
=============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation
(depreciation) -- investments $(2,829,197)
------------------------------------------------------------
Temporary book/tax differences (4,818)
------------------------------------------------------------
Capital loss carryforward (1,399,717)
------------------------------------------------------------
Post-October capital loss deferral (284,206)
------------------------------------------------------------
Shares of beneficial interest 74,002,736
============================================================
$69,484,798
____________________________________________________________
============================================================
|
AIM V.I. MID CAP CORE EQUITY FUND
FS-160
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax difference is the result of trustee deferral of compensation.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
--------------------------------
December 31, 2010 $1,399,717
________________________________
================================
|
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, 2002 was $63,703,456 and $10,358,275, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,455,516 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (4,284,713) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(2,829,197) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $76,884,138. |
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of a net operating loss and other items on December 31, 2002, undistributed net investment income was increased by $75,210, undistributed net realized gains decreased by $152 and shares of beneficial interest decreased by $75,058. This reclassification had no effect on the net assets of the Fund.
NOTE 9--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and the period September 10, 2001 (date operations commenced) through December 31, 2001 were as follows:
2002 2001
------------------------ ---------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------------------------------------------
Sold:
Series I 7,099,303 $71,687,663 957,217 $9,827,415
---------------------------------------------------------------------------------------------------------------
Series II 84,599 847,018 50,002 500,020
===============================================================================================================
Issued as reinvestment of dividends:
Series I -- -- 1,101 11,467
---------------------------------------------------------------------------------------------------------------
Series II -- -- 55 575
===============================================================================================================
Reacquired:
Series I (820,000) (7,946,930) (71,833) (765,938)
---------------------------------------------------------------------------------------------------------------
Series II (7,021) (72,002) -- --
===============================================================================================================
6,356,881 $64,515,749 936,542 $9,573,539
_______________________________________________________________________________________________________________
===============================================================================================================
|
AIM V.I. MID CAP CORE EQUITY FUND
FS-161
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
----------------------------------
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
--------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.72 $10.00
--------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a) 0.00
--------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.17) 0.74
==================================================================================================
Total from investment operations (1.19) 0.74
==================================================================================================
Less distributions from net investment income -- (0.02)
==================================================================================================
Net asset value, end of period $ 9.53 $10.72
__________________________________________________________________________________________________
==================================================================================================
Total return(b) (11.10)% 7.37%
__________________________________________________________________________________________________
==================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $68,271 $9,500
__________________________________________________________________________________________________
==================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.30%(c) 1.27%(d)
--------------------------------------------------------------------------------------------------
Without fee waivers 1.30%(c) 5.16%(d)
==================================================================================================
Ratio of net investment income (loss) to average net assets (0.22)%(c) (0.08)%(d)
__________________________________________________________________________________________________
==================================================================================================
Portfolio turnover rate 36% 20%
__________________________________________________________________________________________________
==================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $34,195,267.
(d) Annualized.
SERIES II
----------------------------------
SEPTEMBER 10, 2001
(DATE OPERATIONS
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.71 $10.00
------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04)(a) (0.01)
------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.16) 0.73
================================================================================================
Total from investment operations (1.20) 0.72
================================================================================================
Less distributions from net investment income -- (0.01)
================================================================================================
Net asset value, end of period $ 9.51 $10.71
________________________________________________________________________________________________
================================================================================================
Total return(b) (11.20)% 7.22%
________________________________________________________________________________________________
================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,214 $ 536
________________________________________________________________________________________________
================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.45%(c) 1.44%(d)
------------------------------------------------------------------------------------------------
Without fee waivers 1.55%(c) 5.44%(d)
================================================================================================
Ratio of net investment income (loss) to average net assets (0.37)%(c) (0.25)%(d)
________________________________________________________________________________________________
================================================================================================
Portfolio turnover rate 36% 20%
________________________________________________________________________________________________
================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(c) Ratios are based on average daily net assets of $815,346.
(d) Annualized.
AIM V.I. MID CAP CORE EQUITY FUND
FS-162
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, 2002, 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 years or periods in the five year 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, 2002 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, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. MONEY MARKET FUND
FS-163
Schedule of Investments
December 31, 2002
PAR
MATURITY (000) VALUE
--------------------------------------------------------------------------------
COMMERCIAL PAPER-23.98%(a)
Asset-Backed Securities-Commercial Loans/ Leases-8.85%
Fountain Square Commercial Funding Corp.
(Fifth Third Bank-ABS Program Sponsor)(b)
(Acquired 10/01/02; Cost $1,983,958)
1.65% 03/26/03 $ 2,000 $ 1,992,300
--------------------------------------------------------------------------------
(Acquired 10/01/02; Cost $2,938,374)
1.70% 03/26/03 2,963 2,951,247
--------------------------------------------------------------------------------
Stellar Funding Group, Inc. (U.S. Bank
National Association-ABS Program
Sponsor)(b)
(Acquired 11/05/02; Cost $2,987,963)
1.57% 02/05/03 3,000 2,995,421
--------------------------------------------------------------------------------
(Acquired 12/31/02; Cost $3,325,197)
1.34% 03/28/03 3,336 3,325,321
================================================================================
11,264,289
================================================================================
Asset-Backed Securities-Fully Backed-5.73%
Steamboat Funding Corp. (National Westminster
Bank PLC-ABS Program Sponsor) (Acquired
12/23/02; Cost $4,995,368)(b)
1.45% 01/15/03 5,000 4,997,180
--------------------------------------------------------------------------------
Tulip Funding Corp. (ABN AMRO Bank N.V.-ABS
Program Sponsor) (Acquired 12/18/02; Cost
$2,300,440)(b)
1.40% 02/19/03 2,306 2,301,606
================================================================================
7,298,786
================================================================================
Asset-Backed Securities-Multi-Purpose-4.70%
Amsterdam Funding Corp. (ABN AMRO Bank
N.V.-ABS Program Sponsor) (Acquired
10/28/02; Cost $2,978,608)(b)
1.70% 03/28/03 3,000 2,987,817
--------------------------------------------------------------------------------
Sheffield Receivables Corp. (Barclays Bank
PLC-NY Branch-ABS Program Sponsor)
(Acquired 10/17/02; Cost $2,987,985)(b)
1.78% 01/06/03 3,000 2,999,258
================================================================================
5,987,075
================================================================================
Asset-Backed Securities-Trade Receivables-3.92%
Blue Ridge Asset Funding Corp. (Wachovia Bank
N.A.-ABS Program Sponsor) (Acquired
09/19/02; Cost $4,972,064)(b) 1.78% 01/10/03 5,000 4,997,775
================================================================================
Diversified Financial Services-0.78%
National Australia Funding
2.09% 02/07/03 1,000 997,852
================================================================================
Total Commercial Paper (Cost $30,545,777) 30,545,777
================================================================================
|
PAR
MATURITY (000) VALUE
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-8.09%
Federal Home Loan Bank-3.14%
Unsec. Bonds,
1.61% 12/08/03 $ 3,000 $ 3,000,000
--------------------------------------------------------------------------------
1.70% 12/08/03 1,000 1,000,000
================================================================================
4,000,000
================================================================================
Overseas Private Investment Corp.-4.95%
Floating Rate Participation Ctfs.,
1.30%(c)(d) 05/15/15 6,300 6,300,000
================================================================================
Total U.S. Government Agency Securities
(Cost $10,300,000) 10,300,000
================================================================================
VARIABLE RATE DEMAND NOTES-4.01%
Insured-1.20%
Omaha (City of); Special Tax Redevelopment
Series B RB,
1.52%(c)(d)(e) 02/01/13 1,530 1,530,000
================================================================================
Letter of Credit Guaranteed-2.81%(c)(d)(f)
Albuquerque (City of) (Ktech Corp.); IDR
(LOC-Wells Fargo Bank N.A.),
1.50% 11/01/22 1,750 1,750,000
--------------------------------------------------------------------------------
Dome Corp.; Floating Rate Notes (LOC-Wachovia
Bank N.A.),
1.47% 08/31/16 665 665,000
--------------------------------------------------------------------------------
Folk Financial Services Inc.-Series A,
Floating Rate Loan Program Notes
(LOC-National City Bank),
1.62% 10/15/27 1,160 1,160,000
================================================================================
3,575,000
================================================================================
Total Variable Rate Demand Notes (Cost
$5,105,000) 5,105,000
================================================================================
ASSET-BACKED NOTES-5.30%
Fully Backed-0.89%
Capital One Auto Finance Trust-
Series 2002-B, Class A1
1.76%(e) 09/15/03 1,130 1,130,089
================================================================================
Structured Investment Vehicles-3.92%
Beta Finance Inc.-Floating Rate (City Bank
International plc.-ABS Program Sponsor)
(Acquired 10/03/02; Cost $5,000,000)
1.31%(b)(g) 10/14/03 5,000 5,000,000
================================================================================
Trade Receivables-0.49%
World Omni Auto Receivables Trust-
Series 2002-A, Class A1
1.87% 07/15/03 625 625,071
================================================================================
Total Asset-Backed Notes (Cost
$6,755,160) 6,755,160
================================================================================
|
AIM V.I. MONEY MARKET FUND
FS-164
PAR
MATURITY (000) VALUE
--------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT-9.42%
HBOS Treasury Services PLC (United Kingdom)
1.52% 05/06/03 $ 5,000 $ 5,000,000
--------------------------------------------------------------------------------
Lloyd's TSB Bank PLC-New York (United
Kingdom)
2.15% 02/10/03 3,000 3,000,000
--------------------------------------------------------------------------------
Svenska Handelsbanken A.B. (Sweden)
1.77% 02/28/03 4,000 4,000,000
================================================================================
Total Certificates of Deposit (Cost
$12,000,000) 12,000,000
================================================================================
MASTER NOTE AGREEMENTS-7.85%(h)
Merrill Lynch Mortgage Capital, Inc.
1.47%(i) 08/18/03 5,000 5,000,000
--------------------------------------------------------------------------------
Morgan Stanley
1.38%(j) 03/17/03 5,000 5,000,000
================================================================================
Total Master Note Agreements (Cost
$10,000,000) 10,000,000
================================================================================
MEDIUM TERM NOTES-0.81%
General Electric Capital Corp.-Series A
6.75% (Cost $1,032,990) 09/11/03 1,000 1,032,990
================================================================================
|
PAR
MATURITY (000) VALUE
--------------------------------------------------------------------------------
PROMISSORY NOTES-4.71%
Goldman Sachs Group, Inc. (The)
1.50%(g) (Cost $6,000,000) 03/05/03 $ 6,000 $ 6,000,000
================================================================================
Total Investments Excluding Repurchase
Agreements (Cost $81,738,927) 81,738,927
================================================================================
REPURCHASE AGREEMENTS-36.04%(k)
BNP Paribas Securities Corp. (France)
1.25%(l) 01/02/03 20,900 20,900,152
--------------------------------------------------------------------------------
Greenwich Capital Markets, Inc.
1.25%(m) 01/02/03 25,000 25,000,000
================================================================================
Total Repurchase Agreements (Cost
$45,900,152) 45,900,152
================================================================================
TOTAL INVESTMENTS-100.21% (Cost
$127,639,079)(n) 127,639,079
================================================================================
OTHER ASSETS LESS LIABILITIES-(0.21)% (272,019)
================================================================================
NET ASSETS-100.00% $127,367,060
________________________________________________________________________________
================================================================================
|
Investment Abbreviations:
ABS - Asset Backed Security Ctfs. - Certificates IDR - Industrial Development Revenue Bonds LOC - Letter of Credit RB - Revenue Bonds Unsec. - Unsecured |
Notes to Schedule of Investments:
(a) Security is traded on a discount basis. The interest rate shown represents
the rate of discount paid or received at the time of purchase by the Fund.
(b) Securities not registered under the Securities Act of 1933, as amended
(e.g., the security was purchased in a Rule 144A transaction or a Regulation
D transaction); the securities may be resold only pursuant to an exemption
from registration under the 1933 Act, typically to qualified institutional
buyers. The Fund has no rights to demand registration of these securities.
The aggregate market value of these securities at 12/31/02 was $34,547,925
which represented 27.12% of the Fund's net assets. These securities are not
considered illiquid.
(c) Interest rates are redetermined weekly. Rate shown is the rate in effect on
12/31/02.
(d) Demand security; payable upon demand by the Fund with usually no more than
seven calendar day's notice.
(e) Secured by bond insurance provided by Ambac Assurance Corp. or MBIA
Insurance Co.
(f) Principal and interest payments are guaranteed by the letter of credit
agreement.
(g) Interest rates are redetermined daily. Rate shown is the rate in effect on
12/31/02.
(h) 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.
(i) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon one or two business day's notice based on the timing
of the demand. Interest rates on master notes are redetermined periodically.
Rate shown is the rate in effect on 12/31/02.
(j) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon one business day's oral notice for up to 10% of
outstanding amount, otherwise, upon seven business day's written notice for
more than 10% of outstanding balance. Interest rates on master notes are
redetermined periodically. Rate shown is the rate in effect on 12/31/02.
(k) 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.
(l) Joint repurchase agreement entered into 12/31/02 with a maturing value of
$1,250,086,806. Collateralized by $1,161,027,000 U.S. Government
obligations, 0% to 7.63% due 01/07/03 to 07/15/32 with an aggregate market
value at 12/31/02 of $1,275,000,101.
(m) Joint repurchase agreement entered into 12/31/02 with a maturing value of
$500,034,722. Collateralized by $468,160,000 U.S. Treasury and U.S.
Government obligations, 0% to 11.25% due 01/15/03 to 04/15/30 with an
aggregate market value at 12/31/02 of $510,006,098.
(n) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-165
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, excluding repurchase agreements
at value (amortized cost) $ 81,738,927
-------------------------------------------------------------
Repurchase agreements 45,900,152
-------------------------------------------------------------
Interest receivable 163,279
-------------------------------------------------------------
Investment for deferred compensation plan 34,039
-------------------------------------------------------------
Other assets 784
=============================================================
Total assets 127,837,181
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 341,549
-------------------------------------------------------------
Deferred compensation plan 34,039
-------------------------------------------------------------
Accrued administrative services fees 54,267
-------------------------------------------------------------
Accrued distribution fees -- Series II 2,659
-------------------------------------------------------------
Accrued transfer agent fees 2,741
-------------------------------------------------------------
Accrued operating expenses 34,866
=============================================================
Total liabilities 470,121
=============================================================
Net assets applicable to shares outstanding $127,367,060
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $119,536,303
_____________________________________________________________
=============================================================
Series II $ 7,830,757
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 119,534,898
_____________________________________________________________
=============================================================
Series II 7,830,736
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 1.00
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 1.00
_____________________________________________________________
=============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Interest $2,351,385
============================================================
Expenses:
Advisory fees 509,205
------------------------------------------------------------
Administrative services fees 262,888
------------------------------------------------------------
Custodian fees 8,622
------------------------------------------------------------
Distribution fees -- Series II 8,683
------------------------------------------------------------
Transfer agent fees 9,247
------------------------------------------------------------
Trustees' fees 9,316
------------------------------------------------------------
Other 49,704
============================================================
Total expenses 857,665
============================================================
Net investment income 1,493,720
============================================================
Net realized gain from investment securities 1,121
============================================================
Net increase in net assets resulting from
operations $1,494,841
____________________________________________________________
============================================================
|
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-166
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,493,720 $ 3,722,328
------------------------------------------------------------------------------------------
Net realized gain from investment securities 1,121 248
==========================================================================================
Net increase in net assets resulting from operations 1,494,841 3,722,576
==========================================================================================
Distributions to shareholders from net investment income:
Series I (1,462,967) (3,721,914)
------------------------------------------------------------------------------------------
Series II (30,753) (414)
------------------------------------------------------------------------------------------
Share transactions-net:
Series I (8,742,052) 54,413,296
------------------------------------------------------------------------------------------
Series II 6,833,408 997,328
==========================================================================================
Net increase (decrease) in net assets (1,907,523) 55,410,872
==========================================================================================
NET ASSETS:
Beginning of year 129,274,583 73,863,711
==========================================================================================
End of year $127,367,060 $129,274,583
__________________________________________________________________________________________
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $127,365,634 $129,274,278
------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities 1,426 305
==========================================================================================
$127,367,060 $129,274,583
__________________________________________________________________________________________
==========================================================================================
|
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-167
Notes to Financial Statements
December 31, 2002
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 statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 premiums or accretion of discount.
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 accretion of discounts on investments, is recorded on the accrual basis from settlement date.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
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 gain) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements.
E. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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 $250 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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $262,888 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $4,033 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $8,683.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,776 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 each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option
AIM V.I. MONEY MARKET FUND
FS-168
to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
NOTE 4--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from ordinary
income $1,493,720 $3,722,328
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 53,690
-------------------------------------------------------------
Temporary book/tax differences (52,264)
-------------------------------------------------------------
Shares of beneficial interest 127,365,634
=============================================================
$127,367,060
_____________________________________________________________
=============================================================
|
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
NOTE 5--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 110,861,797 $ 110,861,797 155,024,398 $ 155,024,398
----------------------------------------------------------------------------------------------------------------------------
Series II* 214,772,526 214,772,526 1,996,952 1,996,952
============================================================================================================================
Issued as reinvestment of dividends:
Series I 1,462,967 1,462,967 3,721,914 3,721,914
----------------------------------------------------------------------------------------------------------------------------
Series II* 30,753 30,753 414 414
============================================================================================================================
Reacquired:
Series I (121,066,816) (121,066,816) (104,333,016) (104,333,016)
----------------------------------------------------------------------------------------------------------------------------
Series II* (207,969,871) (207,969,871) (1,000,038) (1,000,038)
============================================================================================================================
(1,908,644) $ (1,908,644) 55,410,624 $ 55,410,624
____________________________________________________________________________________________________________________________
============================================================================================================================
|
* Series II shares commenced sales on December 16, 2001.
AIM V.I. MONEY MARKET FUND
FS-169
NOTE 6--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.04 0.06 0.05 0.05
========================================================================================================================
Less distributions from net investment income (0.01) (0.04) (0.06) (0.05) (0.05)
========================================================================================================================
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
________________________________________________________________________________________________________________________
========================================================================================================================
Total return(a) 1.19% 3.61% 5.83% 4.66% 5.06%
________________________________________________________________________________________________________________________
========================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $119,536 $128,277 $73,864 $95,152 $64,090
________________________________________________________________________________________________________________________
========================================================================================================================
Ratio of expenses to average net assets 0.67%(b) 0.64% 0.71% 0.60% 0.58%
========================================================================================================================
Ratio of net investment income to average net assets 1.18%(b) 3.36% 5.66% 4.59% 4.94%
________________________________________________________________________________________________________________________
========================================================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(b) Ratios are based on average daily net assets of $123,828,132.
AIM V.I. MONEY MARKET FUND
FS-170
NOTE 6--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
--------------------------------------
DECEMBER 16, 2001
YEAR ENDED (DATE SALES COMMENCED)
DECEMBER 31, TO DECEMBER 31,
2002 2001
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $1.00
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.00
======================================================================================================
Less distributions from net investment income (0.01) 0.00
======================================================================================================
Net asset value, end of period $ 1.00 $1.00
______________________________________________________________________________________________________
======================================================================================================
Total return(a) 0.93% 0.05%
______________________________________________________________________________________________________
======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $7,831 $ 997
______________________________________________________________________________________________________
======================================================================================================
Ratio of expenses to average net assets 0.92%(b) 0.89%(c)
======================================================================================================
Ratio of net investment income to average net assets 0.93%(b) 3.11%(c)
______________________________________________________________________________________________________
======================================================================================================
|
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total returns for
all periods shown.
(b) Ratios are based on average daily net assets of $3,473,175.
(c) Annualized.
AIM V.I. MONEY MARKET FUND
FS-171
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. New Technology Fund a series of shares of beneficial interest of AIM Variable Insurance Funds including the schedule of investments as of December 31, 2002, 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 years or periods in the four year 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 the year 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, 2002 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. New Technology Fund, as of December 31, 2002, 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 years or period in the four year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. NEW TECHNOLOGY FUND
FS-172
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-95.14%
Aerospace & Defense-8.77%
Alliant Techsystems Inc.(a) 6,400 $ 399,040
--------------------------------------------------------------------------------
Engineered Support Systems, Inc. 10,150 372,099
--------------------------------------------------------------------------------
InVision Technologies, Inc.(a) 4,400 115,984
--------------------------------------------------------------------------------
L-3 Communications Holdings, Inc.(a) 6,000 269,460
--------------------------------------------------------------------------------
Rockwell Collins, Inc. 5,500 127,930
================================================================================
1,284,513
================================================================================
Application Software-6.17%
Documentum, Inc.(a) 15,700 245,862
--------------------------------------------------------------------------------
Intuit Inc.(a) 5,000 234,600
--------------------------------------------------------------------------------
Mercury Interactive Corp.(a) 11,200 332,080
--------------------------------------------------------------------------------
PeopleSoft, Inc.(a) 5,000 91,500
================================================================================
904,042
================================================================================
Auto Parts & Equipment-1.71%
Gentex Corp.(a) 7,900 249,956
================================================================================
Biotechnology-7.45%
Chiron Corp.(a) 900 33,840
--------------------------------------------------------------------------------
Enzon Pharmaceuticals, Inc.(a) 2,400 40,128
--------------------------------------------------------------------------------
Gilead Sciences, Inc.(a) 13,400 455,600
--------------------------------------------------------------------------------
IDEC Pharmaceuticals Corp.(a) 6,400 212,288
--------------------------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 1,900 62,415
--------------------------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(a) 3,900 30,966
--------------------------------------------------------------------------------
OraSure Technologies, Inc.(a) 9,400 51,230
--------------------------------------------------------------------------------
PRAECIS Pharmaceuticals Inc.(a) 30,300 98,475
--------------------------------------------------------------------------------
SangStat Medical Corp.(a) 5,600 63,280
--------------------------------------------------------------------------------
Trimeris, Inc.(a) 1,000 43,090
================================================================================
1,091,312
================================================================================
Computer & Electronics Retail-0.96%
CDW Computer Centers, Inc.(a) 3,200 140,320
================================================================================
Computer Hardware-5.50%
Dell Computer Corp.(a) 19,600 524,104
--------------------------------------------------------------------------------
Hewlett-Packard Co. 7,100 123,256
--------------------------------------------------------------------------------
Pinnacle Systems, Inc.(a) 11,600 157,876
================================================================================
805,236
================================================================================
Computer Storage & Peripherals-5.95%
Imation Corp.(a) 3,800 133,304
--------------------------------------------------------------------------------
Lexmark International, Inc.(a) 1,700 102,850
--------------------------------------------------------------------------------
Overland Storage, Inc.(a) 9,700 141,436
--------------------------------------------------------------------------------
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------------
Computer Storage & Peripherals-(Continued)
SanDisk Corp.(a) 10,500 $ 213,150
--------------------------------------------------------------------------------
Storage Technology Corp.(a) 9,600 205,632
--------------------------------------------------------------------------------
Western Digital Corp.(a) 11,800 75,402
================================================================================
871,774
================================================================================
Consumer Electronics-0.62%
Garmin Ltd. (Cayman Islands)(a) 1,700 49,810
--------------------------------------------------------------------------------
Harman International Industries, Inc. 700 41,650
================================================================================
91,460
================================================================================
Data Processing Services-0.83%
eSPEED, Inc.-Class A(a) 7,200 121,975
================================================================================
Electronic Equipment & Instruments-1.67%
Itron, Inc.(a) 2,400 46,008
--------------------------------------------------------------------------------
OSI Systems, Inc.(a) 11,700 198,666
================================================================================
244,674
================================================================================
Health Care Distributors & Services-6.33%
Accredo Health, Inc.(a) 4,200 148,050
--------------------------------------------------------------------------------
Cerner Corp.(a) 9,200 287,592
--------------------------------------------------------------------------------
Covance Inc.(a) 2,700 66,393
--------------------------------------------------------------------------------
Express Scripts, Inc.(a) 2,400 115,296
--------------------------------------------------------------------------------
IMPAC Medical Systems, Inc.(a) 4,100 75,932
--------------------------------------------------------------------------------
Laboratory Corp. of America Holdings(a) 5,400 125,496
--------------------------------------------------------------------------------
Quest Diagnostics Inc.(a) 1,900 108,110
================================================================================
926,869
================================================================================
Health Care Equipment-0.79%
Boston Scientific Corp.(a) 900 38,268
--------------------------------------------------------------------------------
Conceptus, Inc.(a) 6,500 77,870
================================================================================
116,138
================================================================================
Health Care Supplies-0.56%
ICU Medical, Inc.(a) 2,200 82,060
================================================================================
Internet Retail-3.04%
Amazon.com, Inc.(a) 5,300 100,117
--------------------------------------------------------------------------------
eBay Inc.(a) 5,100 345,882
================================================================================
445,999
================================================================================
Internet Software & Services-6.92%
Expedia, Inc.-Class A(a) 1,200 80,316
--------------------------------------------------------------------------------
Hotels.com-Class A(a) 1,500 81,945
--------------------------------------------------------------------------------
Overture Services, Inc.(a) 14,300 390,533
--------------------------------------------------------------------------------
PEC Solutions, Inc.(a) 3,900 116,610
--------------------------------------------------------------------------------
|
AIM V.I. NEW TECHNOLOGY FUND
FS-173
MARKET
SHARES VALUE
--------------------------------------------------------------------------------
Internet Software & Services-(Continued)
Websense, Inc.(a) 16,100 $ 343,912
================================================================================
1,013,316
================================================================================
IT Consulting & Services-2.23%
Affiliated Computer Services, Inc.-Class A(a) 3,300 173,745
--------------------------------------------------------------------------------
Anteon International Corp.(a) 2,800 67,200
--------------------------------------------------------------------------------
Syntel, Inc.(a) 4,100 86,141
================================================================================
327,086
================================================================================
Networking Equipment-2.00%
Cisco Systems, Inc.(a) 13,500 176,850
--------------------------------------------------------------------------------
McDATA Corp.-Class A(a) 5,200 36,920
--------------------------------------------------------------------------------
NetScreen Technologies, Inc.(a) 4,700 79,148
================================================================================
292,918
================================================================================
Pharmaceuticals-2.24%
American Pharmaceutical Partners, Inc.(a) 6,400 113,920
--------------------------------------------------------------------------------
Biovail Corp. (Canada)(a) 1,600 42,256
--------------------------------------------------------------------------------
Forest Laboratories, Inc.(a) 500 49,110
--------------------------------------------------------------------------------
Mylan Laboratories Inc. 3,500 122,150
================================================================================
327,436
================================================================================
Semiconductor Equipment-3.92%
Applied Materials, Inc.(a) 10,000 130,300
--------------------------------------------------------------------------------
KLA-Tencor Corp.(a) 4,400 155,628
--------------------------------------------------------------------------------
Lam Research Corp.(a) 5,600 60,480
--------------------------------------------------------------------------------
Novellus Systems, Inc.(a) 3,900 109,512
--------------------------------------------------------------------------------
Varian Semiconductor Equipment Associates, Inc.(a) 5,000 118,805
================================================================================
574,725
================================================================================
Semiconductors-9.99%
Analog Devices, Inc.(a) 8,400 200,508
--------------------------------------------------------------------------------
Integrated Circuit Systems, Inc.(a) 7,600 138,700
--------------------------------------------------------------------------------
Intel Corp. 12,700 197,739
--------------------------------------------------------------------------------
Marvell Technology Group Ltd. (Bermuda)(a) 7,700 145,222
--------------------------------------------------------------------------------
Microchip Technology Inc. 10,400 254,280
--------------------------------------------------------------------------------
QLogic Corp.(a) 3,900 134,589
--------------------------------------------------------------------------------
|
MARKET
SHARES VALUE
--------------------------------------------------------------------------------
Semiconductors-(Continued)
Silicon Laboratories Inc.(a) 11,100 $ 211,788
--------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd.-ADR
(Taiwan)(a) 20,240 142,692
--------------------------------------------------------------------------------
Zoran Corp.(a) 2,700 37,989
================================================================================
1,463,507
================================================================================
Systems Software-6.68%
Microsoft Corp.(a) 7,600 392,920
--------------------------------------------------------------------------------
Oracle Corp.(a) 7,100 76,680
--------------------------------------------------------------------------------
SafeNet, Inc.(a) 2,500 63,375
--------------------------------------------------------------------------------
Symantec Corp.(a) 11,000 444,950
================================================================================
977,925
================================================================================
Telecommunications Equipment-6.14%
Inter-Tel, Inc. 8,300 173,553
--------------------------------------------------------------------------------
Nokia Oyj-ADR (Finland) 14,800 229,400
--------------------------------------------------------------------------------
QUALCOMM Inc.(a) 7,300 265,647
--------------------------------------------------------------------------------
UTStarcom, Inc.(a) 11,600 230,028
================================================================================
898,628
================================================================================
Wireless Telecommunication Services-4.67%
AT&T Wireless Services Inc.(a) 24,600 138,990
--------------------------------------------------------------------------------
Nextel Communications, Inc.-Class A(a) 27,900 322,245
--------------------------------------------------------------------------------
United States Cellular Corp.(a) 8,900 222,678
================================================================================
683,913
================================================================================
Total Common Stocks & Other Equity Interests (Cost
$14,331,575) 13,935,782
================================================================================
MONEY MARKET FUNDS-7.43%
STIC Liquid Assets Portfolio(b) 543,970 543,970
--------------------------------------------------------------------------------
STIC Prime Portfolio(b) 543,970 543,970
================================================================================
Total Money Market Funds (Cost $1,087,940) 1,087,940
================================================================================
TOTAL INVESTMENTS-102.57% (Cost $15,419,515) 15,023,722
================================================================================
OTHER ASSETS LESS LIABILITIES-(2.57%) (375,977)
================================================================================
NET ASSETS-100.00% $14,647,745
________________________________________________________________________________
================================================================================
|
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. NEW TECHNOLOGY FUND
FS-174
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost $15,419,515) $15,023,722
--------------------------------------------------------------------------------
Dividend receivables 2,000
--------------------------------------------------------------------------------
Investment for deferred compensation plan 13,799
================================================================================
Total assets 15,039,521
________________________________________________________________________________
================================================================================
LIABILITIES:
Payables for:
Investments purchased 338,611
--------------------------------------------------------------------------------
Fund shares reacquired 11,890
--------------------------------------------------------------------------------
Deferred compensation plan 13,799
--------------------------------------------------------------------------------
Accrued administrative services fees 8,986
--------------------------------------------------------------------------------
Accrued distribution fees -- Series II 4
--------------------------------------------------------------------------------
Accrued transfer agent fees 1,095
--------------------------------------------------------------------------------
Accrued operating expenses 17,391
================================================================================
Total liabilities 391,776
================================================================================
Net assets applicable to shares outstanding $14,647,745
________________________________________________________________________________
================================================================================
NET ASSETS:
Series I $14,634,445
________________________________________________________________________________
================================================================================
Series II $ 13,300
________________________________________________________________________________
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Series I 6,324,863
________________________________________________________________________________
================================================================================
Series II 5,751
________________________________________________________________________________
================================================================================
Series I:
Net asset value per share $ 2.31
________________________________________________________________________________
================================================================================
Series II:
Net asset value per share $ 2.31
________________________________________________________________________________
================================================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends $ 2,999
--------------------------------------------------------------------------------
Dividends from affiliated money market funds 16,454
================================================================================
Total investment income 19,453
================================================================================
EXPENSES:
Advisory fees 216,332
--------------------------------------------------------------------------------
Administrative services fees 101,610
--------------------------------------------------------------------------------
Custodian fees 18,936
--------------------------------------------------------------------------------
Distribution fees -- Series II 40
--------------------------------------------------------------------------------
Transfer agent fees 8,738
--------------------------------------------------------------------------------
Trustees' fees 8,736
--------------------------------------------------------------------------------
Other 15,004
================================================================================
Total expenses 369,396
================================================================================
Less: Fees waived and expenses reimbursed (87,991)
--------------------------------------------------------------------------------
Expenses paid indirectly (30)
================================================================================
Net expenses 281,375
================================================================================
Net investment income (loss) (261,922)
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (9,327,344)
--------------------------------------------------------------------------------
Option contracts written 13,065
================================================================================
(9,314,279)
================================================================================
Change in net unrealized appreciation (depreciation) of investment
securities (4,612,766)
================================================================================
Net gain (loss) from investment securities and option contracts (13,927,045)
================================================================================
Net increase (decrease) in net assets resulting from operations $(14,188,967)
________________________________________________________________________________
================================================================================
|
See Notes to Financial Statements.
AIM V.I. NEW TECHNOLOGY FUND
FS-175
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ (261,922) $ (464,860)
--------------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and option
contracts (9,314,279) (36,564,431)
--------------------------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of investment securities and
foreign currencies (4,612,766) 3,697,847
================================================================================
Net increase (decrease) in net assets
resulting from operations (14,188,967) (33,331,444)
================================================================================
Distributions to shareholders from net investment
income:
Series I -- (758,754)
--------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains:
Series I -- (19,031,270)
--------------------------------------------------------------------------------
Share transactions-net:
Series I (5,805,609) 18,425,518
--------------------------------------------------------------------------------
Series II 28,202 --
================================================================================
Net increase (decrease) in net assets (19,966,374) (34,695,950)
================================================================================
NET ASSETS:
Beginning of year 34,614,119 69,310,069
================================================================================
End of year $ 14,647,745 $ 34,614,119
________________________________________________________________________________
================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 68,855,836 $ 74,892,563
--------------------------------------------------------------------------------
Undistributed net investment income (loss) (17,374) (14,772)
--------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
option contracts (53,794,924) (44,480,645)
--------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of
investment securities and foreign currencies (395,793) 4,216,973
================================================================================
$ 14,647,745 $ 34,614,119
________________________________________________________________________________
================================================================================
|
See Notes to Financial Statements.
AIM V.I. NEW TECHNOLOGY FUND
FS-176
Notes to Financial Statements
December 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. New Technology Fund (the "Fund") is a series portfolio of AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies 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 gain) 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.
AIM V.I. NEW TECHNOLOGY FUND
FS-177
The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
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. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
H. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. AIM has agreed to waive advisory fees of Series I and Series II shares to the extent necessary to limit the expenses (excluding Rule 12b-1 plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) of each Series to 1.30%. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $87,975.
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. For the year ended December 31, 2002, the Fund paid AIM $101,610 of which AIM retained $50,000 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $6,282 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. AIM Distributors has agreed to reimburse the Fund's Rule 12b-1 Distribution Plan fees to the extent necessary to limit the total expenses of Series II shares to 1.45%. Pursuant to the master distribution agreement for the period April 2, 2002 (date sales commenced) through December 31, 2002, the Series II shares paid $24 after plan fees reimbursed by AIM Distributors of $16.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $2,704 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, 2002, the Fund received reductions in custodian fees of $30 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $30.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, the Fund did not borrow under the
AIM V.I. NEW TECHNOLOGY FUND
FS-178
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, 2002 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------------------------------------------------------------------------------
Beginning of year -- $ --
--------------------------------------------------------------------------------
Written 105 20,422
--------------------------------------------------------------------------------
Closed (85) (16,444)
--------------------------------------------------------------------------------
Exercised (20) (3,978)
================================================================================
End of year -- $ --
________________________________________________________________________________
================================================================================
|
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income $ -- $ 758,754
--------------------------------------------------------------------------------
Long-term capital gain -- 19,031,270
================================================================================
$ -- $19,790,024
________________________________________________________________________________
================================================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Unrealized appreciation (depreciation) -- investments $ (577,675)
--------------------------------------------------------------------------------
Temporary book/tax differences (18,550)
--------------------------------------------------------------------------------
Capital loss carryforward (52,485,468)
--------------------------------------------------------------------------------
Post-October capital loss deferral (1,126,398)
--------------------------------------------------------------------------------
Shares of beneficial interest 68,855,836
================================================================================
$ 14,647,745
________________________________________________________________________________
================================================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable to the tax deferral of losses on wash sales and the treatment of foreign tax on certain stock dividends.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
------------------------------------------------------------------------------
December 31, 2009 $43,238,949
------------------------------------------------------------------------------
December 31, 2010 9,246,519
==============================================================================
$52,485,468
______________________________________________________________________________
==============================================================================
|
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, 2002 was $30,105,274 and $35,292,140, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 1,070,431 -------------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,648,106) ================================================================================ Net unrealized appreciation (depreciation) of investment securities $ (577,675) ________________________________________________________________________________ ================================================================================ Cost of investments for tax purposes is $15,601,397. |
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of net operating losses on December 31, 2002, undistributed net investment income (loss) was increased by $259,320 and shares of beneficial interest decreased by $259,320. This reclassification had no effect on the net assets of the Fund.
AIM V.I. NEW TECHNOLOGY FUND
FS-179
NOTE 10--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------
Sold:
Series I 966,802 $ 2,977,433 871,432 $ 9,872,754
--------------------------------------------------------------------------------
Series II* 27,100 76,719 -- --
================================================================================
Issued as reinvestment
of dividends:
Series I -- -- 4,734,455 19,790,024
================================================================================
Reacquired:
Series I (2,859,709) (8,783,042) (1,127,829) (11,237,260)
--------------------------------------------------------------------------------
Series II* (21,349) (48,517) -- --
================================================================================
(1,887,156) $(5,777,407) 4,478,058 $ 18,425,518
________________________________________________________________________________
================================================================================
|
* Series II shares commenced sales on April 2, 2002.
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
-------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2002 2001 2000 1999 1998
-------------------------------------------------------
Net asset value, beginning
of period $ 4.21 $ 18.53 $ 32.96 $ 20.66 $ 18.40
-----------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) (0.04)(a) (0.05) 0.20 (0.14) (0.01)
-----------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (1.86) (8.79) (11.05) 18.46 3.99
===================================================================================
Total from investment
operations (1.90) (8.84) (10.85) 18.32 3.98
===================================================================================
Less distributions:
Dividends from net
investment income -- (0.21) -- -- --
-----------------------------------------------------------------------------------
Distributions from net
realized gains -- (5.27) (3.58) (6.02) (1.72)
===================================================================================
Total distributions -- (5.48) (3.58) (6.02) (1.72)
===================================================================================
Net asset value, end of
period $ 2.31 $ 4.21 $ 18.53 $ 32.96 $ 20.66
___________________________________________________________________________________
===================================================================================
Total return(b) (45.13)% (47.47)% (36.29)% 106.52% 22.11%
___________________________________________________________________________________
===================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $14,634 $34,614 $69,310 $108,428 $69,459
___________________________________________________________________________________
===================================================================================
Ratio of expenses to
average net assets:
With fee waivers 1.30%(c) 1.36% 1.31% 1.27% 1.17%
-----------------------------------------------------------------------------------
Without fee waivers 1.71%(c) 1.49% 1.31% 1.27% 1.18%
===================================================================================
Ratio of net investment
income (loss) to average
net assets (1.22)%(c) (1.14)% 0.74% (0.62)% (0.04)%
___________________________________________________________________________________
===================================================================================
Portfolio turnover rate 144% 289% 131% 124% 73%
___________________________________________________________________________________
===================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(c) Ratios are based on average daily net assets of $21,617,213.
AIM V.I. NEW TECHNOLOGY FUND
FS-180
NOTE 11--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
-------------
APRIL 2, 2002
(DATE SALES
COMMENCED) TO
DECEMBER 31,
2002
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 3.69
--------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.03)(a)
--------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.35)
================================================================================
Total from investment operations (1.38)
================================================================================
Net asset value, end of period $ 2.31
________________________________________________________________________________
================================================================================
Total return(b) (37.40)%
________________________________________________________________________________
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 13
________________________________________________________________________________
================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.45%(c)
--------------------------------------------------------------------------------
Without fee waivers 1.96%(c)
================================================================================
Ratio of net investment income (loss) to average net assets (1.37)%(c)
________________________________________________________________________________
================================================================================
Portfolio turnover rate 144%
________________________________________________________________________________
================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total return does not reflect charges at the
separate account level which if included would reduce total return for
the period shown.
(c) Ratios are annualized and based on average daily net assets of $21,275.
AIM V.I. NEW TECHNOLOGY FUND
FS-181
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. Premier Equity Fund, formerly 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, 2002, 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 years or periods in the five year 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, 2002 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. Premier Equity Fund, as of December 31, 2002, 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 years or periods in the five year period then ended in conformity with accounting principles generally accepted in the United States of America.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 31, 2003
AIM V.I. PREMIER EQUITY FUND
FS-182
Schedule of Investments
December 31, 2002
MARKET
SHARES VALUE
------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-91.49%
Advertising-1.27%
Omnicom Group Inc. 300,000 $ 19,380,000
==============================================================================
Airlines-0.66%
Southwest Airlines Co. 730,400 10,152,560
==============================================================================
Application Software-0.77%
BEA Systems, Inc.(a) 693,700 7,956,739
------------------------------------------------------------------------------
Intuit Inc.(a) 82,000 3,847,440
==============================================================================
11,804,179
==============================================================================
Banks-3.37%
Bank of America Corp. 457,000 31,793,490
------------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 823,300 19,726,268
==============================================================================
51,519,758
==============================================================================
Biotechnology-0.53%
Amgen Inc.(a) 166,800 8,063,112
==============================================================================
Brewers-0.78%
Anheuser-Busch Cos., Inc. 247,100 11,959,640
==============================================================================
Broadcasting & Cable TV-5.12%
Comcast Corp.-Class A(a) 293,899 6,927,199
------------------------------------------------------------------------------
Comcast Corp.-Special Class A(a) 1,215,000 27,446,850
------------------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 1,549,700 44,011,480
==============================================================================
78,385,529
==============================================================================
Building Products-0.23%
Masco Corp. 165,000 3,473,250
==============================================================================
Computer & Electronics Retail-1.20%
Best Buy Co., Inc.(a) 762,700 18,419,205
==============================================================================
Computer Hardware-4.14%
Dell Computer Corp.(a) 1,320,000 35,296,800
------------------------------------------------------------------------------
Hewlett-Packard Co. 1,017,800 17,669,008
------------------------------------------------------------------------------
International Business Machines Corp. 133,200 10,323,000
==============================================================================
63,288,808
==============================================================================
Consumer Finance-1.11%
MBNA Corp. 894,900 17,020,998
==============================================================================
Data Processing Services-1.71%
First Data Corp. 738,800 26,160,908
==============================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------------
Department Stores-0.95%
Federated Department Stores, Inc.(a) 506,700 $ 14,572,692
==============================================================================
Diversified Financial Services-10.88%
American Express Co. 194,000 6,857,900
------------------------------------------------------------------------------
Citigroup Inc. 1,617,400 56,916,306
------------------------------------------------------------------------------
Fannie Mae 475,400 30,582,482
------------------------------------------------------------------------------
Freddie Mac 654,600 38,654,130
------------------------------------------------------------------------------
J.P. Morgan Chase & Co. 321,100 7,706,400
------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 200,000 7,590,000
------------------------------------------------------------------------------
Morgan Stanley 456,100 18,207,512
==============================================================================
166,514,730
==============================================================================
Drug Retail-1.12%
Walgreen Co. 588,700 17,184,153
==============================================================================
Electronic Equipment & Instruments-0.47%
Celestica Inc. (Canada)(a) 510,700 7,200,870
==============================================================================
Environmental Services-0.87%
Waste Management, Inc. 584,300 13,392,156
==============================================================================
Footwear-1.69%
NIKE, Inc.-Class B 580,000 25,792,600
==============================================================================
General Merchandise Stores-3.13%
Target Corp. 1,391,900 41,757,000
------------------------------------------------------------------------------
Wal-Mart de Mexico S.A. de C.V.-Series V
(Mexico) 2,700,100 6,196,951
==============================================================================
47,953,951
==============================================================================
Health Care Distributors & Services-0.14%
Laboratory Corp. of America Holdings(a) 89,200 2,073,008
==============================================================================
Health Care Equipment-0.55%
Baxter International Inc. 298,500 8,358,000
==============================================================================
Health Care Facilities-2.92%
HCA Inc. 1,075,400 44,629,100
==============================================================================
Household Products-2.49%
Kimberly-Clark Corp. 160,000 7,595,200
------------------------------------------------------------------------------
Procter & Gamble Co. (The) 355,200 30,525,888
==============================================================================
38,121,088
==============================================================================
|
AIM V.I. PREMIER EQUITY FUND
FS-183
MARKET
SHARES VALUE
------------------------------------------------------------------------------
Industrial Conglomerates-2.37%
General Electric Co. 1,489,200 $ 36,262,020
==============================================================================
Industrial Machinery-1.25%
Danaher Corp. 290,800 19,105,560
==============================================================================
Integrated Oil & Gas-5.72%
BP PLC-ADR (United Kingdom) 478,900 19,467,285
------------------------------------------------------------------------------
ChevronTexaco Corp. 380,000 25,262,400
------------------------------------------------------------------------------
Exxon Mobil Corp. 1,227,000 42,871,380
==============================================================================
87,601,065
==============================================================================
Integrated Telecommunication Services-1.76%
AT&T Corp. 181,700 4,744,187
------------------------------------------------------------------------------
SBC Communications Inc. 316,000 8,566,760
------------------------------------------------------------------------------
Verizon Communications Inc. 352,200 13,647,750
==============================================================================
26,958,697
==============================================================================
IT Consulting & Services-0.71%
Accenture Ltd.-Class A (Bermuda)(a) 342,000 6,152,580
------------------------------------------------------------------------------
Affiliated Computer Services, Inc.-Class A(a) 88,100 4,638,465
==============================================================================
10,791,045
==============================================================================
Life & Health Insurance-0.54%
AFLAC Inc. 275,000 8,283,000
==============================================================================
Managed Health Care-2.49%
Anthem, Inc.(a) 180,100 11,328,290
------------------------------------------------------------------------------
UnitedHealth Group Inc. 321,200 26,820,200
==============================================================================
38,148,490
==============================================================================
Movies & Entertainment-1.95%
AOL Time Warner Inc.(a) 637,200 8,347,320
------------------------------------------------------------------------------
Viacom Inc.-Class B(a) 527,500 21,500,900
==============================================================================
29,848,220
==============================================================================
Multi-Line Insurance-4.05%
American International Group, Inc. 869,900 50,323,715
------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 257,600 11,702,768
==============================================================================
62,026,483
==============================================================================
Multi-Utilities & Unregulated Power-0.62%
Duke Energy Corp. 486,900 9,514,026
==============================================================================
Networking Equipment-1.15%
Cisco Systems, Inc.(a) 1,342,200 17,582,820
==============================================================================
|
MARKET
SHARES VALUE
------------------------------------------------------------------------------
Oil & Gas Drilling-0.93%
GlobalSantaFe Corp. (Cayman Islands) 170,000 $ 4,134,400
------------------------------------------------------------------------------
Transocean Inc. 433,000 10,045,600
==============================================================================
14,180,000
==============================================================================
Oil & Gas Equipment & Services-1.88%
Baker Hughes Inc. 638,000 20,537,220
------------------------------------------------------------------------------
BJ Services Co.(a) 255,700 8,261,667
==============================================================================
28,798,887
==============================================================================
Packaged Foods & Meats-0.81%
Sara Lee Corp. 547,600 12,326,476
==============================================================================
Pharmaceuticals-7.78%
Allergan, Inc. 245,000 14,116,900
------------------------------------------------------------------------------
Johnson & Johnson 395,900 21,263,789
------------------------------------------------------------------------------
King Pharmaceuticals, Inc.(a) 456,200 7,842,078
------------------------------------------------------------------------------
Merck & Co. Inc. 139,200 7,880,112
------------------------------------------------------------------------------
Pfizer Inc. 1,973,000 60,314,610
------------------------------------------------------------------------------
Wyeth 203,800 7,622,120
==============================================================================
119,039,609
==============================================================================
Property & Casualty Insurance-1.57%
Allstate Corp. (The) 427,400 15,809,526
------------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A(a) 183,670 2,690,766
------------------------------------------------------------------------------
Travelers Property Casualty Corp.-Class B(a) 372,947 5,463,674
==============================================================================
23,963,966
==============================================================================
Restaurants-1.27%
Yum! Brands, Inc.(a) 801,300 19,407,486
==============================================================================
Semiconductor Equipment-0.77%
Applied Materials, Inc.(a) 902,000 11,753,060
==============================================================================
Semiconductors-1.50%
Analog Devices, Inc.(a) 738,700 17,632,769
------------------------------------------------------------------------------
Micron Technology, Inc.(a) 553,700 5,393,038
==============================================================================
23,025,807
==============================================================================
Soft Drinks-0.50%
PepsiCo, Inc. 182,300 7,696,706
==============================================================================
Specialty Stores-0.30%
Staples, Inc.(a) 250,000 4,575,000
==============================================================================
Systems Software-3.46%
Microsoft Corp.(a) 1,025,600 53,023,520
==============================================================================
|
AIM V.I. PREMIER EQUITY FUND
FS-184
MARKET
SHARES VALUE
------------------------------------------------------------------------------
Telecommunications Equipment-0.19%
QUALCOMM Inc.(a) 80,000 $ 2,911,200
==============================================================================
Wireless Telecommunication Services-1.82%
Nextel Communications, Inc.-Class A(a) 1,362,500 15,736,875
------------------------------------------------------------------------------
Sprint Corp. (PCS Group)(a) 2,760,100 12,089,238
==============================================================================
27,826,113
==============================================================================
Total Common Stocks & Other Equity
Interests (Cost $1,625,518,117) 1,400,069,551
==============================================================================
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.65%
1.18%, 03/20/03 (Cost $9,974,433)(b) $10,000,000(c) 9,974,433
==============================================================================
|
PRINCIPAL MARKET
AMOUNT VALUE
------------------------------------------------------------------------------
MARKET
SHARES VALUE
------------------------------------------------------------------------------
MONEY MARKET FUNDS-7.96%
STIC Liquid Assets Portfolio(d) 60,884,509 $ 60,884,509
------------------------------------------------------------------------------
STIC Prime Portfolio(d) 60,884,509 60,884,509
==============================================================================
Total Money Market Funds (Cost
$121,769,018) 121,769,018
==============================================================================
TOTAL INVESTMENTS-100.10% (Cost
$1,757,261,568) 1,531,813,002
==============================================================================
OTHER ASSETS LESS LIABILITIES-(0.10%) (1,454,097)
==============================================================================
NET ASSETS-100.00% $1,530,358,905
______________________________________________________________________________
==============================================================================
|
Investment Abbreviations:
ADR - American Depositary Receipt |
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Security traded on a discount basis. The interest rate shown represents the
discount rate at the time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 8.
(d) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
AIM V.I. PREMIER EQUITY FUND
FS-185
Statement of Assets and Liabilities
December 31, 2002
ASSETS:
Investments, at market value (cost
$1,757,261,568) $1,531,813,002
-------------------------------------------------------------
Receivables for:
Foreign currency contracts closed 2,254
-------------------------------------------------------------
Variation margin 84,000
-------------------------------------------------------------
Fund shares sold 190,576
-------------------------------------------------------------
Dividends 1,369,656
-------------------------------------------------------------
Amount due from advisor 31,867
-------------------------------------------------------------
Investment for deferred compensation plan 52,770
-------------------------------------------------------------
Other assets 8,125
=============================================================
Total assets 1,533,552,250
_____________________________________________________________
=============================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,706,728
-------------------------------------------------------------
Foreign currency contracts outstanding 13,366
-------------------------------------------------------------
Deferred compensation plan 52,770
-------------------------------------------------------------
Accrued administrative services fees 1,119,943
-------------------------------------------------------------
Accrued distribution fees -- Series II 5,973
-------------------------------------------------------------
Accrued transfer agent fees 43,327
-------------------------------------------------------------
Accrued operating expenses 251,238
=============================================================
Total liabilities 3,193,345
=============================================================
Net assets applicable to shares outstanding $1,530,358,905
_____________________________________________________________
=============================================================
NET ASSETS:
Series I $1,519,524,897
_____________________________________________________________
=============================================================
Series II $ 10,834,008
_____________________________________________________________
=============================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER
SHARE:
Series I 93,699,663
_____________________________________________________________
=============================================================
Series II 669,992
_____________________________________________________________
=============================================================
Series I:
Net asset value per share $ 16.22
_____________________________________________________________
=============================================================
Series II:
Net asset value per share $ 16.17
_____________________________________________________________
=============================================================
|
Statement of Operations
For the year ended December 31, 2002
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$188,302) $ 19,693,519
-------------------------------------------------------------
Dividends from affiliated money market funds 1,923,056
-------------------------------------------------------------
Interest 75,961
=============================================================
Total investment income 21,692,536
=============================================================
EXPENSES:
Advisory fees 12,074,846
-------------------------------------------------------------
Administrative services fees 4,279,991
-------------------------------------------------------------
Custodian fees 223,222
-------------------------------------------------------------
Distribution fees -- Series II 13,525
-------------------------------------------------------------
Transfer agent fees 120,224
-------------------------------------------------------------
Trustees' fees 19,092
-------------------------------------------------------------
Other 173,488
=============================================================
Total expenses 16,904,388
=============================================================
Less: Fees waived (22,903)
-------------------------------------------------------------
Expenses paid indirectly (549)
=============================================================
Net expenses 16,880,936
=============================================================
Net investment income 4,811,600
=============================================================
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 (436,760,132)
-------------------------------------------------------------
Foreign currencies 62,146
-------------------------------------------------------------
Foreign currency contracts (1,848,273)
-------------------------------------------------------------
Futures contracts 1,145,630
-------------------------------------------------------------
Option contracts written 300,747
=============================================================
(437,099,882)
=============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (328,190,604)
-------------------------------------------------------------
Foreign currency contracts (30,805)
-------------------------------------------------------------
Futures contracts (2,142,322)
=============================================================
(330,363,731)
=============================================================
Net gain (loss) from investment securities,
foreign currencies, foreign currency
contracts, futures contracts and option
contracts (767,463,613)
=============================================================
Net increase (decrease) in net assets
resulting from operations $(762,652,013)
_____________________________________________________________
=============================================================
|
See Notes to Financial Statements.
AIM V.I. PREMIER EQUITY FUND
FS-186
Statement of Changes in Net Assets
For the years ended December 31, 2002 and 2001
2002 2001
-----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,811,600 $ 6,224,561
-----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, foreign currency contracts, futures
contracts and option contracts (437,099,882) (272,780,154)
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies, foreign
currency contracts, futures contracts and option
contracts (330,363,731) (97,327,279)
===============================================================================================
Net increase (decrease) in net assets resulting from
operations (762,652,013) (363,882,872)
===============================================================================================
Distributions to shareholders from net investment income:
Series I (6,192,808) (3,348,106)
-----------------------------------------------------------------------------------------------
Series II (41,642) (548)
-----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Series I -- (50,823,827)
-----------------------------------------------------------------------------------------------
Series II -- (8,314)
-----------------------------------------------------------------------------------------------
Share transactions-net:
Series I (271,364,143) 230,022,815
-----------------------------------------------------------------------------------------------
Series II 11,802,858 686,924
===============================================================================================
Net increase (decrease) in net assets (1,028,447,748) (187,353,928)
===============================================================================================
NET ASSETS:
Beginning of year 2,558,806,653 2,746,160,581
===============================================================================================
End of year $ 1,530,358,905 $2,558,806,653
_______________________________________________________________________________________________
===============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 2,492,872,435 $2,752,433,720
-----------------------------------------------------------------------------------------------
Undistributed net investment income 4,773,524 6,134,226
-----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts (740,205,143) (303,043,113)
-----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies, foreign currency
contracts, futures contracts and option contracts (227,081,911) 103,281,820
===============================================================================================
$ 1,530,358,905 $2,558,806,653
_______________________________________________________________________________________________
===============================================================================================
|
See Notes to Financial Statements.
AIM V.I. PREMIER EQUITY FUND
FS-187
Notes to Financial Statements
December 31, 2002
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Premier Equity Fund (formerly AIM V.I. Value Fund) (the "Fund") is a series portfolio of AIM Variable Insurance Funds (the "Trust"). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of eighteen separate portfolios. The Fund currently offers two classes of shares, Series I and Series II shares, both of which are offered to insurance company separate accounts. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. Current SEC guidance, however, requires participating insurance companies to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each portfolio and class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's primary 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 traded in the over-the-counter market (but not securities reported on the NASDAQ National Market System) is valued at the closing bid price furnished by independent pricing services or market makers. 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 institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. 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 and commercial paper 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").
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the 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 the close of the respective markets. Events affecting the values of such foreign securities may occur between the times at which the particular foreign market closes 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 a development/event is so significant that there is a reasonably high degree of certainty as to both the effect and the degree of effect that the development/event has actually caused that closing price to no longer reflect actual value, the closing prices, as determined at the close of the applicable foreign market, may be adjusted to reflect the fair value of the affected foreign securities as of the close of the NYSE 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.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. DISTRIBUTIONS -- Distributions from income and net realized capital gains, if any, are generally paid to separate accounts of participating insurance companies annually and recorded on ex-dividend date.
AIM V.I. PREMIER EQUITY FUND
FS-188
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 gain) 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. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments are included with the net realized and unrealized gain or loss from investments in the statement of operations.
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. 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. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
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. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased or sold.
I. 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. Risks also include to varying degrees, the risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
J. EXPENSES -- Distribution expenses directly attributable to a class of shares are charged to the respective classes' operations. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses are charged to each class pursuant to a transfer agency and service agreement adopted by the Fund with respect to such class. All other expenses are allocated among the classes based on relative net assets.
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. Further, AIM has voluntarily agreed to waive advisory fees of the Fund in the amount of 25% of the advisory fee AIM receives from the affiliated money market funds in which the Fund has invested. For the year ended December 31, 2002, AIM waived fees of $22,903.
AIM V.I. PREMIER EQUITY FUND
FS-189
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 fees paid to insurance companies that have agreed to provide administrative services to the Fund. During the year ended December 31, 2002, the Fund paid AIM $4,279,991, of which AIM retained $309,575 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended December 31, 2002, AFS retained $61,761 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. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares ("the Plan"). The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual rate of 0.25% of the Fund's average daily net assets of Series II shares. Of this amount, the Fund may pay a service fee of up to 0.25% of the average daily net assets of the Series II shares to insurance companies who furnish continuing personal shareholder services to their customers who purchase and own Series II shares of the Fund. Pursuant to the master distribution agreement for the year ended December 31, 2002, the Series II shares paid $13,525.
Certain officers and trustees of the Trust are officers of AIM, AFS and/or AIM Distributors.
During the year ended December 31, 2002, the Fund paid legal fees of $6,305 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, 2002, the Fund received reductions in custodian fees of $549 under an expense offset arrangement which resulted in a reduction of the Fund's total expenses of $549.
NOTE 4--TRUSTEES' FEES
Trustees' fees represent remuneration paid to each trustee who is not an "interested person" of AIM. Trustees have the option to defer compensation payable by the Trust. The Trustees deferring compensation have the option to select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested.
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) $500,000,000 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,
2002, 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--FOREIGN CURRENCY CONTRACTS
Outstanding foreign currency contracts at December 31, 2002 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT ---------------------- APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------------------------------------------------------------------------
02/25/03 CAD 9,160,000 $5,800,165 $5,813,531 $(13,366)
___________________________________________________________________________
===========================================================================
|
NOTE 7--CALL OPTION CONTRACTS
Transactions in call options written during the year ended December 31, 2002 are summarized as follows:
CALL OPTION CONTRACTS
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-----------------------------------------------------------
Beginning of year -- $ --
-----------------------------------------------------------
Written 1,645 326,367
-----------------------------------------------------------
Closed (610) (105,004)
-----------------------------------------------------------
Expired (1,035) (221,363)
===========================================================
End of year -- $ --
___________________________________________________________
===========================================================
|
NOTE 8--FUTURES CONTRACTS
On December 31, 2002, $3,805,000 principal amount of U.S. Treasury obligations were pledged as collateral to cover margin requirements for open futures contracts. Open futures contracts as of December 31, 2002 were as follows:
UNREALIZED
NO. OF MONTH/ MARKET APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
-----------------------------------------------------------------------
S&P 500 Index 240 Mar.-03/Long $52,734,000 $(1,619,979)
_______________________________________________________________________
=======================================================================
|
AIM V.I. PREMIER EQUITY FUND
FS-190
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF BENEFICIAL INTEREST
Distributions to Shareholders:
The tax character of distributions paid during the years ended December 31, 2002 and 2001 was as follows:
2002 2001
---------------------------------------------------------------
Distributions paid from:
Ordinary income $6,234,450 $ 3,348,613
---------------------------------------------------------------
Long-term capital gain -- 50,832,182
===============================================================
$6,234,450 $54,180,795
_______________________________________________________________
===============================================================
|
Tax Components of Beneficial Interest:
As of December 31, 2002, the components of beneficial interest on a tax basis were as follows:
Undistributed ordinary income $ 4,885,292
-------------------------------------------------------------
Unrealized appreciation
(depreciation)-investments (249,962,089)
-------------------------------------------------------------
Temporary book/tax differences (111,769)
-------------------------------------------------------------
Capital loss carryforward (662,368,304)
-------------------------------------------------------------
Post-October capital loss deferral (54,956,660)
-------------------------------------------------------------
Shares of beneficial interest 2,492,872,435
=============================================================
$1,530,358,905
_____________________________________________________________
=============================================================
|
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's unrealized appreciation (depreciation) difference is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains (losses) on certain foreign currency contracts and on certain futures contracts.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of trustee deferral of compensation and retirement plan expenses.
The Fund's capital loss carryforward expires as follows:
CAPITAL LOSS
EXPIRATION CARRYFORWARD
-----------------------------------------------------------
December 31, 2009 $250,136,976
-----------------------------------------------------------
December 31, 2010 412,231,328
===========================================================
$662,368,304
___________________________________________________________
===========================================================
|
NOTE 10--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, 2002 was $865,797,179 and $1,106,733,753, respectively.
The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of December 31, 2002 is as follows:
Aggregate unrealized appreciation of investment securities $ 79,628,983 ------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (329,591,072) ============================================================= Net unrealized appreciation (depreciation) of investment securities $(249,962,089) _____________________________________________________________ ============================================================= Cost of investments for tax purposes is $1,781,775,091. |
NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES
As a result of differing book/tax treatment of foreign currency transactions on December 31, 2002, undistributed net investment income was increased by $62,148 and undistributed net realized gains (losses) decreased by $62,148. This reclassification had no effect on the net assets of the Fund.
AIM V.I. PREMIER EQUITY FUND
FS-191
NOTE 12--SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 2002 and 2001 were as follows:
2002 2001
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------------------------------------------------
Sold:
Series I 12,952,884 $ 261,301,166 25,530,747 $ 638,287,847
--------------------------------------------------------------------------------------------------------------------------
Series II* 743,703 13,539,946 30,153 703,791
==========================================================================================================================
Issued as reinvestment of dividends:
Series I 376,691 6,192,808 2,393,801 54,171,933
--------------------------------------------------------------------------------------------------------------------------
Series II* 2,541 41,642 392 8,862
==========================================================================================================================
Reacquired:
Series I (29,178,636) (538,858,117) (18,964,766) (462,436,965)
--------------------------------------------------------------------------------------------------------------------------
Series II* (105,692) (1,778,730) (1,105) (25,729)
==========================================================================================================================
(15,208,509) $(259,561,285) 8,989,222 $ 230,709,739
__________________________________________________________________________________________________________________________
==========================================================================================================================
|
* Series II shares commenced sales on September 19, 2001.
AIM V.I. PREMIER EQUITY FUND
FS-192
NOTE 13--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
SERIES I
------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
2002 2001 2000 1999 1998
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 23.35 $ 27.30 $ 33.50 $ 26.25 $ 20.83
---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05(a) 0.06(a) 0.04(a) 0.06(a) 0.09
---------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized
and unrealized) (7.11) (3.50) (4.94) 7.76 6.59
=================================================================================================================================
Total from investment operations (7.06) (3.44) (4.90) 7.82 6.68
=================================================================================================================================
Less distributions:
Dividends from net investment income (0.07) (0.03) (0.04) (0.09) (0.13)
---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.48) (1.26) (0.48) (1.13)
=================================================================================================================================
Total distributions (0.07) (0.51) (1.30) (0.57) (1.26)
=================================================================================================================================
Net asset value, end of period $ 16.22 $ 23.35 $ 27.30 $ 33.50 $ 26.25
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Total return(b) (30.26)% (12.53)% (14.68)% 29.90% 32.41%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,519,525 $2,558,120 $2,746,161 $2,383,367 $1,221,384
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Ratio of expenses to average net assets 0.85%(c) 0.85% 0.84% 0.76% 0.66%
=================================================================================================================================
Ratio of net investment income to average net
assets 0.24%(c) 0.24% 0.12% 0.20% 0.68%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
Portfolio turnover rate 46% 40% 62% 62% 100%
_________________________________________________________________________________________________________________________________
=================================================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America. Total returns do not reflect
charges at the separate account level which if included would reduce
total returns for all periods shown.
(c) Ratios are based on average daily net assets of $1,986,230,999.
AIM V.I. PREMIER EQUITY FUND
FS-193
NOTE 13--FINANCIAL HIGHLIGHTS (CONTINUED)
SERIES II
-------------------------------------
SEPTEMBER 19, 2001
(DATE SALES
YEAR ENDED COMMENCED) TO
DECEMBER 31, DECEMBER 31,
2002 2001
---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 23.34 $21.00
---------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.00(a) 0.00(a)
---------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (7.10) 2.85
===================================================================================================
Total from investment operations (7.10) 2.85
===================================================================================================
Less distributions:
Dividends from net investment income (0.07) (0.03)
---------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.48)
===================================================================================================
Total distributions (0.07) (0.51)
===================================================================================================
Net asset value, end of period $ 16.17 $23.34
___________________________________________________________________________________________________
===================================================================================================
Total return(b) (30.44)% 13.66%
___________________________________________________________________________________________________
===================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $10,834 $ 687
___________________________________________________________________________________________________
===================================================================================================
Ratio of expenses to average net assets 1.10%(c) 1.10%(d)
===================================================================================================
Ratio of net investment income (loss) to average net assets (0.01)%(c) (0.01)%(d)
___________________________________________________________________________________________________
===================================================================================================
Portfolio turnover rate 46% 40%
___________________________________________________________________________________________________
===================================================================================================
|
(a) Calculated using average shares outstanding.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and is not annualized for
periods less than one year. Total returns do not reflect charges at the
separate account level which if included would reduce total return for
all periods shown.
(c) Ratios are based on average daily net assets of $5,410,029.
(d) Annualized.
AIM V.I. PREMIER EQUITY FUND
FS-194
PART C
OTHER INFORMATION
a (1) - Amended and Restated Agreement and Declaration of Trust of Registrant, dated May 15, 2002.(20)
b (1) - Amended and Restated By-Laws of Registrant, dated effective May
15, 2002.(20)
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.(15)
- (c) Amendment No. 2 to Master Investment Advisory Agreement of
Registrant dated September 7, 2001, between Registrant and A I M
Advisors, Inc.(18)
- (d) Amendment No. 3 to Master Investment Advisory Agreement of
Registrant dated May 1, 2002, between Registrant and A I M
Advisors, Inc.(20)
(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) First Amended and Restated Master Distribution Agreement,
dated July 16, 2001, between Registrant and A I M Distributors,
Inc.(17)
|
(b) Amendment No. 1, dated September 7, 2001, to First Amended and Restated Master Distribution Agreement, between Registrant and A I M Distributors, Inc., dated July 16, 2001.(18)
- (c) Amendment No. 2, dated May 1, 2002, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Advisors, Inc., dated July 16, 2001.(20)
f (1) - Retirement Plan of Registrant's Non-Affiliated Directors,
effective March 8, 1994, as restated September 18, 1995.(4)
C-1
|
(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 Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company.(15)
|
- (b) Amendment, dated May 1, 2000, to Master Custodian Contract, dated May 1, 2000, between Registrant and State Street Bank and Trust Company.(15)
- (c) Amendment dated June 29, 2001, to Master Custodian Contract dated May 1, 2000, between Registrant and State Street Bank and Trust Company.(20)
- (d) Amendment dated April 2, 2002, to Master Custodian Contract dated May 1, 2000, between Registrant and State Street Bank and Trust Company.(20)
(2) - Custody Agreement, dated September 19, 2000, between Registrant
and The Bank of New York.(15)
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.(15)
- (c) Amendment No. 2 to Master Administrative Services Agreement
between Registrant and A I M Advisors, Inc., dated September 7,
2001.(18)
- (d) Amendment No. 3, dated May 1, 2002 to Master Administrative
Services Agreement, dated May 1, 2000, between Registrant and A I
M Advisors, Inc.(20)
|
- (e) Amendment No. 4, dated June 1, 2002 to Master Administrative Services Agreement, dated May 1, 2000, between Registrant and A I M Advisors, Inc.(20)
(2) - Transfer Agency and Service Agreement, dated October 15, 2001,
between Registrant and A I M Fund Services, Inc.(18)
(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 the 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 the 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 the Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Company.(7)
|
- (c) Amendment No. 2, dated September 2, 1997, to the Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Company.(6)
- (d) Amendment No. 3, dated January 26, 1998, to the Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Company.(7)
- (e) Amendment No. 4, dated May 1, 1998, to the 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)
- (g) Amendment No. 6, dated September 26, 2001 to the Participation Agreement, dated December 19, 1995, between Registrant and Glenbrook Life and Annuity Company.(20)
(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 the Participation Agreement, dated September 21, 1996, between Registrant and Pruco Life Insurance Company.(6)
- (c) Amendment No. 2, dated August 1, 1998, to the 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 the 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 the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(6)
|
- (c) Amendment No. 2, dated April 13, 2000, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(14)
- (d) Amendment No. 3, dated February 16, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(18)
- (e) Amendment No. 4, dated May 1, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(18)
- (f) Amendment No. 5, dated October 5, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(18)
- (g) Agreement No. 6, dated September 10, 2002, to the Participation Agreement, dated December 18, 1996, between Registrant and Merrill Lynch Life Insurance Company.(20)
(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 the Participation Agreement, dated December 18, 1996, between Registrant and ML Life Insurance Company of New York.(6)
- (c) Amendment No. 2, dated April 3, 2000, to the Participation Agreement, dated December 18, 1996, by and between Registrant and ML Life Insurance Company of New York.(14)
- (d) Amendment No. 3 dated February 16, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and ML Life Insurance Company of New York.(18)
- (e) Amendment No. 4, dated May 1, 2001, to the Participation Agreement, dated December 18, 1996, between Registrant and ML Life Insurance Company of New York.(18)
- (f) Amendment No. 5, dated October 5, 2001, to the Participation Agreement, dated, December 18, 1996, between Registrant and ML Life Insurance Company of New York.(18)
- (g) Amendment No. 6, dated September 10, 2002, to the Participation Agreement, dated December 18, 1996, between Registrant and ML Life Insurance Company of New York.(20)
(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 the 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 the 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)
- (g) Amendment No. 6, dated September 5, 2001, to the
Participation Agreement, dated December 3, 1997, between
Registrant and Security Life of Denver Insurance Company.(18)
(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)
- (d) Amendment No. 3, dated February 12, 2001, to the
Participation Agreement, dated December 31, 1997, between
Registrant and Met Life Investors Insurance Company (formerly
Cova Financial Services Life Insurance Company).(18)
(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)
- (c) Amendment No. 2, dated February 12, 2001, to the
Participation Agreement, dated April 23, 1999, between Registrant
and Met Life Investors Insurance Company (formerly Cova Financial
Life Insurance Company).(18)
|
(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, Inc.(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, Inc.(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)
- (e) Amendment No. 4, dated December 1, 2000, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Life Insurance and Annuity Company, Inc.(18)
(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)
- (e) Amendment No. 4, dated May 1, 2000, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S).(18)
- (f) Amendment No. 5, dated May 1, 2001, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(18)
- (g) Amendment No. 6, dated September 1, 2001, to the
Participation Agreement dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada (U.S.).(18)
- (h) Amendment No. 7, date April 1, 2002 to the Participation
Agreement dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(20)
|
- (i) Amendment No. 8, dated August 5, 2002, to the Participation Agreement dated February 17, 1998, between Registrant and Sun Life Assurance Company of Canada (U.S.).(20)
(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)
- (c) Amendment No. 2, dated March 12, 2001, to the Participation
Agreement, dated April 21, 1998, between Registrant and Keyport
Life Insurance Company.(18)
(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 the 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)
- (d) Amendment No. 3, dated August 1, 1999, to the Participation
Agreement, dated May 1, 1998, between Registrant and PFL Life
Insurance Company.(18)
- (e) Amendment No. 4, dated February 28, 2001, to the
Participation Agreement, dated May 1, 1998, between Registrant
and PFL Life Insurance Company.(18)
- (f) Amendment No. 5, dated July 1, 2001, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly PFL Life Insurance Company).(18)
- (g) Amendment No. 6, dated August 15, 2001, to the Participation
Agreement dated May 1, 1998, between Transamerica Life Insurance
Company (formerly PFL Life Insurance Company).(18)
- (h) Amendment No. 7 dated May 1, 2002, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly PFL Life Insurance Company).(20)
|
- (i) Amendment No. 8 dated July 15, 2002, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(20)
- (j) Amendment No. 9 dated December 1, 2002, to the Participation Agreement, dated May 1, 1998, between Registrant and Transamerica Life Insurance Company (formerly PFL Life Insurance Company).(20)
(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.(14)
- (d) Amendment No. 3, dated February 1, 2000, to the Participation Agreement, dated June 1, 1998, between Registrant and American General Life Insurance Company.(14)
- (e) Amendment No. 4, dated November 1, 2000, to the Participation Agreement, dated June 1, 1998, between Registrant and American General Life Insurance Company.(18)
- (f) Amendment No. 5, dated May 14, 2002, to the Participation Agreement, dated June 1, 1998, between Registrant and American General Life Insurance Company.(20)
(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.(14)
- (d) Amendment No. 3, dated October 14, 1999, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(14)
- (e) Amendment No. 4, dated May 1, 2000, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(14)
- (f) Amendment No. 5, dated July 15, 2000, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(18)
- (g) Amendment No. 6, dated July 15, 2001, to the Participation
Agreement dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(18)
(33) - (a) Participation Agreement, dated June 30, 1998, between
Registrant and Aetna Life Insurance and Annuity Company.(7)
- (b) Amendment No. 1, dated October 1, 2000, to the Participation
Agreement, dated June 20, 1998, between Registrant and AETNA Life
Insurance and Annuity Company.(18)
(34) - (a) Participation Agreement, dated July 1, 1998, between
Registrant and The Union Central Life Insurance Company.(8)
|
- (b) Amendment dated January 1, 2003, to the Participation Agreement, dated July 1, 1998, between Registrant and The Union Central Life Insurance Company.(20)
(35) - Participation Agreement, dated July 1, 1998, between Registrant
and United Investors Life Insurance Company.(8)
(36) - (a) Participation Agreement, dated July 2, 1998, between
Registrant and Hartford Life Insurance Company.(7)
|
- (b) Amendment No. 1, dated April 29, 2002, to be effective as of November 1, 2000, to the Participation Agreement, dated July 2, 1998, between Registration and Hartford Life Insurance Company.(20)
- (c) Amendment No. 2, dated September 20, 2001, to the Participation Agreement, dated July 2, 1998, between Registrant and Hartford Life Insurance Company.(20)
(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)
- (f) Amendment No. 5, dated December 1, 2000, to the Participation
Agreement, dated July 27, 1998, between Registrant and Allmerica
Financial Life Insurance and Annuity Company.(18)
- (g) Amendment No. 6, dated May 1, 2001, to the Participation
Agreement dated July 27, 1998, between Registrant and Allmerica
Financial Life Insurance and Annuity Company.(18)
- (h) Amendment No. 7, dated May 1, 2002, to the Participation
Agreement dated July 27, 1998, between Registrant and Allmerica
Financial Life Insurance and Annuity Company.(20)
(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)
- (f) Amendment No. 5, dated December 1, 2000, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(18)
- (g) Amendment No. 6, dated May 1, 2001, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(18)
- (h) Amendment No. 7, dated May 1, 2002, to the Participation Agreement, dated July 27, 1998, between Registrant and First Allmerica Financial Life Insurance Company.(20)
(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) - (a) Participation Agreement, dated February 1, 1999, between
Registrant and Sage Life Assurance of America, Inc.(9)
- (b) Amendment No. 1, dated October 1, 2001, to the Participation
Agreement, dated February 1, 1999, between Registrant and Sage
Life Assurance of America, Inc.(18)
(44) - (a) Participation Agreement, dated April 1, 1999, between
Registrant and Liberty Life Assurance Company of Boston.(9)
- (b) Amendment No. 1, dated May 1, 2001, to the Participation
Agreement, dated April 1, 1999, between Registrant and Liberty
Life Assurance Company of Boston.(18)
(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) - (a) Participation Agreement, dated June 8, 1999, between
Registrant and Principal Life Insurance Company.(11)
|
- (b) Amendment, dated May 1, 2002, to the Participation Agreement, dated June 8, 1999, between Registrant and Principal Life Insurance Company.(20)
- (c) Amendment, dated August 15, 2002, to the Participation Agreement, dated June 8, 1999, between Registrant and Principal Life Insurance Company.(20)
(51) - Participation Agreement, dated June 14, 1999, between Registrant
and Security First Life Insurance Company.(11)
(52) - (a) Participation Agreement, dated July 1, 1999, between
Registrant and Allstate Life Insurance Company.(11)
- (b) Amendment No. 1, dated December 20, 2001, to the
Participation Agreement, dated July 1, 1999, between Registrant
and Allstate Life Insurance Company.(18)
(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) - (a) Participation Agreement, dated November 1, 1999, between
Registrant and AETNA Insurance Company of America.(12)
- (b) Amendment No. 1, dated November 17, 2000, to the
Participation Agreement dated November 1, 1999, between
Registrant and AETNA Insurance Company of America.(18)
(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) - (a) Participation Agreement, dated April 10, 2000, between
Registrant and Allmerica Financial Life Insurance and Annuity
Company.(14)
- (b) Amendment No. 1, dated December 1, 2000, to the Participation
Agreement, dated April 10, 2000, between Registrant and Allmerica
Financial Life Insurance and Annuity Company.(18)
(64) - Participation Agreement, dated April 14, 2000, between Registrant
and United Investors Life Insurance Company.(14)
(65) - (a) Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York.(14)
|
- (b) Amendment No. 1, dated April 27, 2000, to the Participation Agreement, dated April 17, 2000, between Registrant and Sun Life Insurance and Annuity Company of New York.(20)
- (c) Amendment No. 2, dated September 1, 2001, to the Participation Agreement, dated April 17, 2000, between Registrant and Sun Life Insurance and Annuity Company of New York.(20)
- (d) Amendment No. 3, dated April 1, 2002, to the Participation Agreement, dated April 17, 2000, between Registrant and Sun Life Insurance and Annuity Company of New York.(20)
- (e) Amendment No. 4, dated December 31, 2002, to the Participation Agreement, dated April 17, 2000, between Registrant and Sun Life Insurance and Annuity Company of New York.(20)
(66) - (a) Participation Agreement, dated August 1, 2000, between
Registrant and Kansas City Life Insurance Company.(14)
(67) - (a) Participation Agreement, dated September 25, 2000, between
Registrant and Security Life of Denver Insurance Company.(14)
- (b) Amendment No. 1, dated September 5, 2001, to the Private
Placement Participation Agreement, dated September 25, 2000,
between Registrant and Security Life of Denver Insurance
Company.(18)
(68) - (a) Participation Agreement, dated February 26, 1999, between
Registrant and American General Life Insurance Company.(18)
- (b) Amendment No. 1, dated November 1, 2000, to the Participation
Agreement, dated February 26, 1999, between Registrant and
American General Life Insurance Company.(18)
|
(69) - (a) Participation Agreement, dated April 3, 2000, between
Registrant and First Cova Life Insurance Company.(18)
- (b) Amendment No. 1, dated February 12, 2001, to the
Participation Agreement dated December 31, 1997, between
Registrant and First Met Life Investors Insurance Company
(formerly, First Cova Life Insurance Company).(18)
(70) - Participation Agreement, dated February 1, 2001, between
Registrant and Peoples Benefit Life Insurance Company.(18)
(71) - Participation Agreement, dated March 28, 2001, between Registrant
and Security Benefit Life Insurance Company.(18)
(72) - Participation Agreement, dated March 29, 2001, between Registrant
and Phoenix Home Life Mutual Insurance Company.(18)
(73) - Participation Agreement, dated March 29, 2001, between Registrant
and Phoenix Life and Annuity Company.(18)
(74) - Participation Agreement, dated March 29, 2001, between Registrant
and PHL Variable Insurance Company.(18)
(75) - Participation Agreement, dated April 4, 2001, between Registrant
and Annuity Investors Life Insurance Company.(18)
(76) - Participation Agreement, dated April 17, 2001, between Registrant
and Sun Life Insurance and Annuity Company of New York.(18)
(77) - Participation Agreement, dated April 30, 2001, between Registrant
and Western Reserve Life Assurance Co. of Ohio.(18)
(78) - Participation Agreement, dated July 13, 2001, between Registrant
and Golden American Life Insurance Company.(18)
(79) - (a) Participation Agreement, dated July 24, 2001, between
Registrant and Lincoln Benefit Life Company.(18)
|
- (b) Amendment No. 1, dated December 18, 2002, to the Participation Agreement, dated July 24, 2001, between Registrant and Lincoln Benefit Life Company.(20)
(80) - Participation Agreement, dated October 1, 2001, between
Registrant and The Travelers Life and Annuity Company.(18)
(81) - Participation Agreement, dated November 1, 2001, between
Registrant and The American Life Insurance Company of New
York.(18)
(82) - Accounting Services Agreement, dated March 31, 1993, between the
Registrant and State Street Bank and Trust Company.(4)
(83) - Agreement and Plan of Reorganization, dated December 7, 1999,
between Registrant and AIM Variable Insurance Funds.(12)
(84) - Participation Agreement, dated March 4, 2002, between Registrant
and Minnesota Life Insurance Company.(19)
|
(85) - Participation Agreement, dated May 1, 2002, between Registrant and AUSA Life Insurance Company, Inc.(20)
(86) - Participation Agreement, dated October 1, 2002, between Registrant and CUNA Mutual Life Insurance Company.(20)
(87) - (a) Memorandum of Agreement between Registrant, on behalf of AIM
V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund, and A I M
Advisors, Inc., dated July 1, 2001.(18)
- (b) Memorandum of Agreement, between Registrant, on behalf of AIM
V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund, and A I M
Advisors, Inc. regarding securities lending, dated July 1,
2001.(18)
|
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) Opinion and Consent of Messrs. Foley & Lardner regarding the addition of a Series II share class.(16)
- (j) Opinion and Consent of Messrs. Foley & Lardner regarding the addition of AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Equity Fund.(17)
- (k) Consent of Messrs. Foley & Lardner.(20)
j - Consent of Independent Certified Public Accountants, Messrs.
Tait, Weller and Baker.(20)
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)
- (f) Agreement Concerning Initial Capitalization of the AIM V.I.
Basic Value Fund and the AIM V.I. Mid Cap Equity Fund, dated
September 7, 2001.(18)
m - (a) Registrant's Master Distribution Plan pursuant to Rule 12b-1
for Series II shares.(17)
- (b) Amendment No. 1 to the Registrant's Master Distribution Plan,
dated September 7, 2001.(18)
- (c) Amendment No. 2 to the Registrant's Master Distribution Plan,
dated May 1, 2002.(20)
n - Registrant's Multiple Class Plan.(16)
o - Reserved
p (1) - A I M Management Group Inc. Code of Ethics adopted May 1, 1981 as
last amended September 27, 2002 relating to A I M Management
Group Inc. and A I M Advisors, Inc. and its wholly owned and
indirect subsidiaries.(20)
(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.
(15) Incorporated herein by reference to Post-Effective Amendment No.
19, filed electronically on April 12, 2001.
(16) Incorporated herein by reference to Post Effective Amendment No.
20, filed electronically on May 29, 2001.
(17) Incorporated herein by reference to Post Effective Amendment No.
21, filed electronically on July 18, 2001.
(18) Incorporated herein by reference to Post Effective Amendment No.
22, filed electronically on February 12, 2002.
(19) Incorporated herein by reference to Post Effective Amendment No.
24, filed electronically on April 30, 2002.
(20) Filed herewith electronically.
|
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 with Positions and Offices
Business Address* Underwriter with Registrant
Michael J. Cemo Chairman, Director, President and Chief Executive None
Officer
Mark H. Williamson Director Trustee & Executive
Vice President
Gary T. Crum Director Senior Vice President
Gene L. Needles Executive Vice President None
James L. Salners Executive Vice President None
John S. Cooper Senior Vice President None
Marilyn M. Miller Senior Vice President None
Leslie A. Schmidt Senior Vice President None
James E. Stueve Senior Vice President None
Stephen H. Bitteker First Vice President None
Glenda A. Dayton First Vice President None
Gary K. Wendler First Vice President None
Kevin M. Carome Vice President None
|
Name and Principal Position and Offices with Positions and Offices
Business Address* Underwriter with Registrant
Mary A. Corcoran Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, General Counsel & Assistant Assistant Secretary
Secretary
Kim T. McAuliffe Vice President None
Linda L. Warriner Vice President None
Rebecca Starling-Klatt Assistant Vice President & Chief Compliance None
Officer
Kathleen J. Pflueger Secretary Assistant Secretary
|
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(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 29th day of April, 2003.
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 29, 2003
----------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ FRANK S. BAYLEY Trustee April 29, 2003
-----------------------
(Frank S. Bayley)
/s/ BRUCE L. CROCKETT Trustee April 29, 2003
-----------------------
(Bruce L. Crockett)
/s/ ALBERT R. DOWDEN Trustee April 29, 2003
-----------------------
(Albert R. Dowden)
/s/ EDWARD K. DUNN, JR. Trustee April 29, 2003
-----------------------
(Edward K. Dunn, Jr.)
/s/ JACK M. FIELDS Trustee April 29, 2003
-----------------------
(Jack M. Fields)
/s/ CARL FRISCHLING Trustee April 29, 2003
-----------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee April 29, 2003
-----------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee April 29, 2003
-----------------------
(Lewis F. Pennock)
/s/ RUTH H. QUIGLEY Trustee April 29, 2003
-----------------------
(Ruth H. Quigley)
/s/ LOUIS S. SKLAR Trustee April 29, 2003
-----------------------
(Louis S. Sklar)
/s/ Mark H. Williamson Trustee & April 29, 2003
----------------------- Executive Vice President
(Mark H. Williamson)
/s/ Dana R. Sutton Vice President & Treasurer April 29, 2003
----------------------- (Principal Financial and
(Dana R. Sutton) Accounting Officer)
|
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------
a(1) Amended and Restated Agreement and Declaration of Trust
of Registrant, dated May 15, 2002
b(1) Amended and Restated By-Laws of Registrant, dated
effective May 15, 2002.
d(1)(d) Amendment No. 3 to Master Investment Advisory Agreement
of Registrant dated May 1, 2002, between Registrant and
A I M Advisors, Inc.
e(1)(c) Amendment No. 2, dated May 1, 2002, to First Amended
and Restated Master Distribution Agreement between
Registrant and A I M Advisors, Inc., dated July 16,
2001.
g(1)(c) Amendment dated June 29, 2001, to Master Custodian
Contract dated May 1, 2000, between Registrant and
State Street Bank and Trust Company.
g(1)(d) Amendment dated April 2, 2002, to Master Custodian
Contract dated May 1, 2000, between Registrant and
State Street Bank and Trust Company.
h(1)(d) Amendment No. 3, dated May 1, 2002 to Master
Administrative Services Agreement, dated May 1, 2000,
between Registrant and A I M Advisors, Inc.
h(1)(e) Amendment No. 4, dated June 1, 2002 to Master
Administrative Services Agreement, dated May 1, 2000,
between Registrant and A I M Advisors, Inc.
h(6)(g) Amendment No. 6, dated September 26, 2001 to the
Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity
Company.
h(13)(g) Agreement No. 6, dated September 10, 2002, to the
Participation Agreement, dated December 18, 1996,
between Registrant and Merrill Lynch Life Insurance
Company.
h(14)(g) Amendment No. 6, dated September 10, 2002, to the
Participation Agreement, dated December 18, 1996,
between Registrant and ML Life Insurance Company of New
York.
h(26)(h) Amendment No. 7, dated April 1, 2002 to the
Participation Agreement dated February 17, 1998,
between Registrant and Sun Life Assurance Company of
Canada (U.S.).
h(26)(i) Amendment No. 8, dated August 5, 2002, to the
Participation Agreement dated February 17, 1998,
between Registrant and Sun Life Assurance Company of
Canada (U.S.).
h(29)(h) Amendment No. 7 dated May 1, 2002, to the Participation
Agreement, dated May 1, 1998, between Registrant and
Transamerica Life Insurance Company (formerly PFL Life
Insurance Company).
h(29)(i) Amendment No. 8 dated July 15, 2002, to the
Participation Agreement, dated May 1, 1998, between
Registrant and Transamerica Life Insurance Company
(formerly PFL Life Insurance Company).
h(29)(j) Amendment No. 9 dated December 1, 2002, to the
Participation Agreement, dated
|
May 1, 1998, between Registrant and Transamerica Life
Insurance Company (formerly PFL Life Insurance
Company).
h(31)(f) Amendment No. 5, dated May 14, 2002, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company
h(34)(b) Amendment dated January 1, 2003, to the Participation
Agreement, dated July 1, 1998, between Registrant and
The Union Central Life Insurance Company.
h(36)(b) Amendment No. 1, dated April 29, 2002, to be effective
as of November 1, 2000, to the Participation Agreement,
dated July 2, 1998, between Registration and Hartford
Life Insurance Company.
h(36)(c) Amendment No. 2, dated September 20, 2001, to the
Participation Agreement, dated July 2, 1998, between
Registrant and Hartford Life Insurance Company.
h(38)(h) Amendment No. 7, dated May 1, 2002, to the
Participation Agreement dated July 27, 1998, between
Registrant and Allmerica Financial Life Insurance and
Annuity Company.
h(39)(h) Amendment No. 7, dated May 1, 2002, to the
Participation Agreement, dated July 27, 1998, between
Registrant and First Allmerica Financial Life Insurance
Company.
h(50)(b) Amendment, dated May 1, 2002, to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company.
h(50)(c) Amendment, dated August 15, 2002, to the Participation
Agreement, dated June 8, 1999, between Registrant and
Principal Life Insurance Company.
h(65)(b) Amendment No. 1, dated April 27, 2000, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company
of New York.
h(65)(c) Amendment No. 2, dated September 1, 2001, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company
of New York.
h(65)(d) Amendment No. 3, dated April 1, 2002, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company
of New York.
h(65)(e) Amendment No. 4, dated December 31, 2002, to the
Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company
of New York.
h(79)(b) Amendment No. 1, dated December 18, 2002, to the
Participation Agreement, dated July 24, 2001, between
Registrant and Lincoln Benefit Life Company.
h(85) Participation Agreement, dated May 1, 2002, between
Registrant and AUSA Life Insurance Company, Inc.
h(86) Participation Agreement, dated October 1, 2002, between
Registrant and CUNA Mutual Life Insurance Company.
i(1)(k) Consent of Messrs. Foley & Lardner.
|
j Consent of Independent Certified Public Accountants,
Messrs. Tait, Weller and Baker.
m(c) Amendment No. 2 to the Registrant's Master Distribution
Plan, dated May 1, 2002.
p (1) - A I M Management Group Inc. Code of Ethics adopted May
1, 1981 as last amended September 27, 2002 relating
to A I M Management Group Inc. and A I M Advisors,
Inc. and its wholly owned and indirect subsidiaries.
|
EXHIBIT a(1)
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST of AIM Variable Insurance Funds, dated December 6,1999, as previously amended, is hereby amended and restated as of May 15, 2002, among Frank S. Bayley, Bruce L. Crockett, Albert R. Dowden, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock, Ruth H. Quigley and Louis S. Sklar, as the Trustees, and each person who becomes a Shareholder in accordance with the terms hereinafter set forth.
NOW, THEREFORE, the Trustees do hereby declare that all money and property contributed to the trust hereunder shall be held and managed in trust under this Agreement for the benefit of the Shareholders as herein set forth below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND CERTIFICATE OF TRUST
Section 1.1 Name. The name of the business trust established hereby is AIM Variable Insurance Funds, and the Trustees may transact the Trust's affairs in that name. The Trust shall constitute a Delaware business trust in accordance with the Delaware Act.
Section 1.2 Definitions. Whenever used herein, unless otherwise required by the context or specifically provided:
(a) "Affiliated Person," "Company," "Person," and "Principal Underwriter" shall have the meanings given them in the 1940 Act, as modified by or interpreted by any applicable order or orders of the Commission or any rules or regulations adopted or interpretive releases of the Commission thereunder. The term "Commission" shall have the meaning given it in the 1940 Act;
(b) "Agreement" means this Agreement and Declaration of Trust, as it may be amended from time to time;
(c) "allocable" has the meaning specified in Section 2.5(d);
(d) "allocated" has the meaning specified in Section 2.5(d);
(e) "Bylaws" means the Bylaws referred to in Section 4.1(e), as from time to time amended;
(f) "Class" means a portion of Shares of a Portfolio of the Trust established in accordance with the provisions of Section 2.3(b);
(g) "Class Expenses" means expenses incurred by a particular Class in connection with a shareholder services arrangement or a distribution plan that is specific to such Class or any other differing share of expenses or differing fees, in each case pursuant to a plan adopted by the Trust pursuant to Rule 18f-3 under the 1940 Act, as such plan or Rule may be amended from time to time;
(h) "Covered Person" means a person who is or was a Trustee, officer, employee or agent of the Trust, or is or was serving at the request of the Trustees as a director, trustee, partner, officer, employee or agent of a corporation, trust, partnership, joint venture or other enterprise;
(i) The "Delaware Act" refers to the Delaware Business Trust Act, 12 Del. C. Section 3801 et seq., as such Act may be amended from time to time;
(j) "fund complex" has the meaning specified in Regulation 14A under the Securities Exchange Act of 1934, as amended from time to time;
(k) "Governing Instrument" means collectively this Agreement, the Bylaws, all amendments to this Agreement and the Bylaws and every resolution of the Trustees or any committee of the Trustees that by its terms is incorporated by reference into this Agreement or stated to constitute part of the Trust's Governing Instrument or that is incorporated herein by Section 2.3 of this Agreement;
(l) "Majority Shareholder Vote" means "the vote of a majority of the outstanding voting securities" (as defined in the 1940 Act) of the Trust, Portfolio, or Class, as applicable;
(m) "Majority Trustee Vote" means the vote of a majority of the Trustees;
(n) "New Class A Shares" has the meaning specified in Section 2.6(c);
(o) "New Class B Shares" has the meaning specified in Section 2.6(c);
(p) The "1940 Act" means the Investment Company Act of 1940, as amended from time to time;
(q) "Outstanding Shares" means Shares shown on the books of the Trust or its transfer agent as then issued and outstanding, and includes Shares of one Portfolio that the Trust has purchased on behalf of another Portfolio, but excludes Shares of a Portfolio that the Trust has redeemed or repurchased;
(r) "Portfolio" means a series of Shares of the Trust within the meaning of Section 3804(a) of the Delaware Act, established in accordance with the provisions of Section 2.3(a);
(s) "Proportionate Interest" has the meaning specified in Section 2.5(d);
(t) "Purchasing Portfolio" has the meaning specified in Section 2.10;
(u) "Schedule A" has the meaning specified in Section 2.3(a);
(v) "Selling Portfolio" has the meaning specified in Section 2.10;
(w) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(x) "Shares" means, as to a Portfolio or any Class thereof, the equal proportionate
transferable units of beneficial interest into which the beneficial interest of such Portfolio or such Class thereof shall be divided and may include fractions of Shares in 1/1000th of a Share or integral multiples thereof as well as whole Shares;
(y) The "Trust" means AIM Variable Insurance Funds, the Delaware business trust established hereby, and reference to the Trust, when applicable to one or more Portfolios, shall refer to each such Portfolio;
(z) The "Trustees" means the Persons who have signed this Agreement as trustees so long as they shall continue to serve as trustees of the Trust in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed as Trustee in accordance with the provisions of Section 3.4, or elected as Trustee by the Shareholders, and reference herein to a Trustee or to the Trustees shall refer to such Persons in their capacity as Trustees hereunder; and
(aa) "Trust Property" means any and all property, real or personal, tangible or intangible, which is owned or held by or for the account of the Trust or any Portfolio, or by the Trustees on behalf of the Trust or any Portfolio.
Section 1.3 Purpose. The purpose of the Trust is to conduct, operate and carry on the business of an open-end management investment company registered under the 1940 Act through one or more Portfolios investing primarily in securities and to carry on such other business as the Trustees may from time to time determine pursuant to their authority under this Agreement.
Section 1.4 Certificate of Trust. Immediately upon the execution of this Agreement, the Trustees shall file a Certificate of Trust with respect to the Trust in the Office of the Secretary of State of the State of Delaware pursuant to the Delaware Act. From time to time, the Trustees shall cause such Certificate of Trust to be amended to reflect changes in the composition of the Board of Trustees.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1 Shares of Beneficial Interest. The Trust is authorized (A)
to issue one or more series of beneficial interests within the meaning of
Section 3804(a) of the Delaware Act, which shall constitute the Trust's
Portfolio(s), and (B) to divide the shares of any Portfolio into one or more
separate and distinct Classes. The beneficial interests of the Trust shall be
divided into an unlimited number of Shares, with par value of $0.001 per Share.
All Shares issued hereunder, including without limitation, Shares issued in
connection with a dividend or other distribution in Shares or a split or reverse
split of Shares, shall be fully paid and nonassessable.
Section 2.2 Issuance of Shares. The Trustees in their discretion may, from time to time, without vote of the Shareholders, issue Shares, in addition to the then issued and Outstanding Shares, to such party or parties and for such amount and type of consideration, subject to applicable law, including cash or securities, at such time or times and on such terms as the Trustees may deem appropriate, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with, the assumption of liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares. The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1000th of a Share or integral multiples thereof.
Section 2.3 Establishment of Portfolios and Classes.
(a) The Trust shall consist of one or more separate and distinct
Portfolios, each with an unlimited number of Shares unless
otherwise specified. The Trustees hereby establish and designate
the Portfolios listed on Schedule A attached hereto and made a
part hereof ("Schedule A"). Each additional Portfolio shall be
established by the adoption of one or more resolutions by the
Trustees. Each such resolution is hereby incorporated herein by
this reference and made a part of the Governing Instrument
whether or not expressly stated in such resolution, and shall be
effective upon the occurrence of both (i) the date stated therein
(or, if no such date is stated, upon the date of such adoption)
and (ii) the execution of an amendment either to this Agreement
or to Schedule A hereto establishing and designating such
additional Portfolio or Portfolios. The Shares of each Portfolio
shall have the relative rights and preferences provided for
herein and such rights and preferences as may be designated by
the Trustees in any amendment or modification to the Trust's
Governing Instrument. The Trust shall maintain separate and
distinct records of each Portfolio and shall hold and account for
the assets belonging thereto separately from the other Trust
Property and the assets belonging to any other Portfolio. Each
Share of a Portfolio shall represent an equal beneficial interest
in the net assets belonging to that Portfolio, except to the
extent of Class Expenses and other expenses separately allocated
to Classes thereof (if any Classes have been established) as
permitted herein.
(b) The Trustees may establish one or more Classes of Shares of any Portfolio, each with an unlimited number of Shares unless otherwise specified. Each Class so established and designated shall represent a Proportionate Interest (as defined in Section 2.5(d)) in the net assets belonging to that Portfolio and shall have identical voting, dividend, liquidation, and other rights and be subject to the same terms and conditions, except that (1) Class Expenses allocated to a Class for which such expenses were incurred shall be borne solely by that Class, (2) other expenses, costs, charges, and reserves allocated to a Class in accordance with Section 2.5(e) may be borne solely by that Class, provided that the allocation of such other expenses, costs, charges, and reserves is not specifically required to be set forth in a plan adopted by the Trust pursuant to Rule 18f-3 under the Act, (3) dividends declared and payable to a Class pursuant to Section 7.1 shall reflect the items separately allocated thereto pursuant to the preceding clauses, (4) each Class may have separate rights to convert to another Class, exchange rights, and similar rights, each as determined by the Trustees, and (5) subject to Section 2.6(c), each Class may have exclusive voting rights with respect to matters affecting only that Class. The Trustees hereby establish for each Portfolio listed on Schedule A the Classes listed thereon. Each additional Class for any or all Portfolios shall be established by the adoption of one or more resolutions by the Trustees. Each such resolution is hereby incorporated herein by this reference and made a part of the Governing Instrument whether or not expressly stated in such resolution, and shall be effective upon the occurrence of both (i) the date stated therein (or, if no such date is stated, upon the date of such adoption) and (ii) the execution of an amendment to this Agreement establishing and designating such additional Class or Classes.
Section 2.4 Actions Affecting Portfolios and Classes. Subject to the right of Shareholders, if any, to vote pursuant to Section 6.1,the Trustees shall have full power and authority, in their sole
discretion without obtaining any prior authorization or vote of the Shareholders of any Portfolio, or Class thereof, to establish and designate and to change in any manner any Portfolio of Shares, or any Class or Classes thereof; to fix or change such preferences, voting powers, rights, and privileges of any Portfolio, or Classes thereof, as the Trustees may from time to time determine, including any change that may adversely affect a Shareholder; to divide or combine the Shares of any Portfolio, or Classes thereof, into a greater or lesser number; to classify or reclassify or convert any issued Shares of any Portfolio, or Classes thereof, into one or more Portfolios or Classes of Shares of a Portfolio; and to take such other action with respect to the Shares as the Trustees may deem desirable. A Portfolio and any Class thereof may issue any number of Shares but need not issue any Shares. At any time that there are no Outstanding Shares of any particular Portfolio or Class previously established and designated, the Trustees may abolish that Portfolio or Class and the establishment and designation thereof.
Section 2.5 Relative Rights and Preferences. Unless the establishing resolution or any other resolution adopted pursuant to Section 2.3 otherwise provides, Shares of each Portfolio or Class thereof established hereunder shall have the following relative rights and preferences;
(a) Except as set forth in paragraph (e) of this Section 2.5, each Share of a Portfolio, regardless of Class, shall represent an equal pro rata interest in the assets belonging to such Portfolio and shall have identical voting, dividend, liquidation and other rights, preferences, powers, restrictions, limitations, qualifications and designations and terms and conditions with each other Share of such Portfolio.
(b) Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or the Trustees, whether of the same or other Portfolio (or Class).
(c) All consideration received by the Trust for the issue or sale of Shares of a particular Portfolio, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange, or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Portfolio and may be referred to herein as "assets belonging to" that Portfolio. The assets belonging to a particular Portfolio shall belong to that Portfolio for all purposes, and to no other Portfolio, subject only to the rights of creditors of that Portfolio. In addition, any assets, income, earnings, profits or funds, or payments and proceeds with respect thereto, which are not readily identifiable as belonging to any particular Portfolio shall be allocated by the Trustees between and among one or more of the Portfolios in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Portfolios thereof for all purposes, and such assets, income, earnings, profits, or funds, or payments and proceeds with respect thereto shall be assets belonging to that Portfolio.
(d) Each Class of a Portfolio shall have a proportionate undivided interest (as determined by or at the direction of, or pursuant to authority granted by, the Trustees, consistent with industry practice) ("Proportionate Interest") in the net assets belonging to that Portfolio. References herein to assets, expenses, charges, costs, and reserves "allocable" or "allocated" to a particular Class of a Portfolio shall mean the aggregate amount of such item(s) of the Portfolio multiplied by the Class's Proportionate Interest.
(e) A particular Portfolio shall be charged with the liabilities of that Portfolio, and all expenses, costs, charges and reserves attributable to any particular Portfolio shall be borne by such Portfolio; provided that the Trustees may, in their sole discretion, allocate or authorize the allocation of particular expenses, costs, charges, and/or reserves of a Portfolio to fewer than all the Classes thereof. Class Expenses shall, in all cases, be allocated to the Class for which such Class Expenses were incurred. Any general liabilities, expenses, costs, charges or reserves of the Trust (or any Portfolio) that are not readily identifiable as chargeable to or bearable by any particular Portfolio (or any particular Class) shall be allocated and charged by the Trustees between or among any one or more of the Portfolios (or Classes) in such manner as the Trustees in their sole discretion deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Portfolios (or Classes) for all purposes. Without limitation of the foregoing provisions of this Section 2.5(e), (i) 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 the Trust generally or assets belonging to any other Portfolio, and (ii) none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Trust generally that have not been allocated to a specified Portfolio, or with respect to any other Portfolio, shall be enforceable against the assets of such specified Portfolio. Notice of this contractual limitation on inter-Portfolio liabilities shall be set forth in the Trust's Certificate of Trust described in Section 1.4, and upon the giving of such notice in the Certificate of Trust, the statutory provisions of Section 3804 of the Delaware Act relating to limitations on inter-Portfolio liabilities (and the statutory effect under Section 3804 of setting forth such notice in the Certificate of Trust) shall become applicable to the Trust and each Portfolio.
(f) Except as provided for in Section 2.10, shares redeemed or repurchased by a Portfolio or the Trust shall be deemed to be canceled.
(g) The Trust may issue Shares in fractional denominations of 1/1000th of a Share or integral multiples thereof to the same extent as its whole Shares, and Shares in fractional denominations shall be Shares having proportionately to the respective fractions represented thereby all the rights of whole Shares of the same Portfolio (or Class), including without limitation, the right to vote, the right to receive dividends and distributions and the right to participate upon termination of the Trust or any Portfolio, but excluding the right to receive a certificate representing fractional Shares.
All references to Shares in this Agreement shall be deemed to be shares of any or all Portfolios, or Classes thereof, as the context may require. All provisions herein relating to the Trust shall apply equally to each Portfolio of the Trust, and each Class thereof, except as the context otherwise requires.
Section 2.6 Additional Rights and Preferences of Class B Shares. In addition to the relative rights and preferences set forth in Section 2.5 and all other provisions of this Agreement relating to Shares of the Trust generally, any Class of any Portfolio designated as Class B Shares shall have the following rights and preferences:
(a) Subject to the provisions of paragraph (c) below, all Class B Shares other than those purchased through the reinvestment of dividends and distributions shall automatically convert to Class A Shares at the end of the month which is eight (8) years after the date on which a Shareholder's order to purchase such shares was accepted.
(b) Subject to the provisions of paragraph (c) below, Class B Shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares will be considered held in a separate sub-account, and will automatically convert to Class A Shares in the same proportion as any Class B Shares (other than those in the sub-account) convert to Class A Shares. Other than this conversion feature, the Class B Shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares shall have all the rights and preferences, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of Class B Shares generally.
(c) If (1) the Class A Shareholders of a Portfolio approve any
increase in expenses allocated to the Class A Shares of that
Portfolio in connection with (A) a Plan of Distribution adopted
pursuant to Rule 12b-1 under the 1940 Act, (B) a non-Rule 12b-1
shareholder services plan or (C) any other plan or arrangement
whereby Classes of that Portfolio pay a different share of other
expenses, not including advisory or custodial fees or other
expenses related to the management of the Trust's assets, then
(2) the Class B Shares of that Portfolio will stop converting to
the Class A Shares unless the Class B Shareholders of that
Portfolio, voting separately, approve the increase in expenses.
The Trustees shall have sole discretion in determining whether
such increase in expenses is submitted to a vote of the Class B
Shareholders. Should such increase in expenses not be submitted
to a vote of the Class B Shareholders or, if submitted, should
the Class B Shareholders fail to approve such increase in
expenses, the Trustees shall take such action as is necessary to:
(1) create a new class of that Portfolio (the "New Class A
Shares") which shall be identical in all material respects to the
Class A Shares of that Portfolio as they existed prior to the
implementation of the increase in expenses; and (2) ensure that
the existing Class B Shares of that Portfolio will be exchanged
or converted into New Class A Shares no later than the date such
Class B Shares were scheduled to convert to Class A Shares. If
deemed advisable by the Trustees to implement the foregoing, and
at the sole discretion of the Trustees, such action may include
the exchange of all Class B Shares of that Portfolio for a new
class of that Portfolio (the "New Class B Shares"), identical in
all material respects to the Class B Shares of that Portfolio
except that the New Class B Shares will automatically convert
into the New Class A Shares. Such exchanges or conversions shall
be effected in a manner that the Trustees reasonably believe will
not be subject to federal taxation.
Section 2.7 Investment in the Trust. Investments may be accepted by the Trust from such Persons, at such times, on such terms, and for such consideration, which may consist of cash or tangible or intangible property or a combination thereof, as the Trustees from time to time may authorize. At the Trustees' sole discretion, such investments, subject to applicable law, may be in the form of cash or securities in which the affected Portfolio is authorized to invest, valued as provided in applicable law. Each such investment shall be recorded in the individual Shareholder's account in the form of full and fractional Shares of the Trust, in such Portfolio (or Class) as the Shareholder shall select.
Section 2.8 Personal Liability of Shareholders. As provided by applicable law, no Shareholder of the Trust shall be personally liable for the debts, liabilities, obligations and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or any Portfolio (or Class) thereof. Neither the Trust nor the Trustees, nor any officer, employee, or agent of the Trust shall have any power to bind personally any Shareholder or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise. The Shareholders shall be entitled, to the fullest extent permitted by applicable law, to the same limitation of personal liability as is extended under the Delaware General Corporation Law to stockholders of private corporations for profit. Every note, bond, contract or other undertaking issued by or on behalf of the Trust or the Trustees relating to the Trust or to any Portfolio shall include a recitation limiting the obligation represented thereby to the Trust and its assets or to one or more Portfolios and the assets belonging thereto (but the omission of such a recitation shall not operate to bind any Shareholder or Trustee of the Trust or otherwise limit any benefits set forth in the Delaware Act that may be applicable to such Persons).
Section 2.9 Assent to Agreement. Every Shareholder, by virtue of having purchased a Share, shall be held to have expressly assented to, and agreed to be bound by, the terms hereof. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the same nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but only to rights of said decedent under the Governing Instrument.
Section 2.10 Purchases of Shares Among Portfolios. The Trust may purchase, on behalf of any Portfolio (the "Purchasing Portfolio"), Shares of another Portfolio (the "Selling Portfolio") or any Class thereof. Shares of the Selling Portfolio so purchased on behalf of the Purchasing Portfolio shall be Outstanding Shares, and shall have all preferences, voting powers, rights and privileges established for such Shares.
ARTICLE ILL
THE TRUSTEES
Section 3.1 Management of the Trust. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by this Agreement. The Trustees shall have power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all states of the United States of America, in the District of Columbia, in any and all commonwealths, territories, dependencies, colonies, or possessions of the United States of America, and in any and all foreign jurisdictions and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Agreement, the presumption shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Agreement shall not be construed as limiting the aforesaid power. The powers of the Trustees may be exercised without order of or resort to any court or other authority.
Section 3.2 Trustees. The number of Trustees shall be such number as shall be fixed from time to time by a majority of the Trustees; provided, however, that the number of Trustees shall in no event be less than two (2) nor more than fifteen (15). The initial Trustees are those first identified above.
Section 3.3 Terms of Office of Trustees. The Trustees shall hold office during the lifetime of this Trust, and until its termination as herein provided; except that (A) any Trustee may resign his trusteeship or may retire by written instrument signed by him and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (B) any Trustee may
be removed at any time by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal shall become effective; (C) any Trustee who has died, become physically or mentally incapacitated by reason of disease or otherwise, or is otherwise unable to serve, may be retired by written instrument signed by a majority of the other Trustees, specifying the date of his retirement; and (D) a Trustee may be removed at any meeting of the Shareholders by a vote of the Shareholders owning at least two-thirds of the Outstanding Shares.
Section 3.4 Vacancies and Appointment of Trustees. In case of the declination to serve, death, resignation, retirement or removal of a Trustee, or a Trustee is otherwise unable to serve, or an increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled, the other Trustees shall have all the powers hereunder and the certification of the other Trustees of such vacancy shall be conclusive. In the case of an existing vacancy, the remaining Trustees may fill such vacancy by appointing such other person as they in their discretion shall see fit, or may leave such vacancy unfilled or may reduce the number of Trustees to not less than two (2) Trustees. Such appointment shall be evidenced by a written instrument signed by a majority of the Trustees in office or by resolution of the Trustees, duly adopted, which shall be recorded in the minutes of a meeting of the Trustees, whereupon the appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office in anticipation of a vacancy to occur by reason of retirement, resignation, or removal of a Trustee, or an increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at the time or after the expected vacancy occurs. As soon as any Trustee appointed pursuant to this Section 3.4 or elected by the Shareholders shall have accepted the Trust and agreed in writing to be bound by the terms of the Agreement, the Trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance, and he shall be deemed a Trustee hereunder.
Section 3.5 Temporary Absence of Trustee. Any Trustee may, by power of attorney, delegate his power for a period not exceeding six months at any one time to any other Trustee or Trustees, provided that in no case shall less than two Trustees personally exercise the other powers hereunder except as herein otherwise expressly provided.
Section 3.6 Effect of Death, Resignation, etc. of a Trustee. The declination to serve, death, resignation1 retirement, removal, incapacity, or inability of the Trustees, or any one of them, shall not operate to terminate the Trust or to revoke any existing agency created pursuant to the terms of this Agreement.
Section 3.7 Ownership of Assets of the Trust. The assets of the Trust and of each Portfolio thereof shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. Legal title in all of the assets of the Trust and the right to conduct any business shall at all times be considered as vested in the Trustees on behalf of the Trust, except that the Trustees may cause legal title to any Trust Property to be held by or in the name of the Trust, or in the name of any Person as nominee. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust, or belonging to any Portfolio, or allocable to any Class thereof, or any right of partition or possession thereof, but each Shareholder shall have, except as otherwise provided for herein, a proportionate undivided beneficial interest in the Trust or in assets belonging to the Portfolio (or allocable to the Class) in which the Shareholder holds Shares. The Shares shall be personal property giving only the rights specifically set forth in this Agreement or the Delaware Act.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1 Powers. The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust. Without limiting the foregoing and subject to any applicable limitation in this Agreement or the Bylaws of the Trust, the Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or other property uninvested, without in any event being bound or limited by any present or future law or custom in regard to investments by Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust;
(b) To operate as, and to carry on the business of, an investment company, and to exercise all the powers necessary and appropriate to the conduct of such operations;
(c) To borrow money and in this connection issue notes or other evidence of indebtedness; to secure borrowings by mortgaging, pledging or otherwise subjecting as security the Trust Property; to endorse, guarantee, or undertake the performance of an obligation or engagement of any other Person and to lend Trust Property;
(d) To provide for the distribution of Shares either through a principal underwriter in the manner hereafter provided for or by the Trust itself, or both, or otherwise pursuant to a plan of distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Agreement providing for the conduct of the business of the Trust and to amend and repeal them to the extent that they do not reserve such right to the Shareholders; such Bylaws shall be deemed incorporated and included in this Agreement;
(f) To elect and remove such officers and appoint and terminate such agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are members of a national securities exchange or such other domestic or foreign entities as custodians of any assets of the Trust subject to any conditions set forth in this Agreement or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing agents;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable to any officers of the Trust and to any investment adviser, manager, administrator, custodian, underwriter or other agent or independent contractor;
(k) To sell or exchange any or all of the assets of the Trust, subject to the right of Shareholders, if any, to vote on such transaction pursuant to Section 6.1;
(l) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies and powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustee shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any trust, whether in bearer, book entry, unregistered or other negotiable form; or either in the name of the Trust or of a Portfolio or a custodian or a nominee or nominees, subject in either case to proper safeguards according to the usual practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Portfolios with separately defined investment objectives and policies and distinct investment purposes in accordance with the provisions of Article II hereof and to establish Classes of such Portfolios having relative rights, powers and duties as they may provide consistent with this Agreement and applicable law;
(p) Subject to the provisions of Section 3804 of the Delaware Act, to allocate assets, liabilities and expenses of the Trust to a particular Portfolio or to apportion the same between or among two or more Portfolios, provided that any liabilities or expenses incurred by a particular Portfolio shall be payable solely out of the assets belonging to that Portfolio as provided for in Article II hereof;
(q) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is held in the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes;
(s) To declare and pay dividends and make distributions of income and of capital gains and capital to Shareholders in the manner hereinafter provided;
(t) To establish, from time to time, a minimum investment for Shareholders in the Trust or in one or more Portfolios or Classes, and to require the redemption of the Shares of any Shareholder whose investment is less than such minimum upon giving notice to such Shareholder;
(u) To redeem or repurchase Shares as provided for in this Agreement, upon such terms and conditions as the Trustees shall establish;
(v) To establish one or more committees, to delegate any of the powers of the Trustees to said committees and to adopt a committee charter providing for such responsibilities, membership (including Trustees, officers or other agents of the Trust therein) and any
other characteristics of said committees as the Trustees may deem proper, each of which committees may consist of less than the whole number of Trustees then in office, and may be empowered to act for and bind the Trustees and the Trust, as if the acts of such committee were the acts of all the Trustees then in office;
(w) To interpret the investment policies, practices or limitations of any Portfolios;
(x) To establish a registered office and have a registered agent in the State of Delaware; and
(y) In general, to carry on any other business in connection with or incidental to any of the foregoing powers, to do everything necessary, suitable or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power hereinbefore set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant to or growing out of or connected with the aforesaid business or purposes, objects or powers.
The foregoing clauses shall be construed both as objects and powers, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Trustees. Any action by one or more of the Trustees in their capacity as such hereunder shall be deemed an action on behalf of the Trust or the applicable Portfolio, and not an action in an individual capacity.
The Trustees shall not be limited to investing in obligations maturing before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order.
Section 4.2 Issuance, Redemption and Repurchase of Shares. The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, and otherwise deal in Shares and, subject to the provisions set forth in Articles II and VII hereof, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property of the Trust, or any assets belonging to the particular Portfolio or any assets allocable to the particular Class, with respect to which such Shares are issued.
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 this Agreement and 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.
Section 4.4 Principal Transactions. The Trustees may, on behalf of the Trust, buy any securities from or sell any securities to, or lend any assets of the Trust to, any Trustee or officer of the Trust or any firm of which any such Trustee or officer is a member acting as principal, or have any such dealings with any investment adviser, distributor, or transfer agent for the Trust or with any Affiliated Person of such Person; and the Trust may employ any such Person, or firm or Company in which such Person is an Affiliated Person, as broker, legal counsel, registrar, investment adviser, distributor, administrator, transfer agent, dividend disbursing agent, custodian, or in any capacity upon customary terms, subject in all cases to applicable laws, rules, and regulations and orders of regulatory authorities.
Section 4.5 Payment of Expenses by the Trust. The Trustees are authorized to pay or cause to be paid out of the principal or income of the Trust or any Portfolio, or partly out of the principal and partly out of income, and to charge or allocate to, between or among such one or more of the Portfolios (or Classes), as they deem fair, all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust or Portfolio (or Class), or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, investment adviser and manager, administrator, principal underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur.
Section 4.6 Trustee Compensation. The Trustees as such shall be entitled to reasonable compensation from the Trust. They may fix the amount of their compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, administrative, legal, accounting, investment banking, underwriting, brokerage, or investment dealer or other services and the payment for the same by the Trust.
Section 4.7 Independent Trustee. A Trustee who is an "Independent Trustee," as that term is defined in the Delaware Act, shall be deemed to be an Independent Trustee when making any determinations or taking any action as a Trustee.
ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1 Investment Adviser. The Trustees may in their discretion, from time to time, enter into an investment advisory or management contract or contracts with respect to the Trust or any Portfolio whereby the other party or parties to such contract or contracts shall undertake to furnish the Trustees with such management, investment advisory, statistical and research facilities and services and such other facilities and services, if any, and all upon such terms and conditions, as the Trustees may in their discretion determine.
The Trustees may authorize the investment adviser to employ, from time to time, one or more sub-advisers to perform such of the acts and services of the investment adviser, and upon such terms and conditions, as may be agreed upon among the Trustees, the investment adviser and sub-adviser. Any references in this Agreement to the investment adviser shall be deemed to include such sub-advisers, unless the context otherwise requires.
Section 5.2 Other Service Contracts. The Trustees may authorize the engagement of a principal underwriter, transfer agent, administrator, custodian, and similar service providers.
Section 5.3 Parties to Contract. Any contract of the character described in Sections 5.1 and 5.2 may be entered into with any corporation, firm, partnership, trust or association, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract.
Section 5.4 Miscellaneous. The fact that (i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any Company or of or for any parent or affiliate of any Company, with which an advisory or administration contract, or principal underwriter's or distributor's contract, or transfer, shareholder servicing, custodian or other agency contract may have been or may hereafter be made, or that any such Company, or any parent or affiliate thereof, is a Shareholder or has an interest in the Trust, or that (ii) any Company with which an advisory or administration contract or principal underwriter's or distributor's contract, or transfer, shareholder servicing, custodian, or other agency contract may have been or may hereafter be made also has an advisory or administration contract, or principal underwriter's or distributor's contract, or transfer, shareholder servicing, custodian or other agency contract with one or more other companies, or has other business or interests shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or its Shareholders.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETING
Section 6.1 Voting Powers. The Shareholders shall have power to vote only to: (i) elect Trustees, provided that a meeting of Shareholders has been called for that purpose; (ii) remove Trustees, provided that a meeting of Shareholders has been called for that purpose; (iii) approve the termination of the Trust or any Portfolio or Class, provided that the Trustees have called a meeting of the Shareholders for the purpose of approving any such termination, unless, as of the date on which the Trustees have determined to so terminate the Trust or such Portfolio or Class, there are fewer than 100 holders of record of the Trust or of such terminating Portfolio or Class; (iv) approve the sale of all or substantially all the assets of the Trust or any Portfolio or Class, unless the primary purpose of such sale is to change the Trust's domicile or form of organization or form of business trust; (v) approve the merger or consolidation of the Trust or any Portfolio or Class with and into another Company or with and into any Portfolio or Class of the Trust, unless (A) the primary purpose of such merger or consolidation is to change the Trust's domicile or form of organization or form of business trust, or (B) after giving effect to such merger or consolidation, based on the number of Outstanding Shares as of a date selected by the Trustees, the Shareholders of the Trust or such Portfolio or Class will have a majority of the outstanding shares of the surviving Company or Portfolio or Class thereof, as the case may be; (vi) approve any amendment to this Article VI, Section 6.1; and (vii) approve such additional matters as may be required by law or as the Trustees, in their sole discretion, shall determine.
Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required or permitted by law, this Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to a vote of the Shareholders, all Shares shall be voted together, except when required by applicable law or when the Trustees have determined that the matter affects the interests of one or more Portfolios (or Classes), then only the Shareholders of all such affected Portfolios (or Classes) shall be entitled to vote thereon. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote, and each fractional Share shall be entitled to a proportionate fractional vote. The vote necessary to approve any such matter shall be set forth in the Bylaws.
Section 6.2 Additional Voting Powers and Voting Requirements for Certain Actions. Notwithstanding any other provision of this Agreement, the Shareholders shall have power to vote to approve any amendment to Article VIII of this Agreement that would have the effect of reducing the indemnification provided thereby to Covered Persons or to Shareholders or former Shareholders, and any repeal or amendment of this sentence, and any such action shall require the affirmative vote or consent of Shareholders owning at least sixty-six and two-thirds percent (66 2/3%) of the Outstanding Shares entitled to vote thereon. In addition, the removal of one or more Trustees by the Shareholders shall require the affirmative vote or consent of Shareholders owning at least sixty-six and two-thirds percent (66 2/3%) of the Outstanding Shares entitled to vote thereon.
The voting requirements set forth in this Section 6.2 shall be in addition to, and not in lieu of, any vote or consent of the Shareholders otherwise required by applicable law (including, without limitation, any separate vote by Portfolio (or Class) that may be required by the 1940 Act or by other applicable law) or by this Agreement.
ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1 Distributions. The Trustees may from time to time declare and pay dividends and make other distributions with respect to any Portfolio, or Class thereof, which may be from income, capital gains or capital. The amount of such dividends or distributions and the payment of them and whether they are in cash or any other Trust Property shall be wholly in the discretion of the Trustees. Dividends and other distributions may be paid pursuant to a standing resolution adopted once or more often as the Trustees determine. All dividends and other distributions on Shares of a particular Portfolio or Class shall be distributed pro rata to the Shareholders of that Portfolio or Class, as the case may be, in proportion to the number of Shares of that Portfolio or Class they held on the record date established for such payment, provided that such dividends and other distributions on Shares of a Class shall appropriately reflect Class Expenses and other expenses allocated to that Class. The Trustees may adopt and offer to Shareholders such dividend reinvestment plans, cash distribution payment plans, or similar plans as the Trustees deem appropriate.
Section 7.2 Redemptions. Any holder of record of Shares of a particular Portfolio, or Class thereof, shall have the right to require the Trust to redeem his Shares, or any portion thereof, subject to such terms and conditions as are set forth in the registration statement of the Trust in effect from time to time. The redemption price may in any case or cases be paid wholly or partly in kind if the Trustees determine that such payment is advisable in the interest of the remaining Shareholders of the Portfolio or Class thereof for which the Shares are being redeemed. Subject to the foregoing, the fair value, selection and quantity of securities or other property so paid or delivered as all or part of the redemption price may be determined by or under authority of the Trustees. In no case shall the Trust be liable for any delay of any Person in transferring securities selected for delivery as all or part of any payment in kind.
Section 7.3 Redemption of Shares by Trustees. The Trustees may, at their option, call for the redemption of the Shares of any Person or may refuse to transfer or issue Shares to any Person to the extent that the same is necessary to comply with applicable law or advisable to further the purposes for which the Trust is formed. To the extent permitted by law, the Trustees may retain the proceeds of any redemption of Shares required by them for payment of amounts due and owing by a Shareholder to the Trust or any Portfolio.
Section 7.4 Redemption of De Minimis Accounts. If, at any time when a
request for transferor redemption of Shares of any Portfolio is received by the
Trust or its agent, the value of the Shares of such Portfolio in a Shareholder's
account is less than Five Hundred Dollars ($500.00), or such greater amount as
the Trustees in their discretion shall have determined in accordance with
Section 4.1(t), after giving effect to such transfer or redemption and upon
giving thirty (30) days' notice to the Shareholder, the Trust may cause the
remaining Shares of such Portfolio in such Shareholder's account to be redeemed,
subject to such terms and conditions as are set forth in the registration
statement of the Trust in effect from time to time.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1 Limitation of Liability. A Trustee or officer, when acting in such capacity, shall not be personally liable to any person for any act, omission or obligation of the Trust or any Trustee or officer; provided, however, that nothing contained herein or in the Delaware Act shall protect any Trustee or officer against any liability to the Trust or to Shareholders to which he 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.
Section 8.2 Indemnification of Covered Persons. Every Covered Person shall be indemnified by the Trust to the fullest extent permitted by the Delaware Act, the Bylaws and other applicable law.
Section 8.3 Indemnification of Shareholders. In case any Shareholder or former Shareholder of the Trust shall be held to be personally liable solely by reason of his being or having been a Shareholder of the Trust or any Portfolio or Class and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators or other legal representatives, or, in the case of a corporation or other entity, its corporate or general successor) shall be entitled, out of the assets belonging to the applicable Portfolio (or allocable to the applicable Class), to be held harmless from and indemnified against all loss and expense arising from such liability in accordance with the Bylaws and applicable law. The Trust, on behalf of the affected Portfolio (or Class), shall upon request by the Shareholder, assume the defense of any such claim made against the Shareholder for any act or obligation of that Portfolio (or Class).
ARTICLE IX
MISCELLANEOUS
Section 9.1 Trust Not a Partnership; Taxation. It is hereby expressly declared that a trust and not a partnership is created hereby. No Trustee hereunder shall have any power to bind personally either the Trust's officers or any Shareholder. All persons extending credit to, contracting with or having any claim against the Trust or the Trustees shall look only to the assets of the appropriate Portfolio or, until the Trustees shall have established any separate Portfolio, of the Trust for payment under such credit, contract or claim; and neither the Shareholders, the Trustees, nor the Trust's officers nor any of the agents of the Trustees whether past, present or future, shall be personally liable therefor.
It is intended that the Trust, or each Portfolio if there is more than one Portfolio, be classified for income tax purposes as an association taxable as a corporation, and the Trustees shall do all things that they, in their sole discretion, determine are necessary to achieve that objective, including (if they so determine), electing such classifications on Internal Revenue Form 8832. The Trustees, in their sole discretion and without the vote or consent of the Shareholders, may amend this Agreement to ensure that this objective is achieved.
Section 9.2 Trustee's Good Faith Action, Expert Advice, No Bond or Surety. The exercise by the Trustees of their powers and discretion hereunder in good faith and with reasonable care under the circumstances then prevailing shall be binding upon everyone interested. Subject to the provisions of Article VIII and to Section 9.1, the Trustees shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Agreement, and subject to the provisions of Article VIII and Section 9.1, shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is obtained.
Section 9.3 Termination of Trust or Portfolio or Class.
(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any
time by the Trustees by written notice to the Shareholders,
subject to the right of Shareholders, if any, to vote pursuant to
Section 6.1. Any Portfolio or Class may be terminated at any time
by the Trustees by written notice to the Shareholders of that
Portfolio or Class, subject to the right of Shareholders, if any,
to vote pursuant to Section 6.1.
(b) On termination of the Trust or any Portfolio pursuant to paragraph (a) above,
(1) the Trust or that Portfolio thereafter shall carry on no business except for the purpose of winding up its affairs,
(2) the Trustees shall (i) proceed to wind up the affairs of the Trust or that Portfolio, and all powers of the Trustees under this Agreement with respect thereto shall continue until such affairs have been wound up, including the powers to fulfill or discharge the contracts of the Trust or that Portfolio, (ii) collect its assets or the assets belonging thereto, (iii) sell, convey, assign, exchange, or otherwise dispose of all or any part of those assets to one or more persons at public or private sale for consideration that may consist in whole or in part of cash, securities, or other property of any kind, (iv) discharge or pay its liabilities, and (v) do all other acts appropriate to liquidate its business, and
(3) after paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities, and refunding agreements as they deem necessary for their protection, the Trustees shall distribute the remaining assets ratably among the Shareholders of the Trust or that Portfolio.
(c) On termination of any Class pursuant to paragraph (a) above,
(1) the Trust thereafter shall no longer issue Shares of that Class,
(2) the Trustees shall do all other acts appropriate to terminate the Class, and
(3) the Trustees shall distribute ratably among the Shareholders of that Class, in cash or in kind, an amount equal to the Proportionate Interest of that Class in the net assets of the Portfolio (after taking into account any Class Expenses or other
fees, expenses, or charges allocable thereto), and in connection with any such distribution in cash the Trustees are authorized to sell, convey, assign, exchange or otherwise dispose of such assets of the Portfolio of which that Class is a part as they deem necessary.
(d) On completion of distribution of the remaining assets pursuant to
paragraph (b)(3) above (or the Proportionate Interest of the
Class in the net assets of the Portfolio pursuant to paragraph
(c)(3) above), the Trust or the affected Portfolio (or Class)
shall terminate and the Trustees and the Trust shall be
discharged from all further liabilities and duties hereunder with
respect thereto and the rights and interests of all parties
therein shall be cancelled and discharged. On termination of the
Trust, following completion of winding up of its business, the
Trustees shall cause a Certificate of Cancellation of the Trust's
Certificate of Trust to be filed in accordance with the Delaware
Act, which Certificate may be signed by any one Trustee.
Section 9.4 Sale of Assets; Merger and Consolidation. Subject to right
of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees may cause
(i) the Trust or one or more of its Portfolios to the extent consistent with
applicable law to sell all or substantially all of its assets to, or be merged
into or consolidated with, another Portfolio, business trust (or series thereof)
or Company (or series thereof), (ii) the Shares of the Trust or any Portfolio
(or Class) to be converted into beneficial interests in another business trust
(or series thereof) created pursuant to this Section 9.4, (iii) the Shares of
any Class to be converted into another Class of the same Portfolio, or (iv) the
Shares to be exchanged under or pursuant to any state or federal statute to the
extent permitted by law. In all respects not governed by statute or applicable
law, the Trustees shall have power to prescribe the procedure necessary or
appropriate to accomplish a sale of assets, merger or consolidation including
the power to create one or more separate business trusts to which all or any
part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the Trust or any
Portfolio (or Class) into beneficial interests in such separate business trust
or trusts (or series or class thereof).
Section 9.5 Filing of Copies, References, Headings. The original or a copy of this Agreement or any amendment hereto or any supplemental agreement shall be kept at the office of the Trust where it may be inspected by any Shareholder. In this Agreement or in any such amendment or supplemental agreement, references to this Agreement, and all expressions like "herein," "hereof," and "hereunder," shall be deemed to refer to this Agreement as amended or affected by any such supplemental agreement. All expressions like "his," "he," and "him," shall be deemed to include the feminine and neuter, as well as masculine, genders. Headings are placed herein for convenience of reference only and in case of any conflict, the text of this Agreement, rather than the headings, shall control. This Agreement may be executed in any number of counterparts each of which shall be deemed an original.
Section 9.6 Governing Law. The Trust and this Agreement, and the
rights, obligations and remedies of the Trustees and Shareholders hereunder, are
to be governed by and construed and administered according to the Delaware Act
and the other laws of the State of Delaware; provided, however, that there shall
not be applicable to the Trust, the Trustees, the Shareholders or this Trust
Agreement (A) the provisions of Section 3540 of Title 12 of the Delaware Code or
(B) any provisions of the laws (statutory or common) of the State of Delaware
(other than the Delaware Act) pertaining to trusts which relate to or regulate
(i) the filing with any court or governmental body or agency of trustee accounts
or schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or
concentration of trust investments or requirements relating to the titling, storage or other manner of holding of trust assets, or (vii) the establishment of fiduciary or other standards or responsibilities or limitations on the indemnification, acts or powers of trustees or other Persons, which are inconsistent with the limitations of liabilities or authorities and powers of the Trustees or officers of the Trust set forth or referenced in this Agreement.
The Trust shall be of the type commonly called a "business trust," and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust under Delaware law. The Trust specifically reserves the right to exercise any of the powers or privileges afforded to trusts or actions that may be engaged in by trusts under the Delaware Act, and the absence of a specific reference herein to any such power, privilege or action shall not imply that the Trust may not exercise such power or privilege or take such actions; provided, however, that the exercise of any such power, privilege or action shall not otherwise violate applicable law.
Section 9.7 Amendments. Except as specifically provided in Section 6.1,the Trustees may, without any Shareholder vote, amend this Agreement by making an amendment to this Agreement or to Schedule A, an agreement supplemental hereto, or an amended and restated trust instrument. Any such amendment, having been approved by a Majority Trustee Vote, shall become effective, unless otherwise provided by such Trustees, upon being executed by a duly authorized officer of the Trust. A certification signed by a duly authorized officer of the Trust setting forth an amendment to this Agreement and reciting that it was duly adopted by the Shareholders or by the Trustees as aforesaid, or a copy of this Agreement, as amended, executed by a majority of the Trustees, or a duly authorized officer of the Trust, shall be conclusive evidence of such amendment when lodged among the records of the Trust.
Section 9.8 Provisions in Conflict with Law. The provisions of this Agreement are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with applicable law, the conflicting provision shall be deemed never to have constituted a part of this Agreement; provided, however, that such determination shall not affect any of the remaining provisions of this Agreement or render invalid or improper any action taken or omitted prior to such determination. If any provision of this Agreement shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provisions in any other jurisdiction or any other provision of this Agreement in any jurisdiction.
Section 9.9 Shareholders' Right to Inspect Shareholder List. One or more Persons who together and for at least six months have been Shareholders of at least five percent (5%) of the Outstanding Shares of any Class may present to any officer or resident agent of the Trust a written request for a list of its Shareholders. Within twenty (20) days after such request is made, the Trust shall prepare and have available on file at its principal office a list verified under oath by one of its officers or its transfer agent or registrar which sets forth the name and address of each Shareholder and the number of Shares of each Portfolio and Class which the Shareholder holds. The rights provided for herein shall not extend to any Person who is a beneficial owner but not also a record owner of Shares of the Trust.
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the Trust, have executed this instrument this 15th day of May, 2002.
/s/ FRANK S. BAYLEY ----------------------------- Frank S. Bayley /s/ BRUCE L. CROCKETT ----------------------------- Bruce L. Crockett /s/ ALBERT R. DOWDEN ----------------------------- Albert R. Dowden /s/ EDWARD K. DUNN, JR. ----------------------------- Edward K. Dunn, Jr. /s/ JACK M. FIELDS ----------------------------- Jack M. Fields /s/ CARL FRISCHLING ----------------------------- Carl Frischling /s/ ROBERT H. GRAHAM ----------------------------- Robert H. Graham /s/ PREMA MATHAI-DAVIS ----------------------------- Prema Mathai-Davis /s/ LEWIS F. PENNOCK ----------------------------- Lewis F. Pennock /s/ RUTH H. QUIGLEY ----------------------------- Ruth H. Quigley /s/ LOUIS S. SKLAR ----------------------------- Louis S. Sklar |
SCHEDULE A
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS AND CLASSES THEREOF
PORTFOLIO CLASSES OF EACH PORTFOLIO
--------- -------------------------
AIM V.I. Aggressive Growth Fund Series I Shares
Series II Shares
AIM V.I. Balanced Fund Series I Shares
Series II Shares
AIM V.I. Basic Value Fund Series I Shares
Series II Shares
AIM V.I. Blue Chip Fund Series I Shares
Series II Shares
AIM V.I. Capital Appreciation Fund Series I Shares
Series II Shares
AIM V.I. Capital Development Fund Series I Shares
Series II Shares
AIM V.I. Core Equity Fund Series I Shares
Series II Shares
AIM V.I. Dent Demographic Trends Fund Series I Shares
Series II Shares
AIM V.I. Diversified Income Fund Series I Shares
Series II Shares
AIM V.I. Global Utilities Fund Series I Shares
Series II Shares
AIM V.I. Government Securities Fund Series I Shares
Series II Shares
AIM V.I. Growth Fund Series I Shares
Series II Shares
AIM V.I. High Yield Fund Series I Shares
Series II Shares
AIM V.I International Growth Fund Series I Shares
Series II Shares
|
PORTFOLIO CLASSES OF EACH PORTFOLIO
--------- -------------------------
AIM V.I. Mid Cap Core Equity Fund Series I Shares
Series II Shares
AIM V.I. Money Market Fund Series I Shares
Series II Shares
AIM V.I. New Technology Fund Series I Shares
Series II Shares
AIM V.I. Premier Equity Fund Series I Shares
Series II Shares
|
EXHIBIT b(1)
AMENDED AND RESTATED
BYLAWS OF AIM VARIABLE INSURANCE FUNDS,
A DELAWARE BUSINESS TRUST
Adopted effective May 15, 2002.
Capitalized terms not specifically defined herein shall have the meanings ascribed to them in the Trust's Amended and Restated Agreement and Declaration of Trust (the "Agreement").
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of AIM Variable Insurance Funds (the "Trust") shall be at the offices of The Corporation Trust Company in the County of New Castle, State of Delaware.
Section 2. Other Offices. The Trust may also have offices at such other places both within and without the State of Delaware as the Trustees may from time to time determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees of the Trust may hold meetings, both regular and special, either within or without the State of Delaware. Meetings of the Trustees may be called orally or in writing by the President of the Trust or by any two Trustees.
Section 2. Regular Meetings. Regular meetings of the Board of Trustees shall be held each year, at such time and place as the Board of Trustees may determine.
Section 3. Notice of Meetings. Notice of the time, date, and place of all meetings of the Trustees shall be given to each Trustee (i) by telephone, telex, telegram, facsimile, electronic-mail, or other electronic mechanism sent to his or her home or business address at least twenty-four hours in advance of the meeting or (ii) in person at another meeting of the Trustees or (iii) by written notice mailed or sent via overnight courier to his or her home or business address at least seventy-two hours in advance of the meeting. Notice need not be given to any Trustee who attends the meeting without objecting to the lack of notice or who signs a waiver of notice either before or after the meeting.
Section 4. Quorum. At all meetings of the Trustees, one-third of the Trustees then in office (but in no event less than two Trustees) shall constitute a quorum for the transaction of business and the act of a majority of the Trustees present at any meeting at which there is a quorum shall be the act of the Board of Trustees, except as may be otherwise specifically provided by applicable law or by the Agreement or these Bylaws. If a quorum shall not be present at any meeting of the Board of Trustees, the Trustees present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 5. Designation, Powers, and Names of Committees.
(a) The Board of Trustees shall initially have the following four committees: (1) an Audit Committee; (2) a Committee on Directors/Trustees; (3) an Investments Committee; and (4) a Valuation Committee. Each such Committee shall consist of two or more of the Trustees of the Trust and the Board may designate one or more Trustees as alternate members of any Committee, who may replace any absent or disqualified member at any meeting of such Committee; provided, however, that under no circumstances shall a member of the Audit Committee or the Committee on Directors/Trustees be an "interested person," as such term is defined in the 1940 Act, of the Trust. The Board shall designate the powers and duties of each such Committee and may terminate any such Committee by an amendment to these Bylaws.
(b) The Board of Trustees may, by resolution passed by a majority of the whole Board, designate one or more additional committees, each committee to consist of two or more of the Trustees of the Trust. The Board may designate one or more Trustees as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. Each committee, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Trustees in the management of the business and affairs of the Trust; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board of Trustees to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Trustees.
Section 6. Minutes of Committees. Each committee shall keep regular minutes of its meetings and report the same to the Board of Trustees when required.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the Trust shall he elected by the Board of Trustees as soon as practicable after the organization of the Trust. The executive officers may include a Chairman of the Board, and shall include a President, one or more Vice Presidents (the number thereof to be determined by the Board of Trustees), a Secretary and a Treasurer. The Chairman of the Board, if any, shall be selected from among the Trustees. The Board of Trustees may also in its discretion appoint Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other officers, agents and employees, who shall have such authority and perform such duties as the Board may determine. The Board of Trustees may fill any vacancy which may occur in any office. Any two offices, except for those of President and Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument on behalf of the Trust in more than one capacity, if such instrument is required by law or by these Bylaws to be executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically determined by the Board of Trustees, the officers shall serve at the pleasure of the Board of Trustees. If the Board of Trustees in its judgment finds that the best interests of the Trust will be served, the Board of Trustees may remove any officer of the Trust at any time with or without cause. The Trustees may delegate this power to the President (without supervision by the Trustees) with respect to any other officer. Such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Any officer may resign from office at any time by delivering a written resignation to the Trustees or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery.
Section 3. President. The President shall be the chief executive officer of the Trust and, subject to the Board of Trustees, shall generally manage the business and affairs of the Trust. If there is no Chairman of the Board, or if the Chairman of the Board has been appointed but is absent, the President shall, if present, preside at all meetings of the Shareholders and the Board of Trustees.
Section 4. Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Shareholders and the Board of Trustees, if the Chairman of the Board is present. The Chairman of the Board shall have such other powers and duties as shall be determined by the Board of Trustees, and shall undertake such other assignments as may be requested by the President.
Section 5. Chairman, Vice Presidents. The Chairman of the Board or one or more Vice Presidents shall have and exercise such powers and duties of the President in the absence or inability to act of the President, as may be assigned to them, respectively, by the Board of Trustees or, to the extent not so assigned, by the President. In the absence or inability to act of the President, the powers and duties of the President not otherwise assigned by the Board of Trustees or the President shall devolve upon the Chairman of the Board, or in the Chairman's absence, the Vice Presidents in the order of their election.
Section 6. Secretary. The Secretary shall (a) have custody of the seal of the Trust; (b) attend meetings of the Shareholders, the Board of Trustees, and any committees of Trustees and keep the minutes of such meetings of Shareholders, the Board of Trustees and any committees thereof, and (c) issue all notices of the Trust. The Secretary shall have charge of the Shareholder records and such other books and papers as the Board may direct, and shall perform such other duties as may be incidental to the office or which are assigned by the Board of Trustees. The Secretary shall also keep or cause to be kept a Shareholder book, which may be maintained by means of computer systems, containing the names, alphabetically arranged, of all persons who are Shareholders of the Trust, showing their places of residence, the number and Class of any Shares held by them, respectively, and the dates when they became the record owners thereof.
Section 7. Treasurer. The Treasurer shall have the care and custody of the funds and securities of the Trust and shall deposit the same in the name of the Trust in such bank or banks or other depositories, subject to withdrawal in such manner as these Bylaws or the Board of Trustees may determine. The Treasurer shall, if required by the Board of Trustees, give such bond for the faithful discharge of duties in such form as the Board of Trustees may require.
Section 8. Assistant Officers. Assistant officers, which may include one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, shall perform such functions and have such responsibilities as the Board of Trustees may determine.
Section 9. Surety Bond. The Trustees may require any officer or agent of the Trust to execute a bond (including, without limitation, any bond required by the 1940 Act and the rules and regulations of the Securities and Exchange Commission (the "Commission") to the Trust in such sum and with such surety or sureties as the Trustees may determine, conditioned upon the faithful performance of his or her duties to the Trust, including responsibility for negligence and
for the accounting of any of the Trust's property, funds, or securities that may come into his or her hands.
Section 10. Authorized Signatories. Unless a specific officer is otherwise designated in a resolution adopted by the Board of Trustees, the proper officers of the Trust for executing agreements, documents and instruments other than Internal Revenue Service forms shall be the President, any Vice President, the Secretary or any Assistant Secretary. Unless a specific officer is otherwise designated in a resolution adopted by the Board of Trustees, the proper officers of the Trust for executing any and all Internal Revenue Service forms shall be the President, any Vice President, the Secretary, any Assistant Secretary, or the Treasurer.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1. Purpose. All meetings of the Shareholders for the election of Trustees shall be held at such place as may be fixed from time to time by the Trustees, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Trustees and stated in the notice indicating that a meeting has been called for such purpose. Meetings of Shareholders may be held for any purpose determined by the Trustees and may be held at such time and place, within or without the State of Delaware as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. At all meetings of the Shareholders, every shareholder of record entitled to vote thereat shall be entitled to vote at such meeting either in person or by written proxy signed by the Shareholder or by his duly authorized attorney in fact. A Shareholder may duly authorize such attorney in fact through written, electronic, telephonic, computerized, facsimile, telecommunication, telex or oral communication or by any other form of communication. Unless a proxy provides otherwise, such proxy is not valid more than eleven months after its date. A proxy with respect to shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger.
Section 2. Nomination of Trustees. So long as the Trust has adopted and
maintains a distribution plan pursuant to Rule 1 2b-1 under the 1940 Act (a
"Rule 1 2b-1 Plan"), the nomination of Trustees who are not "interested
persons," as defined in the 1940 Act, of the Trust shall be made by the
Committee on Directors/Trustees. In addition, so long as the Trust maintains a
Committee on Directors/Trustees, the nomination of all other Trustees shall also
be made by the Committee on Directors/Trustees. If the Trust no longer maintains
a Rule 12b-1 Plan and no longer maintains a Committee on Directors/Trustees, the
nomination of all Trustees shall be made by the Board of Trustees. Any
Shareholder may submit names of individuals to be considered by the Committee on
Directors/Trustees or the Board of Trustees, as applicable, provided, however,
(i) that such person submits such names in a timely manner as set out in Section
2 of Article V hereof, (ii) that such person was a shareholder of record at the
time of submission of such names and is entitled to vote at the meeting, and
(iii) that the Committee on Directors/Trustees or the Board of Trustees, as
applicable, shall make the final determination of persons to be nominated.
Section 3. Election of Trustees. All meetings of Shareholders for the purpose of electing Trustees shall be held on such date and at such time as shall be designated from time to time by the Trustees and stated in the notice of the meeting, at which the Shareholders shall
elect by a plurality vote any number of Trustees as the notice for such meeting shall state are to be elected, and transact such other business as may properly be brought before the meeting in accordance with Section 1 of this Article IV.
Section 4. Notice of Meetings. Written notice of any meeting stating the place, date, and hour of the meeting shall be given to each Shareholder entitled to vote at such meeting not less than ten days before the date of the meeting in accordance with Article V hereof.
Section 5. Special Meetings. Special meetings of the Shareholders, for any purpose or purposes, unless otherwise prescribed by applicable law or by the Agreement, may be called by any Trustee; provided, however, that the Trustees shall promptly call a meeting of the Shareholders solely for the purpose of removing one or more Trustees, when requested in writing to do so by the record holders of not less than ten percent of the Outstanding Shares of the Trust.
Section 6. Notice of Special Meeting. Written notice of a special meeting stating the place, date, and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten days before the date of the meeting, to each Shareholder entitled to vote at such meeting.
Section 7. Conduct of Special Meeting. Business transacted at any special meeting of Shareholders shall be limited to the purpose stated in the notice.
Section 8. Quorum. The holders of one-third of the Outstanding Shares entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by applicable law or by the Agreement. Notwithstanding the preceding sentence, with respect to any matter which by applicable law or by the Agreement requires the separate approval of one or more Classes or Portfolios, the holders of one-third of the Outstanding Shares of each such Class or Portfolio (or of such Classes or Portfolios voting together as a single class) entitled to vote on the matter shall constitute a quorum. If, however, such quorum shall not be present or represented at any meeting of the Shareholders, the vote of the holders of a majority of Shares cast shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.
Section 9. Organization of Meetings.
(a) The meetings of the Shareholders shall be presided over by the Chairman of the Board, or if the Chairman shall not be present or if there is no Chairman, by the President, or if the President shall not be present, by a Vice President, or if no Vice President is present, by a chairman appointed for such purpose by the Board of Trustees or, if not so appointed, by a chairman appointed for such purpose by the officers and Trustees present at the meeting. The Secretary of the Trust, if present, shall act as Secretary of such meetings, or if the Secretary is not present, an Assistant Secretary of the Trust shall so act, and if no Assistant Secretary is present, then a person designated by the Secretary of the Trust shall so act, and if the Secretary has not designated a person, then the meeting shall elect a secretary for the meeting.
(b) The Board of Trustees of the Trust shall be entitled to make such rules and regulations for the conduct of meetings of Shareholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Trustees, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing: an agenda or order of business for the meeting; rules and procedures for maintaining order at the meeting and the safety of those present; limitations on participation in such meeting to shareholders of record of the Trust and their duly authorized and constituted proxies, and such other persons as the chairman shall permit; restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants; and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot, unless and to the extent the Board of Trustees or the chairman of the meeting determines that meetings of Shareholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 10. Voting Standard. When a quorum is present at any meeting, the vote of the holders of a majority of the Shares cast shall decide any question brought before such meeting, unless the question is one on which, by express provision of applicable law, the Agreement, these Bylaws, or applicable contract, a different vote is required, in which case such express provision shall govern and control the decision of such question.
Section 11. Voting Procedure. Each whole Share shall be entitled to one vote, and each fractional Share shall be entitled to a proportionate fractional vote. On any matter submitted to a vote of the Shareholders, all Shares shall be voted together, except when required by applicable law or when the Trustees have determined that the matter affects the interests of one or more Portfolios (or Classes), then only the Shareholders of such Portfolios (or Classes) shall be entitled to vote thereon.
Section 12. Action Without Meeting. Unless otherwise provided in the Agreement or applicable law, any action required to be taken at any meeting of the Shareholders, or any action which may be taken at any meeting of the Shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of Outstanding Shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Shares entitled to vote thereon were present and voted. Prompt notice of the taking of any such action without a meeting by less than unanimous written consent shall be given to those Shareholders who have not consented in writing.
Section 13. Broker Non-Votes. At any meeting of Shareholders the Trust will consider broker non-votes as present for purposes of determining whether a quorum is present at the meeting. Broker non-votes will not count as votes cast.
Section 14. Record Date. The Board of Trustees may set a record date for the purpose of making any proper determination with respect to Shareholders, including, but not limited to, which Shareholders are entitled to notice of a meeting or to vote at a meeting. The record date may not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days before the date on which the action requiring the determination will be taken.
Section 15. Adjournments. A meeting of Shareholders convened on the date for which it was called may be adjourned from time to time without further notice to Shareholders to a date not more than 120 days after the original record date. A meeting of Shareholders may not be adjourned for more than 120 days after the original record date for such meeting without giving the Shareholders notice of the adjournment and the new meeting date.
ARTICLE V
NOTICES
Section 1. Methods of Giving Notice. Whenever, under the provisions of applicable law or of the Agreement or of these Bylaws, notice is required to be given to any Trustee or Shareholder, it shall not, unless otherwise provided herein, be construed to mean personal notice, but such notice may be given orally in person, or by telephone (promptly confirmed in writing) or in writing, by mail addressed to such Trustee at his or her last given address or to such Shareholder at his address as it appears on the records of the Trust, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to Trustees or members of a committee may also be given by telex, telegram, facsimile, electronic-mail or via overnight courier. If sent by telex or facsimile, notice to a Trustee or member of a committee shall be deemed to be given upon transmittal; if sent by telegram, notice to a Trustee or member of a committee shall be deemed to be given when the telegram, so addressed, is delivered to the telegraph company; if sent by electronic-mail, notice to a Trustee or member of a committee shall be deemed to be given and shall be presumed valid when the Trust's electronic-mail server reflects the electronic-mail message as having been sent; and if sent via overnight courier, notice to a Trustee or member of a committee shall be deemed to be given when delivered against a receipt therefor.
Section 2. Annual Meeting Notice Requirements for Nominations and Proposals by Shareholders.
(a) For nominations or other business to be properly brought before an annual meeting by a Shareholder, the Shareholder must have given timely notice thereof in writing to the Secretary of the Trust and such other business must otherwise be a proper matter for action by Shareholders. To be timely, a Shareholder's notice shall be delivered to the Secretary at the principal executive offices of the Trust not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date or if the Trust has not previously held an annual meeting, notice by the Shareholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the Trust. In no event shall the public announcement of a postponement or adjournment of an annual meeting to a later date or time commence a new time period for the giving of a Shareholder's notice as described above. Such Shareholder's notice shall set forth (A) as to each person whom the Shareholder proposes to nominate for election or reelection as a Trustee all information relating to such person that is required to be disclosed in solicitations of proxies for election of Trustees in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a Trustee if elected); (B) as to any other business that the Shareholder proposes to bring before the
meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such Shareholder and of the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the Shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (i) the name and address of such Shareholder, as they appear on the Trust's books, and of such beneficial owner and (ii) the number of shares of each Class of Shares of the Portfolio which are owned beneficially and of record by such Shareholder and such beneficial owner.
(b) Notwithstanding anything in the second sentence of paragraph (a) of this Section 2 to the contrary, in the event that the number of Trustees to be elected to the Board of Trustees is increased and there is no public announcement by the Trust naming all of the nominees for Trustee or specifying the size of the increased Board of Trustees at least 100 days prior to the first anniversary of the preceding year's annual meeting, a Shareholder's notice required by this Section 2 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Trust not later than the close of business on the tenth day following the day on which such public announcement is first made by the Trust.
Section 3. Special Meeting Notice Requirement for Nominations and Proposals by Shareholders. Only such business shall be conducted at a special meeting of Shareholders as shall have been brought before the meeting pursuant to the Trust's notice of meeting. Nominations of persons for election to the Board of Trustees may be made at a special meeting of Shareholders at which Trustees are to be elected (A) pursuant to the Trust's notice of meeting, (B) by or at the direction of the Board of Trustees or (C) provided that the Board of Trustees has determined that Trustees shall be elected at such special meeting, by any Shareholder of the Trust who is a Shareholder of record both at the time of giving of notice provided for in Section 2(a) of this Article V and at the time of the special meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in Section 2(a) of this Article V. In the event the Trust calls a special meeting of Shareholders for the purpose of electing one or more Trustees to the Board of Trustees, any such Shareholder may nominate a person or persons (as the case may be) for election to such position as specified in the Trust's notice of meeting, if the Shareholder's notice containing the information required by this Section 2(a) shall be delivered to the Secretary at the principal executive offices of the Trust not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Trustees to be elected at such meeting. In no event shall the public announcement of a postponement or adjournment of a special meeting to a later date or time commence a new time period for the giving of a Shareholder's notice as described above.
Section 4. Written Waiver. Whenever any notice is required to be given under the provisions of applicable law or of the Agreement or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Issuance. The Trust may, in its sole discretion, issue a certificate to any Shareholder, signed by, or in the name of the Trust by, the President, certifying the number of Shares owned by him, her or it in a Class or Portfolio of the Trust. No Shareholder shall have the right to demand or require that a certificate be issued to him, her or it.
Section 2. Countersignature. Where a certificate is countersigned (1) by a transfer agent other than the Trust or its employee, or (2) by a registrar other than the Trust or its employee, the signature of the President may be a facsimile.
Section 3. Lost Certificates. The Board of Trustees may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Trust alleged to have been lost, stolen or destroyed, upon the making of an affidavit of the fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Trustees may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Trust a bond in such sum as it may direct as indemnity against any claim that may be made against the Trust with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfer of Shares. The Trustees shall make such rules as they consider appropriate for the transfer of Shares and similar matters. To the extent certificates are issued in accordance with Section 1 of this Article VI, upon surrender to the Trust or the transfer agent of the Trust of such certificate for Shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Trust to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
Section 5. Fixing Record Date. In order that the Trustees may determine the Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or to express consent to action in writing without a meeting, or entitled to receive payment of any dividend or other distribution of allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of beneficial interests or for the purpose of any other lawful action, the Board of Trustees may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Trustees, and which record date shall not be more than ninety nor less than ten days before the date of such meeting, nor more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Trustees for action by Shareholder consent in writing without a meeting, nor more than ninety days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of Shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Trustees may fix a new record date for the adjourned meeting.
Section 6. Registered Shareholders. The Trust shall be entitled to recognize the exclusive right of a person registered on its books as the owner of Shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim of interest in such Share or Shares on the part of any other person, whether or not it shall have express or other notice hereof.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Seal. The business seal shall have inscribed thereon the name of the business trust, the year of its organization and the word "Business Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. Any officer or Trustee of the Trust shall have authority to affix the seal of the Trust to any document requiring the same.
Section 2. Severability. The provisions of these Bylaws are severable. If any provision hereof shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision only in such jurisdiction and shall not affect any other provision of these Bylaws.
Section 3. Headings. Headings are placed in these Bylaws for convenience of reference only and in case of any conflict, the text of these Bylaws rather than the headings shall control.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. For the purpose of this Section 1,"Trust" includes any domestic or foreign predecessor entity of this Trust in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of the transaction; "proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative; and "expenses" includes without limitation attorney's fees and any expenses of establishing a right to indemnification under this Section 1.
(a) The Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Trust) by reason of the fact that such person is or was a Covered Person, against expenses, judgments, fines and amounts paid in settlements actually and reasonably incurred by such person in connection with such proceeding, if it is determined that person acted in good faith and reasonably believed: (i) in the case of conduct in his official capacity as a Covered Person, that his conduct was in the Trust's best interests and (ii) in all other cases, that his conduct was at least not opposed to the Trust's best interests and (iii) in the case of a criminal proceeding, that he had no reasonable cause to believe that his conduct was unlawful. The termination of any proceeding by judgment, order or settlement shall not, of itself, create a presumption that the person did not meet the requisite standard of conduct set forth in this Section 1. The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the person did not meet the requisite standard of conduct set forth in this Section 1.
(b) The Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding by or in the right of the Trust to procure a judgment in its favor by reason of the fact that person is or was a Covered Person, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of such action or suit if that person acted in good faith, in a manner that person believed to be in the best interests of the Trust and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.
(c) Notwithstanding any provision to the contrary contained herein, there shall be no right to indemnification for any liability arising by reason of willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the Covered Person's office with the Trust.
Section 2. Advance Payments of lndemnifiable Expenses. To the maximum
extent permitted by law, the Trust or applicable Portfolio may advance to a
Covered Person, in connection with the preparation and presentation of a defense
to any claim, action, suit, or proceeding, expenses for which the Covered Person
would ultimately be entitled to indemnification; provided that the Trust or
applicable Portfolio has received an undertaking by or on behalf of such Covered
Person that such amount will be paid over by him to the Trust or applicable
Portfolio if it is ultimately determined that he is not entitled to
indemnification for such expenses, and further provided that (i) such Covered
Person shall have provided appropriate security for such undertaking, (ii) the
Trust is insured against losses arising out of any such advance payments, or
(iii) either a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust nor parties to the matter, or independent
legal counsel in a written opinion shall have determined, based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that there is
reason to believe that such Covered Person will not be disqualified from
indemnification for such expenses.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These Bylaws may be altered or repealed by the Trustees without the vote or approval of the Shareholders at any regular or special meeting of the Board of Trustees without prior notice. These Bylaws may also be altered or repealed by the Shareholders at any special meeting of the Shareholders, but only if the Board of Trustees resolves to put a proposed alteration or repealer to the vote of the Shareholders and notice of such alteration or repealer is contained in a notice of the special meeting being held for such purpose.
EXHIBIT d(1)(d)
AMENDMENT NO. 3
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This amendment dated as of May 1, 2002, 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.
W I T N E S S E T H:
WHEREAS, the parties desire to amend the Agreement to reflect the name change of AIM V.I. Growth and Income Fund to AIM V.I. Core Equity Fund, AIM V.I. International Equity Fund to AIM V.I. International Growth Fund, AIM V.I. Mid Cap Equity Fund to AIM V.I. Mid Cap Core Equity Fund, and AIM V.I. Value Fund to AIM V.I. Premier Equity 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. Basic Value Fund September 10, 2001
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. Core Equity 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 Growth Fund May 1, 2000
AIM V.I. Mid Cap Core Equity Fund September 10, 2001
AIM V.I. Money Market Fund May 1, 2000
AIM V.I. New Technology Fund May 1, 2001
AIM V.I. Premier Equity 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. CORE EQUITY FUND
AIM V.I. GLOBAL UTILITIES FUND
AIM V.I. PREMIER EQUITY 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. BASIC VALUE FUND
AIM V.I. MID CAP CORE EQUITY FUND
NET ASSETS ANNUAL RATE
---------- -----------
First $500 million.................................... 0.725%
Next $500 million..................................... 0.700%
Next $500 million..................................... 0.675%
Excess over $1.5 billion.............................. 0.65%
|
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 GROWTH 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, 2002
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)(c)
AMENDMENT NO. 2
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
The First Amended and Restated Master Distribution Agreement (the "Agreement"), dated as of July 16, 2001, 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:
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
SERIES I SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity 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. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund
SERIES II SHARES
AIM V.I. Aggressive Growth Fund
AIM V.I. Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Blue Chip Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity 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. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. New Technology Fund
AIM V.I. Premier Equity Fund"
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: May 1, 2002
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
|
EXHIBIT g(1)(c)
AMENDMENT TO MASTER CUSTODIAN CONTRACT
This Amendment to Master Custodian Contract is made as of June 29, 2001 by and between each investment company party to that certain Master Custodian Contract with State Street Bank and Trust Company dated as of May 1, 2000 (as amended, modified or supplemented and in effect from time to time, the "Contract") and State Street Bank and Trust Company.
WHEREAS, capitalized terms used in this Amendment without definition shall have the respective meanings given to such terms in the Contract;
WHEREAS, each Fund and the Custodian entered into an Amendment to Custodian Contract dated as of May 1, 2000 (the "2000 Amendment") 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 to amend and restate certain other provisions of the Contract relating to the custody of assets of the Portfolios held outside the United States; and
WHEREAS, each Fund and the Custodian desire to further amend the Contract to reflect further revisions to Rule 17f-5, the adoption of Rule 17f-7 ("Rule 17f-7") promulgated under the 1940 Act and certain other provisions of the Contract relating to the custody of assets of the Portfolios held outside 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 and Article 4 of the Contract (as each is more particularly set forth in the 2000 Amendment) are hereby deleted and replaced in their entirety by Article 3 and Article 4, respectively, set forth below.
ARTICLE 3. PROVISIONS RELATING TO RULES 17f-5 AND 17f-7
3.1. DEFINITIONS. Capitalized terms in this 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 Eligible Securities Depository operating in the country), prevailing or developing custody and settlement practices, and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country.
"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 U.S. Securities and Exchange Commission (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; the term does not include any Eligible Securities Depository.
"Eligible Securities Depository" has the meaning set forth in section (b)(1) of Rule 17f-7.
"Foreign Assets" means any of a Portfolio's investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Portfolio's transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(3) of Rule 17f-5.
3.2. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. Each
Fund, by resolution adopted by its Board, hereby delegates to the Custodian,
subject to Section (b) of Rule 17f-5, the responsibilities set forth in this
Section 3.2 with respect to Foreign Assets of its Portfolios held outside the
United States, and the Custodian hereby accepts such delegation as Foreign
Custody Manager with respect to the Portfolios.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A to this Contract, which list of countries may be amended
from time to time by any Fund with the agreement of the Foreign Custody Manager.
The Foreign Custody Manager shall list on Schedule A the Eligible Foreign
Custodians selected by the Foreign Custody Manager to maintain the assets of the
Portfolios, which list of Eligible Foreign Custodians may be amended from time
to time in the sole discretion of the Foreign Custody Manager. The Foreign
Custody Manager will provide amended versions of Schedule A in accordance with
Section 3.2.5 hereof.
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, on behalf of its Portfolios, of the applicable account opening requirements for such country, the Foreign Custody Manager shall be deemed to have been delegated by the Board on behalf of the Portfolios responsibility as Foreign Custody Manager with respect to that country and to have accepted such 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 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
2.
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 on behalf of such Portfolio 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 such 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 to which the parties agree in writing) after receipt of any such notice by the applicable Fund, the Custodian shall have no further responsibility in its capacity as Foreign Custody Manager to such Fund with respect to the country as to which the Custodian's acceptance of delegation is withdrawn.
3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions of this Section 3.2, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodian selected by the Foreign Custody Manager in each country listed on Schedule A, as amended from time to time. In performing its delegated responsibilities as Foreign Custody Manager to place or maintain 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).
(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody Manager shall determine that the contract 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).
(c) MONITORING. 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 establish a system to monitor (i) the appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian and (ii) the performance of the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian it has selected are no longer appropriate, the Foreign Custody Manager shall notify the applicable Board in accordance with Section 3.2.5 hereunder and, to the extent that the Foreign Custody Manager has not issued a notice of withdrawal as Foreign Custody Manager for the particular country (pursuant to Section 3.2.2 above); the Foreign Custody Manager has not received a Proper Instruction to close the account (pursuant to Section 3.2.2 above); and no other notice regarding termination of delegation has been issued (pursuant to
3.
Section 3.2.8 below), the Foreign Custody Manager shall suggest (in a non-binding manner) an alternative Eligible Foreign Custodian, if such is available.
3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of this Section 3.2, each 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 the Portfolios.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the placement of such Foreign Assets with another Eligible Foreign Custodian by providing to each Board an amended Schedule A at the end of the calendar quarter in which an amendment to such Schedule has occurred. The Foreign Custody Manager shall make written reports notifying each Board of any other material change in the foreign custody arrangements of the Portfolios described in this Section 3.2 after the occurrence of the material change.
3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In performing the responsibilities delegated to it, the Foreign Custody Manager agrees to 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.
3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17f-5. 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 the Board to rely on the Custodian to
perform the responsibilities delegated pursuant to this Contract to the
Custodian as the Foreign Custody Manager of the Portfolios.
3.2.8 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. Each Board's delegation to the Custodian as Foreign Custody Manager of the Portfolios 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 (30) days after receipt by the non-terminating party of such notice. The provisions of Section 3.2.2 hereof shall govern the delegation to and termination of the Custodian as Foreign Custody Manager of the Portfolios with respect to designated countries.
3.3 ELIGIBLE SECURITIES DEPOSITORIES.
3.3.1 ANALYSIS AND MONITORING. The Custodian shall (a) provide each Fund (or its duly-authorized investment manager or investment adviser) with an analysis of the custody risks associated with maintaining assets with the Eligible Securities Depositories set forth on Schedule B hereto in accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a continuing basis, and promptly notify the applicable Fund (or its duly-
4.
authorized investment manager or investment adviser) of any material change in such risks, in accordance with section (a)(l)(i)(B) of Rule 17f-7.
3.3.2 STANDARD OF CARE. The Custodian agrees to exercise reasonable care, prudence and diligence in performing the duties set forth in Section 3.3.1.
ARTICLE 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS
HELD OUTSIDE THE UNITED STATES.
4.1 DEFINITIONS. Capitalized terms in this Article 4 shall have the following meanings:
"Foreign Securities System" means an Eligible Securities Depository listed on Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an Eligible Foreign Custodian.
4.2. HOLDING SECURITIES. The Custodian shall identify on its books as belonging to the applicable Portfolio 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 a Portfolio which are maintained in such account shall identify those securities as belonging to the Portfolio 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.
4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be maintained in a Foreign Securities System in a designated country through arrangements implemented by the Custodian or a Foreign Sub-Custodian, as applicable, in such country.
4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS. The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of a Portfolio held by the Custodian or 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 the sale of such foreign securities for the applicable Portfolio in accordance with commercially reasonable market practice in the country
5.
where such foreign securities 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 market custom; provided that in any such case the Foreign 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 Foreign 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 Fund;
(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
6.
(xii) For any other purpose, but only upon receipt of Proper Instructions specifying the foreign securities to be delivered and naming the person or persons to whom delivery of such securities shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES. 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, monies 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, by (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;
(vi) For payment of part or all of the dividends received in respect of securities sold short;
(vii) In connection with the borrowing or lending of foreign securities; and
(viii) For any other purpose, but only upon receipt of Proper Instructions specifying the amount of such payment and naming the person or persons to whom such payment is to be made.
4.4.3. MARKET CONDITIONS. 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
7.
accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer.
The Custodian shall provide to each Board the information with respect to custody and settlement practices in countries in which the Custodian employs a Foreign Sub-Custodian 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 any Board being provided with substantively less information than had been previously provided hereunder.
4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) shall be registered in the name 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 on behalf of such Portfolio 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 a 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.
4.6 BANK ACCOUNTS. The Custodian shall identify on its books as belonging to the applicable Fund cash (including cash denominated in foreign currencies) deposited with the Custodian. Where the Custodian is unable to maintain, or market practice does not facilitate the maintenance of, cash on the books of the Custodian, a bank account or bank accounts shall be opened and maintained outside the United States on behalf of a Portfolio with a Foreign Sub-Custodian. All accounts referred to in this Section shall be subject only to draft or order by the Custodian (or, if applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this Contract to hold cash received by or from or for the account of the Portfolio. Cash maintained on the books of the Custodian (including its branches, subsidiaries and affiliates), regardless of currency denomination, is maintained in bank accounts established under, and subject to the laws of, The Commonwealth of Massachusetts.
4.7. COLLECTION OF INCOME. The Custodian shall use reasonable commercial efforts to collect all income and other payments with respect to the Foreign Assets held hereunder to which the Portfolios shall be entitled and shall credit such income, as collected, to the applicable Portfolio. In the event that extraordinary measures are required to collect such income, the applicable Fund and the Custodian shall consult as to such measures and as to the compensation and expenses of the Custodian relating to such measures.
8.
4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held pursuant to this Article 4, the Custodian will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights by each Fund, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued. Each Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of such Fund to exercise shareholder rights.
4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The Custodian shall transmit promptly to the applicable Fund written information with respect to materials received by the Custodian via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Portfolios (including, without limitation, pendency of calls and maturities of foreign securities and expirations of rights in connection therewith). With respect to tender or exchange offers, the Custodian shall transmit promptly to the applicable Fund written information with respect to materials 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 Portfolios 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.
4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS.
Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian to exercise reasonable care in the performance of its duties, and to indemnify, and hold harmless, the Custodian from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the Foreign Sub-Custodian's performance of such obligations. At the election of each Fund, such Fund shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the applicable Portfolios have not been made whole for any such loss, damage, cost, expense, liability or claim.
4.11. TAX LAW.
The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on any Fund, the Portfolios or the Custodian as custodian of the Portfolios by the tax law of the United States or of any state or political subdivision thereof. With respect to jurisdictions other than the United states, the sole responsibility of the Custodian with regard to the tax law of any such jurisdiction shall be to use reasonable efforts to (a) notify the
9.
applicable Fund of the obligations imposed on such Fund with respect to the Portfolios or the Custodian as custodian of the Portfolios by the tax law of such jurisdictions including, responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting and (b) perform such ministerial steps as are required to collect any tax refund, to ascertain the appropriate rate of tax withholding and to provide such documents as may be required to enable each Fund to receive appropriate tax treatment under applicable tax laws and any applicable treaty provisions. The Custodian, in performance of its duties under this Section, shall be entitled to treat each Fund which is organized as a Delaware business trust as a Delaware business trust which is a "registered investment company" under the laws of the United States, and it shall be the duty of each Fund to inform the Custodian of any change in the organization, domicile or, to the extent within the knowledge of the applicable Fund, 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 each Fund. The Custodian may engage reasonable professional advisors disclosed to the applicable 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.
4.12. LIABILITY OF CUSTODIAN.
Except as may arise from the Custodian's own negligence or willful misconduct or the negligence or willful misconduct of a Foreign Sub-Custodian, the Custodian shall be without liability to any Fund for any loss, liability, claim or expense resulting from or caused by anything which is part of Country Risk.
The Custodian shall be liable for the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth with respect to sub-custodians generally in the Contract and, regardless of whether assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign Securities System, 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 other loss where the Sub-Custodian has otherwise acted with reasonable care.
4.13 USE OF TERM "FUND"; ASSETS AND LIABILITIES.
All references in this Article 4 or in Article 3 of this Contract to "Fund" shall mean either any Fund, or a Portfolio of any Fund, as the context requires or as applicable.
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
10.
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.
11.
II. 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.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
12.
SIGNATURE PAGE
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/ JOSEPH L. HOOLEY
Stephanie L. Poster -----------------------------------------
Vice President Joseph L. Hooley, Executive Vice President
WITNESSED BY: EACH INVESTMENT COMPANY SET FORTH ON
APPENDIX A HERETO
/s/ JOHN H. LIVELY
------------------------- By: /s/ CAROL F. RELIHAN
Name: John H. Lively ------------------------------------
Title: Counsel Name: Carol F. Relihan
Title: Senior Vice President
AIM Advisor Funds
AIM Equity Funds
AIM Funds Group
AIM International Funds, Inc.
AIM Investment Securities Funds
AIM Special Opportunities Funds
AIM Summit Fund
AIM Variable Insurance Funds
AIM Floating Rate Fund
Vice President
AIM Growth Series
AIM Investment Funds
AIM Series Trust
Global Investment Portfolio
|
13.
EXHIBIT g(1)(d)
AMENDMENT TO CUSTODIAN CONTRACT
Amendment dated April 2, 2002, to the custodian contract, dated May 1, 2000, as amended, by and between State Street Bank and Trust Company (the "Custodian") and each registered investment company and its series, if applicable, listed on Appendix A (each company or series thereof, a "Fund")(the "Contract").
In consideration of the promises and covenants contained herein, the Custodian and the Fund hereby agree to amend and replace Article 5 of the Contract as follows:
5. Proper Instructions
"PROPER INSTRUCTIONS", which may also be standing instructions, as used throughout this Contract shall mean instructions received by the Custodian from the Fund, the Fund's investment manager, or a person or entity duly authorized by either of them. Such instructions may be in writing signed by the authorized person or persons or may be in a tested communication or in a communication utilizing access codes effected between electro-mechanical or electronic devices or may be by such other means and utilizing such intermediary systems and utilities as may be agreed to from time to time by the Custodian and the person giving such instructions, provided that the Fund has followed any security procedures agreed to from time to time by the Fund and the Custodian, including, but not limited to, the security procedures selected by the Fund in the Funds Transfer Addendum to this Contract. 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. The Fund shall cause all oral instructions to be confirmed in writing or through electro-mechanical or electronic devices. For purposes of this Article, Proper Instructions shall include instructions received by the Custodian pursuant to ANY multi-party agreement which requires and governs a segregated asset account established in accordance with Article 2.12 of this Contract. The Fund or the Fund's investment manager shall cause its duly authorized officer to certify to the Custodian in writing the names and specimen signatures of persons authorized to give Proper Instructions. The Custodian shall be entitled to rely upon the identity and authority of such persons until it receives notice from the Fund to the contrary.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and on its behalf by its duly authorized representative as of the 2nd day of April, 2002.
EACH REGISTERED INVESTMENT COMPANY
AND ITS SERIES, IF APPLICABLE, LISTED ON APPENDIX A
By: /s/ ROBERT H. GRAHAM
------------------------------
Its: President
-----------------------------
|
STATE STREET BANK AND TRUST COMPANY
By: /s/ JOSEPH L. HOOLEY
-----------------------------
Joseph L. Hooley
Executive Vice President
|
EXHIBIT h(1)(d)
AMENDMENT NO. 3
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. Basic Value Fund September 10, 2001
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. Core Equity 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 Growth Fund May 1, 2000
AIM V.I. Mid Cap Core Equity Fund September 10, 2001
AIM V.I. Money Market Fund May 1, 2000
AIM V.I. New Technology Fund May 1, 2001
AIM V.I. Premier Equity Fund May 1, 2000"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: May 1, 2002
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(1)(e)
AMENDMENT NO. 4
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:
Item 4 of the Agreement is hereby deleted in its entirety and replaced
with the following:
"4. As full compensation for the services performed and the facilities furnished by or at the direction of the Administrator as described under Item 1, above, the Portfolios shall reimburse the Administrator for expenses incurred by them or their affiliates in accordance with the methodologies established from time to time by the Trust's Board of Trustees. Such amounts shall be paid to the Administrator on a monthly basis."
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. Basic Value Fund September 10, 2001
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. Core Equity 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 Growth Fund May 1, 2000
AIM V.I. Mid Cap Core Equity Fund September 10, 2001
AIM V.I. Money Market Fund May 1, 2000
AIM V.I. New Technology Fund May 1, 2001
AIM V.I. Premier Equity Fund May 1, 2000"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: June 1, 2002
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(6)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 19, 1995, by and among AIM Variable Insurance Funds, Inc., a Delaware Trust; A I M Distributors, Inc., a Delaware corporation; Glenbrook Life and Annuity Company, an Illinois life insurance company; and Allstate Life Financial Services, Inc., a Delaware corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirely and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE THE SEPARATE
SEPARATE ACCOUNTS UTILIZING THE FUNDS ACCOUNTS
------------------------------------- --------
Glenbrook Life and Annuity Company AIM V.I. Aggressive Growth Fund - Series I
Separate Account A* AIM V.I. Balanced Fund - Series I
AIM V.I. Basic Value Fund - Series I
AIM V.I. Blue Chip Fund - Series I
AIM V.I. Capital Appreciation Fund - Series I
AIM V.I. Capital Development Fund - Series I
AIM V.I. Core Equity Fund - Series I
AIM V.I. Dent Demographic Trends Fund - Series I
AIM V.I. Diversified Income Fund - Series I
AIM V.I. Global Utilities Fund - Series I
AIM V.I. Government Securities Fund - Series I
AIM V.I. Growth Fund - Series I
AIM V.I. High Yield Fund - Series I
AIM V.I. International Growth Fund - Series I
AIM V.I. Mid Cap Core Equity Fund - Series I
AIM V.I. Money Market Fund - Series I
AIM V.I. New Technology Fund - Series I
AIM V.I. Premier Equity Fund - Series I
AIM V.I. Aggressive Growth Fund - Series II
AIM V.I. Balanced Fund - Series II
AIM V.I. Basic Value Fund - Series II
AIM V.I. Blue Chip Fund - Series II
AIM V.I. Capital Appreciation Fund - Series II
AIM V.I. Capital Development Fund - Series II
AIM V.I. Core Equity Fund - Series II
AIM V.I. Dent Demographic Trends Fund - Series II
AIM V.I. Diversified Income Fund - Series II
AIM V.I. Global Utilities Fund - Series II
AIM V.I. Government Securities Fund - Series II
AIM V.I. Growth Fund - Series II
AIM V.I. High Yield Fund - Series II
AIM V.I. International Growth Fund - Series II
AIM V.I. Mid Cap Core Equity Fund - Series II
AIM V.I. Money Market Fund - Series II
AIM V.I. New Technology Fund - Series II
AIM V.I. Premier Equity Fund - Series II
|
---------------------------------------------------------------------------------------------
Glenbrook Life A I M Variable Life AIM V.I. Aggressive Growth Fund - Series I
Separate Account A ** AIM V.I. Balanced Fund - Series I
AIM V.I. Basic Value Fund - Series I
AIM V.I. Blue Chip Fund - Series I
AIM V.I. Capital Appreciation Fund - Series I
AIM V.I. Capital Development Fund - Series I
AIM V.I. Core Equity Fund - Series I
AIM V.I. Dent Demographic Trends Fund - Series I
AIM V.I. Diversified Income Fund - Series I
AIM V.I. Global Utilities Fund - Series I
AIM V.I. Government Securities Fund - Series I
AIM V.I. Growth Fund - Series I
AIM V.I. High Yield Fund - Series I
AIM V.I. International Growth Fund - Series I
AIM V.I. Mid Cap Core Equity Fund - Series I
AIM V.I. Money Market Fund - Series I
AIM V.I. New Technology Fund - Series I
AIM V.I. Premier Equity Fund - Series I
---------------------------------------------------------------------------------------------
Glenbrook Life Multi-Manager AIM V.I. Aggressive Growth Fund - Series I
Variable Account *** AIM V.I. Balanced Fund - Series I
------------------------------------------ AIM V.I. Capital Appreciation Fund - Series I
Glenbrook Life Variable Life AIM V.I. Core Equity Fund - Series I
Separate Account A **** AIM V.I. Dent Demographic Trends Fund - Series I
------------------------------------------ AIM V.I. Diversified Income Fund - Series I
Glenbrook Life Variable Life AIM V.I. Global Utilities Fund - Series I
Separate Account B [Dagger] AIM V.I. Government Securities Fund - Series I
AIM V.I. Growth Fund - Series I
AIM V.I. High Yield Fund - Series I
AIM V.I. International Growth Fund - Series I
AIM V.I. Premier Equity Fund - Series I
---------------------------------------------------------------------------------------------
Glenbrook Life and Annuity Company AIM V.I. Balanced Fund - Series I
Variable Annuity Account [Daggers] AIM V.I. Capital Appreciation Fund - Series I
AIM V.I. Core Equity Fund - Series I
AIM V.I. Growth Fund - Series I
AIM V.I. High Yield Fund - Series I
AIM V.I. Premier Equity Fund - Series I
---------------------------------------------------------------------------------------------
|
* The Contracts funded by the separate account are individual and group
flexible premium deferred variable annuity contracts, known as the
"AIM Lifetime Plus--Servicemark-- Variable Annuity" and the "AIM
Lifetime Plus--Servicemark-- Variable Annuity."
** The Contract funded by the separate account is a modified single
premium variable life insurance contract known as the "AIM Lifetime
Plus--Servicemark-- Variable Life" contract.
*** The Contract funded by the separate account is a flexible premium
deferred variable annuity contract known as the "Glenbrook Provider
Variable Annuity."
**** The Contract funded by the separate account is a modified single
premium variable life insurance contract known as the "Glenbrook
Provider Variable Life" contract.
[Dagger] The Contract funded by the separate account is a flexible premium
variable universal life insurance contract known as the "Glenbrook
Contour."
[Daggers] The Contract funded by the separate account is a flexible premium
deferred variable annuity contract known as the "STO Classic Variable
Annuity."
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: 09-26-01
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
-------------------------- ------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
-------------------------- ------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
GLENBROOK LIFE AND ANNUITY COMPANY
Attest: /s/ Timothy N. Vander Pas By: /s/ John R. Hunter
-------------------------- ------------------------
Name: Timothy N. Vander Pas Name: John R. Hunter
Title: Assistant Vice President Title: Vice President
|
(SEAL)
ALLSTATE LIFE FINANCIAL SERVICES, INC.
Attest: /s/ Lisa A. Burnell By: /s/ John R. Hunter
-------------------------- ------------------------
Name: Lisa A. Burnell Name: John R. Hunter
Title: Assistant Vice President Title: President and CEO
|
(SEAL)
EXHIBIT h(13)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc. ("AIM"), a Delaware corporation, and ML Life Insurance Company of New York ("MLNY"), a New York life insurance company, is hereby amended as follows:
The following is added under: "SECTION 2 PROCESSING TRANSACTIONS" before
SECTION 2.1(A):
The Parties agree to communicate, process and settle purchase and redemption transactions for Shares (collectively, "Share transactions") via the Fund/SERV and Networking systems of the National Securities Clearing Corporation (hereinafter, "NSCC"). Merrill Lynch Pierce Fenner & Smith ("MLPFS") on behalf of MLNY and AIM each represents and warrants that it: (a) is a participant in NSCC, (b) has met and will continue to meet all of the requirements to participate in Fund/SERV and Networking, and (c) intends to remain at all times in compliance with the then current rules and procedures of NSCC, all to the extent necessary or appropriate to facilitate such communications, processing, and settlement of Share transactions. AIM agrees to provide MLNY with account positions and activity data relating to Share transactions via Networking. MLNY shall pay for Shares by the scheduled close of federal funds transmissions on the same Business Day on which it places an order to purchase Shares in accordance with this section. Payment shall be in federal funds transmitted by wire from the Settling Bank (on behalf of MLNY) to the NSCC.
For purposes of this Agreement, "Fund/SERV" shall mean NSCC's system for automated, centralized processing of mutual fund purchase and redemption orders, settlement, and account registration; "Networking" shall mean NSCC's (Level Zero) system that allows mutual funds and life insurance companies to exchange account level information electronically; and "Settling Bank" shall mean the entity appointed by AVIF to perform such settlement services on behalf of AVIF, which agrees to abide by NSCC's then current rules and procedures insofar as they relate to same day funds settlement. In all cases, processing and settlement of Share transactions shall be done in a manner consistent with applicable law.
In the event that any Party is prohibited from communicating, processing or settling Share transactions via Fund/SERV or Networking, such Party shall notify the other Parties. After all Parties have been notified, the provisions of paragraphs (b) and (c) of this Section 2.1 shall apply.
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective as of Date: September 10, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim Coppedge By: /s/ Carol F. Relihan
---------------------------- Senior Vice President
Assistant Secretary
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim Coppedge By: /s/ Michael J. Cemo
----------------------------- President
Assistant Secretary
|
(SEAL)
MERRILL LYNCH LIFE INSURANCE COMPANY
Attest: /s/ Illegible By: /s/ Illegible
----------------------------- -----------------------------
Assistant Secretary President
(SEAL)
|
EXHIBIT h(14)(g)
AMENDMENT NO. 6
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated December 18, 1996, as amended, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc. ("AIM"), a Delaware corporation, and Merrill Lynch Life Insurance Company ("MLLIC"), an Arkansas life insurance company, is hereby amended as follows:
The following is added under: "SECTION 2 PROCESSING TRANSACTIONS" before
SECTION 2.1(A):
The Parties agree to communicate, process and settle purchase and redemption transactions for Shares (collectively, "Share transactions") via the Fund/SERV and Networking systems of the National Securities Clearing Corporation (hereinafter, "NSCC"). Merrill Lynch Pierce Fenner & Smith ("MLPFS") on behalf of MLLIC and AIM each represents and warrants that it: (a) is a participant in NSCC, (b) has met and will continue to meet all of the requirements to participate in Fund/SERV and Networking, and (c) intends to remain at all times in compliance with the then current rules and procedures of NSCC, all to the extent necessary or appropriate to facilitate such communications, processing, and settlement of Share transactions. AIM agrees to provide MLLIC with account positions and activity data relating to Share transactions via Networking. MLLIC shall pay for Shares by the scheduled close of federal funds transmissions on the same Business Day on which it places an order to purchase Shares in accordance with this section. Payment shall be in federal funds transmitted by wire from the Settling Bank (on behalf of MLLIC) to the NSCC.
For purposes of this Agreement, "Fund/SERV" shall mean NSCC's system for automated, centralized processing of mutual fund purchase and redemption orders, settlement, and account registration; "Networking" shall mean NSCC's (Level Zero) system that allows mutual funds and life insurance companies to exchange account level information electronically; and "Settling Bank" shall mean the entity appointed by AVIF to perform such settlement services on behalf of AVIF, which agrees to abide by NSCC's then current rules and procedures insofar as they relate to same day funds settlement. In all cases, processing and settlement of Share transactions shall be done in a manner consistent with applicable law.
In the event that any Party is prohibited from communicating, processing or settling Share transactions via Fund/SERV or Networking, such Party shall notify the other Parties. After all Parties have been notified, the provisions of paragraphs (b) and (c) of this Section 2.1 shall apply.
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective as of Date: September 10, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim Coppedge By: /s/ Carol F. Relihan
----------------------------- -----------------------------
Assistant Secretary Senior Vice President
(SEAL)
|
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim Coppedge By: /s/ Michael J. Cemo
----------------------------- -----------------------------
Assistant Secretary President
(SEAL)
ML LIFE INSURANCE COMPANY OF
NEW YORK
Attest: /s/ Illegible By: /s/ Illegible
----------------------------- -----------------------------
Assistant Secretary President
|
(SEAL)
EXHIBIT h(26)(h)
AMENDMENT NO. 7
PARTICIPATION AGREEMENT
The Participation Agreement, made and entered into as of the 17th day of February, 1998, and amended on December 11, 1998, March 15, 1999, April 17, 2000, May 1, 2000, May 1, 2001, and September 1, 2002 (the "Agreement"), by and among AIM Variable Insurance Funds, a Delaware business trust, A I M Distributors, Inc., a Delaware corporation, Sun Life Assurance Company of Canada (U.S.), a Delaware life insurance company, and Clarendon Insurance Agency, Inc., a Massachusetts corporation, is hereby amended as follows:
Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE SEPARATE
POLICIES UTILIZING THE FUNDS ACCOUNTS
-------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - FUTURITY VARIABLE AND FIXED ANNUITY
AIM V.I. Growth Fund Variable Account F CONTRACT
(1)AIM V.I. Growth and Income Fund - FUTURITY II VARIABLE AND FIXED ANNUITY
(1)AIM V.I. International Equity Fund CONTRACT
- FUTURITY III VARIABLE AND FIXED ANNUITY
CONTRACT
- FUTURITY FOCUS VARIABLE AND FIXED ANNUITY
CONTRACT
- FUTURITY FOCUS II VARIABLE AND FIXED
ANNUITY CONTRACT
- FUTURITY ACCOLADE VARIABLE AND FIXED
ANNUITY CONTRACT
- FUTURITY SELECT FOUR VARIABLE AND FIXED
ANNUITY CONTRACT
-------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada U.S. - FUTURITY VARIABLE UNIVERSAL LIFE\
AIM V.I. Growth Fund Variable Account I INSURANCE POLICIES
(1)AIM V.I. Growth and Income Fund - FUTURITY SURVIVORSHIP VARIABLE UNIVERSAL
(1)AIM V.I. International Equity Fund LIFE INSURANCE POLICIES
- FUTURITY SURVIVORSHIP II VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY PROTECTOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
- FUTURITY ACCUMULATOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
-------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - SUN LIFE CORPORATE VARIABLE UNIVERSAL
(1)AIM V.I. Value Fund Variable Account G LIFE INSURANCE POLICIES
-------------------------------------------------------------------------------------------------------------------------
|
-------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - FUTURITY CORPORATE VARIABLE UNIVERSAL
AIM V.I. Growth Fund Variable Account G LIFE INSURANCE POLICIES
(1)AIM V.I. Growth and Income Fund
(1)AIM V.I. International Equity Fund
(1)AIM V.I. Value Fund
-------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
(1)AIM V.I. Value Fund Sun Life of Canada (U.S.) - FUTURITY II VARIABLE AND FIXED ANNUITY
Variable Account F CONTRACT
- FUTURITY III VARIABLE AND FIXED ANNUITY
CONTRACT
- FUTURITY FOCUS II VARIABLE AND FIXED
ANNUITY CONTRACT
- FUTURITY ACCOLADE VARIABLE AND FIXED
ANNUITY CONTRACT
- FUTURITY SELECT FOUR VARIABLE AND FIXED
ANNUITY CONTRACT
-------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
(1)AIM V.I. Value Fund Sun Life of Canada (U.S.) - FUTURITY SURVIVORSHIP II VARIABLE
Variable Account I UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY PROTECTOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
- FUTURITY ACCUMULATOR VARIABLE UNIVERSAL
LIFE INSURANCE POLICIES
-------------------------------------------------------------------------------------------------------------------------
SERIES II SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - FUTURITY SELECT FOUR PLUS
AIM V.I. Growth Fund Variable Account F
(1)AIM V.I. Growth and Income Fund
(1)AIM V.I. International Equity Fund
(1)AIM V.I. Value Fund
-------------------------------------------------------------------------------------------------------------------------
SERIES II SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - ALL-STAR
(1)AIM V.I. International Equity Fund Variable Account F
(1)AIM V.I. Value Fund
-------------------------------------------------------------------------------------------------------------------------
|
(1) On May 1, 2002, the following fund name changes will become effective:
- AIM V.I. Value Fund will become the AIM V.I. Premier Equity Fund
- AIM V.I. Growth and Income Fund will become the AIM V.I. Core Equity Fund
- AIM V.I. International Equity Fund will become the AIM V.I. International Equity Fund
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: April 1, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
--------------------------- ------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
--------------------------- ------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
Attest: /s/ Maura Murphy By: /s/ Edward M. Shea
--------------------------- ------------------------------
Name: Maura Murphy Name: Edward M. Shea
Title: Senior Counsel Title: For the President
By: /s/ Ellen B. King
------------------------------
Name: Ellen B. King
Title: Secretary
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ Maura Murphy By: /s/ Illegible
--------------------------- ------------------------------
Name: Maura Murphy Name: Illegible
Title: Senior Counsel Title: Illegible
By: /s/ George E. Maden
------------------------------
Name: George E. Maden
Title: Secretary and Clerk
|
EXHIBIT h(26)(i)
AMENDMENT NO.8
PARTICIPATION AGREEMENT
The Participation Agreement, made and entered into as of the 17th day of February, 1998, and amended on December 11, 1998, March 15, 1999, April 17, 2000, May 1, 2000, May 1, 2001, September 1, 2001, and April 1, 2002 (the "Agreement"), by and among AIM Variable Insurance Funds, a Delaware business trust, A I M Distributors, Inc., a Delaware corporation, Sun Life Assurance Company of Canada (U.S.), a Delaware life insurance company, and Clarendon Insurance Agency, Inc., a Massachusetts corporation, is hereby amended as follows:
Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
-------------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
-------------------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - FUTURITY VARIABLE AND FIXED
AIM V.I. Growth Fund Variable Account F ANNUITY CONTRACT
AIM V.I. Core Equity Fund - FUTURITY II VARIABLE AND FIXED
AIM V.I. International Growth Fund ANNUITY CONTRACT
- FUTURITY III VARIABLE AND FIXED
ANNUITY CONTRACT
- FUTURITY FOCUS VARIABLE AND FIXED
ANNUITY CONTRACT
- FUTURITY FOCUS II VARIABLE AND
FIXED ANNUITY CONTRACT
- FUTURITY ACCOLADE VARIABLE AND
FIXED ANNUITY CONTRACT
- FUTURITY SELECT FOUR VARIABLE AND
FIXED ANNUITY CONTRACT
-------------------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - FUTURITY VARIABLE UNIVERSAL
AIM V.I. Growth Fund Variable Account I LIFE INSURANCE POLICIES
AIM V.I. Core Equity Fund - FUTURITY SURVIVORSHIP VARIABLE
AIM V.I. International Growth Fund UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY SURVIVORSHIP II
VARIABLE UNIVERSAL LIFE INSURANCE
POLICIES
- FUTURITY PROTECTOR VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY ACCUMULATOR VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
-------------------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - SUN LIFE CORPORATE VARIABLE
AIM V.I. Premier Equity Fund Variable Account G UNIVERSAL LIFE INSURANCE POLICIES
-------------------------------------------------------------------------------------------------------------------------------
|
-------------------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - FUTURITY CORPORATE VARIABLE
AIM V.I. Growth Fund Variable Account G UNIVERSAL LIFE INSURANCE POLICIES
AIM V.I. Core Equity Fund
AIM V.I. International Growth Fund
AIM V.I. Premier Equity Fund
-------------------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Premier Equity Fund Sun Life of Canada (U.S.) - FUTURITY II VARIABLE AND FIXED
Variable Account F ANNUITY CONTRACT
- FUTURITY III VARIABLE AND FIXED
ANNUITY CONTRACT
- FUTURITY FOCUS II VARIABLE AND
FIXED ANNUITY CONTRACT
- FUTURITY ACCOLADE VARIABLE AND
FIXED ANNUITY CONTRACT
- FUTURITY SELECT FOUR VARIABLE AND
FIXED ANNUITY CONTRACT
-------------------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Premier Equity Fund Sun Life of Canada (U.S.) - FUTURITY SURVIVORSHIP II VARIABLE
Variable Account I UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY PROTECTOR VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
- FUTURITY ACCUMULATOR VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
-------------------------------------------------------------------------------------------------------------------------------
SERIES (II) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - FUTURITY SELECT FOUR PLUS
AIM V.I. Growth Fund Variable Account F - FUTURITY SELECT SEVEN
AIM V.I. Core Equity Fund - FUTURITY SELECT FREEDOM
AIM V.I. International Core Equity Fund - FUTURITY SELECT INCENTIVE
AIM V.I. Premier Equity Fund
-------------------------------------------------------------------------------------------------------------------------------
SERIES (II) SHARES
AIM V.I. Capital Appreciation Fund Sun Life of Canada (U.S.) - ALL-STAR
AIM V.I. International Core Equity Fund Variable Account F - ALL-STAR TRADITIONS
AIM V.I. Premier Equity Fund - ALL-STAR FREEDOM
- ALL-STAR EXTRA
-------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. Effective Date: August 5, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim Coppedge By: /s/ Carol F. Relihan
-------------------------- ---------------------------------
Name: Jim Coppedge Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim Coppedge By: /s/ Gene Needles
-------------------------- ---------------------------------
Name: Jim Coppedge Name: Gene Needles
Title: Assistant Secretary Title: Executive Vice President
SUN LIFE ASSURANCE COMPANY OF
CANADA (U.S.)
Attest: /s/ Maura Murphy By: /s/ Edward M. Shea
-------------------------- ---------------------------------
Name: Maura Murphy Name: Edward M. Shea
Title: Senior Counsel Title: Assistant Vice President and
Senior Counsel
By: /s/ Philip K. Polkinghorn
---------------------------------
Name: Philip K. Polkinghorn
Title: Vice President, Retirement
Products and Services
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ Maura Murphy By: /s/ William T. Evers
-------------------------- ---------------------------------
Name: Maura Murphy Name: William T. Evers
Title: Senior Counsel Title: Assistant Secretary
By: /s/ George E. Maden
---------------------------------
Name: George E. Maden
Title: Secretary and Clerk
|
EXHIBIT h(29)(h)
AMENDMENT NO. 7
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 1998, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation; Transamerica Life Insurance Company, an Iowa life insurance company; and AFSG Securities Corporation, a Pennsylvania corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
SERIES I SHARES
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE POLICIES UTILIZING THE FUNDS BY THE SEPARATE ACCOUNTS
------------------------------------------------------------------------------------------------------------------------------
- AIM V.I. Balanced Fund Retirement Builder Variable Transamerica Life Insurance Company
- AIM V.I. Capital Appreciation Fund Annuity Account Policy Form No. AV288 101 95 796
- AIM V.I. Dent Demographic Trends Fund under marketing names: "Retirement
- AIM V.I. Government Securities Fund Legacy Builder Variable Life Income Builder II Variable Annuity" and
- AIM V.I. Growth Fund Separate Account "Portfolio Select Variable Annuity"
- AIM V.I. Core Equity Fund (formerly
- AIM V.I. Growth and Income Fund) PFL Variable Life Account A Transamerica Life Insurance Company
- AIM V.I. International Growth Fund Policy Form No. WL851 136 58 699 under
(formerly AIM V.I. International Equity Separate Account VA A the marketing name "Legacy Builder Plus"
Fund)
- AIM V.I. Premier Equity Fund (formerly
AIM V.I. Value Fund) PFL Corporate Account One Transamerica Life Insurance Company
(1940 Act Exclusion) Policy Form No. APUL0600 699 under the
marketing name "Variable Protector"
Transamerica Life Insurance Company
Policy Form No. AV337 101 100397 under
the marketing name "The Atlas Portfolio
Builder Variable Annuity"
Advantage V, Variable Universal Life
Policy (1933 Act Exempt)
------------------------------------------------------------------------------------------------------------------------------
|
SERIES II SHARES
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE POLICIES UTILIZING THE FUNDS BY THE SEPARATE ACCOUNTS
------------------------------------------------------------------------------------------------------------------------------
- AIM V.I. Balanced Fund Separate Account VA B Transamerica Life Insurance Company
- AIM V.I. Basic Value Fund Policy Form No. AV720 101 148 102 under
- AIM V.I. Blue Chip Fund Separate Account VA C the marketing name "Transamerica
- AIM V.I. Capital Appreciation Fund Landmark Variable Annuity"
- AIM V.I. Dent Demographic Trends Fund Separate Account VA D
- AIM V.I. Government Securities Fund Transamerica Life Insurance Company
- AIM V.I. Core Equity Fund (formerly Separate Account VA F Policy Form No. AV400 101 107 198 under
AIM V.I. Growth and Income Fund) the marketing name "Transamerica Freedom
- AIM V.I. Premier Equity Fund (formerly Separate Account VA I Variable Annuity"
AIM V.I. Value Fund)
Separate Account VA J Transamerica Life Insurance Company
Policy Form No. AV710 101 147 102 under
Separate Account VA K the marketing name "Transamerica EXTRA
Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AV474 101 122 1099 under
the marketing name "Transamerica Access
Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AV288 101 95 796 under
the marketing name "Premier Asset
Builder Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AV288 101 95 796 under
the marketing name "Principal-Plus
Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AVI 200 1 0100 under the
marketing name "Immediate Income Builder
II"
Transamerica Life Insurance Company
Policy Form No. AV721 101 149 1001 under
the marketing name "Retirement Income
Builder III Variable Annuity"
------------------------------------------------ -----------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: May 1, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
------------------------------ -------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------------------ -------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
TRANSAMERICA LIFE INSURANCE COMPANY
Attest: /s/ Frank A. Camp By: /s/ Larry N. Norman
------------------------------ -------------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Vice President & Division Title: President
General Counsel
AFSG SECURITIES CORPORATION
Attest: /s/ Frank A. Camp By: /s/ Larry N. Norman
------------------------------ -------------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Secretary Title: President
|
EXHIBIT h(29)(i)
AMENDMENT NO. 8
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 1998, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation; Transamerica Life Insurance Company, an Iowa life insurance company; and AFSG Securities Corporation, a Pennsylvania corporation, is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
SERIES I SHARES
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE POLICIES UTILIZING THE FUNDS BY THE SEPARATE ACCOUNTS
---------------------------------------------- ------------------------------- --------------------------------------------
o AIM V.I. Balanced Fund Retirement Builder Variable Transamerica Life Insurance Company Policy
o AIM V.I. Capital Appreciation Fund Annuity Account Form No. AV288 101 95 796 under marketing
o AIM V.I. Dent Demographic Trends Fund names: "Retirement Income Builder II
o AIM V.I. Government Securities Fund Legacy Builder Variable Life Variable Annuity" and "Portfolio Select
o AIM V.I. Growth Fund Separate Account Variable Annuity"
o AIM V.I. Core Equity Fund (formerly AIM V.I.
Growth and Income Fund) PFL Variable Life Account A Transamerica Life Insurance Company Policy
o AIM V.I. International Growth Fund (formerly Form No. WL851 136 58 699 under the
AIM V.I. International Equity Fund) Separate Account VA A marketing name "Legacy Builder Plus"
o AIM V.I. Premier Equity Fund (formerly AIM PFL Corporate Account One
V.I. Value Fund) (1940 Act Exclusion) Transamerica Life Insurance Company Policy
Form No. APULO600 699 under the marketing
name "Variable Protector"
Transamerica Life Insurance Company Policy
Form No. AV337 101 100397 under the
marketing name "The Atlas Portfolio Builder
Variable Annuity"
Advantage V, Variable Universal Life
Policy (1933 Act Exempt)
|
SERIES II SHARES
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE POLICIES UTILIZING THE FUNDS BY THE SEPARATE ACCOUNTS
---------------------------------------------- --------------------- --------------------------------------------------
o AIM V.I. Balanced Fund Separate Account VA B Transamerica Life Insurance Company Policy Form
o AIM V.I. Basic Value Fund No. AV720 101 148 102 under the marketing name
o AIM V.I. Blue Chip Fund Separate Account VA C "Transamerica Landmark Variable Annuity"
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Dent Demographic Trends Fund Separate Account VA D Transamerica Life Insurance Company Policy Form
o AIM V.I. Government Securities Fund No. AV400 101 107 198 under the marketing name
o AIM V.I. Growth Fund Separate Account VA F "Transamerica Freedom Variable Annuity"
o AIM V.I. Core Equity Fund (formerly AIM V.I.
Growth and Income Fund) Separate Account VA I Transamerica Life Insurance Company Policy Form
o AIM V.I. Mid Cap Core Equity Fund No. AV710 101 147 102 under the marketing name
o AIM V.I. Premier Equity Fund (formerly AIM Separate Account VA J "Transamerica EXTRA Variable Annuity"
V.I. Value Fund)
Separate Account VA K Transamerica Life Insurance Company Policy Form
No. AV474 101 122 1099 under the marketing name
Separate Account VA L "Transamerica Access Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AV288 101 95 796
under the marketing name "Premier
Asset Builder Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AV288 101 95 796
under the marketing name "Principal-
Plus Variable Annuity"
Transamerica Life Insurance Company
Policy Form No. AVI 200 1 0100 under
the marketing name "Immediate Income
Builder II"
Transamerica Life Insurance Company
Policy Form No. AV721 101 149 1001
under the marketing name "Retirement
Income Builder III Variable Annuity"
Transamerica Life Insurance Company Policy Form
No. AV721 101 149 1001 under the marketing name
"Transamerica Preferred Advantage Variable Annuity"
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: July 15, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ NANCY L. MARTIN By: /s/ CAROL F. RELIHAN
----------------------------- -------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
A I M DISTRIBUTORS, INC.
Attest: /s/ NANCY L. MARTIN By: /s/ MICHAEL J. CEMO
------------------------------ -------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
TRANSAMERICA LIFE INSURANCE COMPANY
Attest: /s/ FRANK A. CAMP By: /s/ LARRY N. NORMAN
------------------------------ ------------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Vice President & Division Title: President
General Counsel
AFSG SECURITIES CORPORATION
Attest: /s/ FRANK A. CAMP By: /s/ LARRY N. NORMAN
------------------------------ -------------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Secretary Title: President
|
EXHIBIT h(29)(j)
AMENDMENT NO. 9
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated as of May 1, 1998, by and among AIM Variable Insurance Funds, a Delaware trust; A I M Distributors, Inc., a Delaware corporation; Transamerica Life Insurance Company, an Iowa life insurance company; and AFSG Securities Corporation, a Pennsylvania corporation, is hereby amended as follows:
The following is added under: "Section 2 Processing Transactions" before Section 2.1(a):
The Parties agree to communicate, process and settle purchase and redemption transactions for Shares (collectively, "Share transactions") via the Fund/SERV and Networking systems of the National Securities Clearing Corporation (hereinafter, "NSCC"). LIFE COMPANY and AIM each represents and warrants that it: (a) has entered into an agreement with NSCC, (b) has met and will continue to meet all of the requirements to participate in Fund/SERV and Networking, and (c) intends to remain at all times in compliance with the then current rules and procedures of NSCC, all to the extent necessary or appropriate to facilitate such communications, processing, and settlement of Share transactions. AIM agrees to provide LIFE COMPANY with account positions and activity data relating to Share transactions via Networking. LIFE COMPANY shall pay for Shares by the scheduled close of federal funds transmissions on the same Business Day on which it places an order to purchase Shares in accordance with this section. Payment shall be in federal funds transmitted by wire from the designated NSCC Settling Bank (on behalf of LIFE COMPANY).
For purposes of this Agreement, "Fund/SERV" shall mean NSCC's system for automated, centralized processing of mutual fund purchase and redemption orders, settlement, and account registration; "Networking" shall mean NSCC's (Level Three) system that allows mutual funds and life insurance companies to exchange account level information electronically; and "Settling Bank" shall mean the entity appointed by AVIF to perform such settlement services on behalf of AVIF, which agrees to abide by NSCC's then current rules and procedures insofar as they relate to same day funds settlement. In all cases, processing and settlement of Share transactions shall be done in a manner consistent with applicable law.
In the event that any Party is prohibited from communicating,
processing or settling Share transactions via Fund/SERV or Networking,
such Party shall promptly notify the other Parties. After all Parties
have been notified, the provisions of paragraphs (b) and (c) of this
Section 2.1 shall apply.
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
SERIES I SHARES
------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE POLICIES UTILIZING THE FUNDS BY THE SEPARATE ACCOUNTS
------------------------------------------------------------------------------------------------------------------------
- AIM V.I. Balanced Fund Retirement Builder Variable - Transamerica Life Insurance
- AIM V.I. Capital Appreciation Fund Annuity Account Company Policy Form No. AV288 101 95
- AIM V.I. Dent Demographic Trends Fund 796 under marketing names:
- AIM V.I. Government Securities Fund Legacy Builder Variable Life "Retirement Income Builder II
- AIM V.I. Growth Fund Separate Account Variable Annuity" and "Portfolio
- AIM V.I. Core Equity Fund (formerly Select Variable Annuity"
AIM V.I. Growth and Income Fund) PFL Variable Life Account A - Transamerica Life Insurance
- AIM V.I. International Growth Fund Company Policy Form No. WL851 136 58
(formerly AIM V.I. International Equity Separate Account VA A 699 under the marketing name "Legacy
Fund) Builder Plus"
- AIM V.I. Premier Equity Fund (formerly
AIM V.I. Value Fund) PFL Corporate Account One - Transamerica Life Insurance
(1940 Act Exclusion) Company Policy Form No. APUL0600 699
under the marketing name "Variable
Protector"
------------------------------------------------------------------------------------------------------------------------
|
------------------------------------------------------------------------------------------------------------------------
- Transamerica Life Insurance
Company Policy Form No. AV337 101
100397 under the marketing name "The
Atlas Portfolio Builder Variable
Annuity"
- Advantage V, Variable Universal
Life Policy (1933 Act Exempt)
------------------------------------------------------------------------------------------------------------------------
|
SERIES II SHARES
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE POLICIES UTILIZING THE FUNDS BY THE SEPARATE ACCOUNTS
--------------------------------------------------------------------------------------------------------------------------
- AIM V.I. Balanced Fund Separate Account VA B - Transamerica Life Insurance
- AIM V.I. Basic Value Fund Company Policy Form No. AV720 101 148
- AIM V.I. Blue Chip Fund Separate Account VA C 102 under the marketing name
- AIM V.I. Capital Appreciation Fund "Transamerica Landmark Variable
- AIM V.I. Dent Demographic Trends Fund Separate Account VA D Annuity"
- AIM V.I. Government Securities Fund - Transamerica Life Insurance
- AIM V.I. Growth Fund Separate Account VA F Company Policy Form No. AV400 101 107
- AIM V.I. Core Equity Fund (formerly 198 under the marketing name
AIM V.I. Growth and Income Fund) Separate Account VA I "Transamerica Freedom Variable
- AIM V.I. Mid Cap Core Equity Fund Annuity"
- AIM V.I. Premier Equity Fund (formerly Separate Account VA J - Transamerica Life Insurance
AIM V.I. Value Fund) Company Policy Form No. AV710 101 147
Separate Account VA K 102 under the marketing name
"Transamerica EXTRA Variable Annuity"
Separate Account VA L - Transamerica Life Insurance
Company Policy Form No. AV474 101 122
Separate Account VA P 1099 under the marketing name
"Transamerica Access Variable Annuity"
- Transamerica Life Insurance
Company Policy Form No. AV288 101 95
796 under the marketing name "Premier
Asset Builder Variable Annuity"
- Transamerica Life Insurance
Company Policy Form No. AV288 101 95
796 under the marketing name
"Principal-Plus Variable Annuity"
- Transamerica Life Insurance
Company Policy Form No. AVI 200 1
0100 under the marketing name
"Immediate Income Builder II"
- Transamerica Life Insurance
Company policy Form No. AV721 101 149
1001 under the marketing name
"Retirement Income Builder III
Variable Annuity"
- Transamerica Life Insurance Company
Policy Form No. AV721 101 149 1001
under the marketing name
"Transamerica Preferred Advantage
Variable Annuity"
- Transamerica Life Insurance
Company Policy Form No. AV721 101 149
1001 under the marketing name
"Transamerica Opportunity Builder"
-------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective date: December ___1___, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
-------------------------------- -----------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
-------------------------------- -------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
TRANSAMERICA LIFE INSURANCE COMPANY
Attest: Illegible By: Illegible
-------------------------------- -------------------------------
|
Name: Illegible Name: Illegible
Title: Vice President Title: President
AFSG SECURITIES CORPORATION
Attest: Illegible By: Illegible
-------------------------------- -------------------------------
Name: Illegible Name: Illegible
Title: Secretary Title: Illegible
|
EXHIBIT h(31)(f)
AMENDMENT NO. 5
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated June 1, 1998, by and among AIM Variable Insurance Funds (formerly AIM Variable Insurance Funds, Inc.), a Delaware Trust, A I M Distributors, Inc., a Delaware Corporation, American General Life Insurance Company ("Life Company"), a Texas Life Insurance Company and American General Securities Incorporated ("AGSI"), and collectively (the "Parties") is hereby amended as follows. All capitalized terms not otherwise defined in this Amendment, shall have the same meaning as described in the Agreement.
WHEREAS, the parties desire to amend Schedule A of the Agreement to add the contracts of the Life Company relating to the Life Company's Platinum Investor PLUS Flexible Premium Variable Life Insurance Policy, Form No. 02600.
NOW, THEREFORE, in consideration of their mutual promises, the parties agree as follows:
1. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
-------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNTS
FUNDS AVAILABLE UNDER UTILIZING SOME OR POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES ALL OF THE FUNDS SEPARATE ACCOUNTS
-------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Growth Fund American General Life Insurance - Platinum Investor I Flexible Premium
AIM V.I. Premier Equity Fund Company Separate Account VL-R Variable Life Insurance Policy
Established: May 1, 1997 - Policy Form No. 97600
- Platinum Investor II Flexible Premium
Variable Life Insurance Policy
- Policy Form No. 97610
- Corporate America - Variable Flexible
Premium Variable Life Insurance
- Policy Form No. 99301
- Platinum Investor Survivor Last
Survivor Flexible Premium Variable Life
Insurance Policy
- Policy Form No. 99206
- Platinum Investor Survivor II Last
Survivor Flexible Premium Variable Life
Insurance Policy
- Policy Form No. 01206
-------------------------------------------------------------------------------------------------------------------------------
|
-------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNTS
FUNDS AVAILABLE UNDER UTILIZING SOME OR POLICIES/CONTRACTS FUNDED BY THE
THE POLICIES ALL OF THE FUNDS SEPARATE ACCOUNTS
-------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Growth Fund American General Life Insurance
AIM V.I. Premier Equity Fund Company Separate Account VL-R - Platinum Investor III Flexible Premium
Established: May 1, 1997 Variable Life Insurance Policy
- Policy Form No. 00600
-------------------------------------- --------------------------------------------
AIM V.I. Premier Equity Fund - AG Legacy Plus Flexible Premium
Variable Life Insurance Policy
- Policy Form No. 98615
-------------------------------------- --------------------------------------------
AIM V.I. Capital Appreciation Fund - The One VUL Solution Flexible Premium
AIM V.I. Government Securities Fund Variable Life Insurance Policy
AIM V.I. High Yield Fund - Policy Form No. 99615
AIM V.I. International Growth Fund
-------------------------------------- --------------------------------------------
AIM V.I. International Growth Fund - AG Legacy Plus Flexible Premium
Variable Life Insurance Policy
- Policy Form No. 99616
-------------------------------------- --------------------------------------------
AIM V.I. International Growth Fund - Platinum Investor PLUS Flexible Premium
AIM V.I. Premier Equity Fund Variable Life Insurance Policy
- Policy Form No. 02600
-------------------------------------------------------------------------------------------------------------------------------
AIM V.I. International Growth Fund American General Life Insurance - Platinum Investor Variable Annuity
AIM V.I. Premier Equity Fund Company Separate Account D - Policy Form No. 98020
Established: November 19, 1973
-------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: May 14, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim Coppedge By: /s/ Carol F. Relihan
----------------------------- ------------------------------
Name: Jim Coppedge Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim Coppedge By: /s/ Michael J. Cemo
----------------------------- ------------------------------
Name: Jim Coppedge Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
(SEAL)
AMERICAN GENERAL LIFE INSURANCE
COMPANY
Attest: /s/ Lauren W. Jones By: /s/ Larry J. O' Brien
-------------------------- --------------------------------
Name: Lauren W. Jones Name: Larry J. O' Brien
------------------------- --------------------------
Title: Assistant Secretary Title: Senior Vice President
------------------------ -------------------------
(SEAL)
AMERICAN GENERAL DISTRIBUTORS, INC.
Attest: /s/ Tracy E Harris By: /s/ David den Boer
-------------------------- --------------------------------
Name: Tracy E Harris Name: David den Boer
------------------------- --------------------------
Title: Assistant Secretary Title: Senior Vice President
------------------------ -------------------------
|
(SEAL)
EXHIBIT h(34)(b)
AMENDMENT TO
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 1, 1998, by and among AIM Variable Insurance Funds, A I M Distributors, Inc., The Union Central Life Insurance Company and Carillon Investments, Inc., (collectively, the "Parties") is hereby amended as follows. All capitalized terms not otherwise defined in this Amendment, shall have the same meaning as described in the Agreement.
WHEREAS, the Parties desire to amend Schedule B of the Agreement to address a logo change;
NOW THEREFORE, in consideration of their mutual promises, the Parties agree as follows:
Schedule B of the Agreement is hereby deleted in its entirety and replaced with the attached Schedule B.
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: January 1, 2003.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
-------------------------- ---------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
-------------------------- ---------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
(SEAL)
THE UNION CENTRAL LIFE
INSURANCE COMPANY
Attest: /s/ JOHN F. LABMEIER By: /s/ [ILLEGIBLE]
-------------------------- ---------------------------------
Name: JOHN F. LABMEIER Name: [ILLEGIBLE]
Title: VICE PRESIDENT Title: VICE PRESIDENT
|
(SEAL)
CARILLON INVESTMENTS, INC.
Attest: /s/ John M. Lucas By: /s/ John F. Labmeier
---------------------- -------------------------
Name: John M. Lucas Name: John F. Labmeier
Title: Assistant Secretary Title: Vice President
|
(SEAL)
SCHEDULE B
LOGO COLORS
[AIM INVESTMENTS LOGO APPEARS HERE] One Color - both the box and the
--Servicemark-- word Investments print black with a
white Chevron and White AIM inside
the box.
Two Colors - in printed versions of
the logo, the preferred usage is
always two color reproduction. The
box prints in PMS 356 Green with
Chevron and AIM white and with the
word Investments printing Black.
[AIM INVESTMENTS LOGO APPEARS HERE] Four Color Process - the box prints
--Servicemark-- Cyan 100% Magenta 0%, Yellow 100%,
Black 20% to simulate PMS 356
Green. The word Investments prints
solid black.
|
EXHIBIT h(36)(b)
AMENDMENT NO. 1
TO THE
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS
AIM DISTRIBUTORS, INC.
HARTFORD LIFE INSURANCE COMPANY
ON BEHALF OF ITSELF AND ITS SEPARATE ACCOUNTS
AND
HARTFORD SECURITIES DISTRIBUTION COMPANY, INC.
WHEREAS, AIM Variable Insurance Funds ("AVIF"), A I M Distributors, Inc. ("AIM"), Hartford Life Insurance Company ("LIFE COMPANY"), and Hartford Securities Distribution Company, Inc. ("UNDERWRITER") (collectively, the "Parties") have previously entered into a Participation Agreement dated July 2, 1998 (the "Agreement");
WHEREAS, AVIF was reorganized from a Maryland corporation into a Delaware business trust on May 1, 2000, resulting in a technical change of control of AVIF and thus an assignment of the Agreement;
WHEREAS, the Parties to the Agreement desired to consent to such assignment and amended the Agreement by letter dated April 27, 2000, and effective as of May 1, 2000, to give their consent to such assignment;
WHEREAS, certain Contracts issued by LIFE COMPANY have as their principal underwriter Hartford Equity Sales Company, Inc. rather than Hartford Securities Distribution Company, Inc. and the parties to the Agreement desire to make Hartford Equity Sales Company, Inc. a Party to the Agreement;
WHEREAS, each of the parties hereto intends and has intended both registered and unregistered Accounts of the Company to be able to invest in shares of the Fund, including those Accounts exempt from registration under the Investment Company Act of 1940 (the "1940 Act") pursuant to Sections 3(c)(1), 3(c)(7) or 3(c)(11) thereof;
WHEREAS, each of the parties hereto desires to expand the number of Accounts of LIFE COMPANY that invest in shares of AVIF and to clarify those Accounts that are and have been covered by the Agreement;
WHEREAS, each of the parties hereto desires to expand the number of Funds of AVIF that the Accounts may invest in and to clarify those Funds that are and have been covered by the Agreement; and
WHEREAS, each of the parties hereto desires to amend the Agreement to comply with the privacy provisions of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder and to make further revisions as appropriate;
NOW, THEREFORE, AVIF, AIM, LIFE COMPANY, and UNDERWRITER hereby agree
to amend the Agreement as follows:
1. The term "UNDERWRITER" as used in the Agreement, and any and all amendments thereto, shall mean Hartford Securities Distribution Company, Inc. and Hartford Equity Sales Company, Inc.
2. Section 4.2(a) is hereby amended as follows:
(a) AVIF will use its best efforts to comply with any applicable state insurance laws or regulations, including the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
3. Section 4.3(a) is hereby amended as follows:
(a) LIFE COMPANY and UNDERWRITER represent and warrant
that (i) interests in each Account pursuant to the Contracts will be
registered under the 1933 Act to the extent required by the 1933 Act,
(ii) the Contracts will be duly authorized for issuance in compliance
with all applicable federal and state laws, including, without
limitation, the 1933 Act, the 1934 Act, the 1940 Act and Connecticut
law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act, (iv) each Account does and
will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, to the extent required, (v) each
Account's 1933 Act registration statement relating to the Contracts,
together with any amendments thereto, will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (vi) LIFE COMPANY will amend the registration statement for
its Contracts under the 1933 Act and for its Accounts under the 1940
Act from time to time as required in order to effect the continuous
offering of its Contracts or as may otherwise be required by applicable
law, and (vii) each Account Prospectus, statement of additional
information ("SAI"), and other documents pursuant to which Contracts
are offered, and any amendments or supplements thereto (collectively,
the "Account Prospectus") will at all times comply in all material
respects with the requirements of the 1933 Act and the rules
thereunder.
4. Section 4.3(f) is hereby added as follows:
4.3(f) For its unregistered Accounts that are exempt from
registration under the 1940 Act in reliance upon Section
3(c)(1) or Section 3(c)(7) thereof, LIFE COMPANY represents
|
and agrees that:
(i) UNDERWRITER is the principal underwriter for each such unregistered Account and its Subaccounts and is a registered broker-dealer under the 1934 Act;
(ii) the Shares of the Funds of AVIF are and will continue to be the only investment securities held by the corresponding Subaccounts of the Account; and
(iii) with regard to each Fund, LIFE COMPANY, on behalf of the corresponding Subaccount, will:
(a) vote such Shares held by it in the same proportion as the vote of all other holders of such Shares; and
(b) refrain from substituting Shares of another security for such Shares unless the SEC has approved such substitution in the manner provided in Section 26 of the 1940 Act.
5. Sections 4.5(a) and (b) are hereby amended as follows:
(a) LIFE COMPANY upon written request of AVIF will provide to AVIF or its designated agent at least one (1) complete copy of all SEC registration statements, Account Prospectuses, private placement memoranda or other disclosure documents (collectively, "Disclosure Documents"), as well as any reports, any preliminary and final voting instruction solicitation material, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to each Account or the Contracts, contemporaneously with the filing of such document with the SEC or other regulatory authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which AVIF or any of its affiliates is named, at least ten (10) Business Days prior to its use (first use for "standardized material" as defined hereafter, unless more frequent review is specifically requested by AVIF or its designated agent or unless such material is amended in any respect other than to provide updated performance figures or dates) or such shorter period as the Parties hereto may, from time to time, agree upon. For purposes of this paragraph, "standardized material" shall include material that is identical in format and content to material that AVIF or its designated agent has reviewed and approved pursuant to this paragraph with the exception of updated dates and performance figures. LIFE COMPANY agrees to bear all responsibility and liability for any error in any standardized material (e.g., transposition of numbers) to the extent any information contained therein does not conform to the information provided to LIFE COMPANY by AIM or the Fund. No such material (including the initial approval of standardized material) shall be used if AVIF or its designated agent reasonably objects to such use within five (5) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time to time, agree upon.
AVIF hereby designates AIM as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
6. Sections 4.6(a), (b) and (c) are hereby amended as follows:
(a) AVIF upon written request of LIFE COMPANY will provide to LIFE COMPANY at least one (1) complete copy of all SEC registration statements, AVIF Disclosure Documents, as well as any reports, any preliminary and final proxy material, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to AVIF or the Shares of a Fund.
(b) AVIF will provide to LIFE COMPANY camera ready copy of all AVIF Prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF Prospectuses (to the extent that AIM is responsible for printing and LIFE COMPANY has not requested camera ready copy), SAI, proxy materials, periodic reports to shareholders and other materials required by law to be sent to Participants who have allocated any Contract value to a Fund. AVIF will provide such copies to LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may be, to print and distribute such materials within the time required by law to be furnished to Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants").
(c) AVIF will provide to LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, or any of its respective affiliates is named, or that refers to the Contracts, at least ten (10) Business Days prior to its use or such shorter period as the Parties hereto may, from time to time, agree upon. No such material shall be used if LIFE COMPANY or its designated agent objects to such use within five (5) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time to time, agree upon. LIFE COMPANY shall receive all such sales literature until such time as it appoints a designated agent by giving notice to AVIF in the manner required by Section 9 hereof.
7. Section 6.1(b) is hereby amended as follows:
(b) at the option of AVIF upon completion of formal proceedings against LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY's obligations under this Agreement or related to the sale of the Contracts, the operation of each Account, or the purchase of Shares, if, in each case, AVIF reasonably determines that such proceedings, or the facts on which such proceedings would be based, have a material likelihood of imposing material adverse consequences on the Fund with respect to which the Agreement is to be terminated; or
8. Section 6.5 is hereby amended to add the following as the last sentence in Section 6.5:
The parties agree that this Section 6.5 will not change or otherwise affect the obligations with respect to Existing Contracts set forth above in Section 6.3.
9. Sections 12.1(a) and (b) are hereby amended as follows:
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective Trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of LIFE COMPANY and UNDERWRITER) or actions in respect thereof (including, to the extent reasonable, legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise; provided, the Account owns shares of the Fund and insofar as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Account's Disclosure Documents, the Contracts, or sales literature or advertising for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY or UNDERWRITER by or on behalf of AVIF for use in any Account's Disclosure Documents, the Contracts, or sales literature or advertising or otherwise for use in connection with the sale of Contracts or Shares (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or representations (other than statements or representations contained in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the unlawful conduct of LIFE COMPANY, UNDERWRITER or their respective affiliates or persons under their control, in connection with the sale or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's 1933 Act registration
statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon and in conformity with information furnished to AVIF, AIM or their affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or their respective affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER to perform the obligations, provide the services and furnish the materials required of them under the terms of this Agreement, or any material breach of any representation and/or warranty made by LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER.
(b) Neither LIFE COMPANY nor UNDERWRITER shall be liable
under this Section 12.1 with respect to any losses, claims, damages,
liabilities or actions to which an Indemnified Party would otherwise be
subject by reason of willful malfeasance or negligence in the
performance by that Indemnified Party of its duties or by reason of
that Indemnified Party's reckless disregard of obligations or duties
(i) under this Agreement, or (ii) to AVIF or AIM.
10. Sections 12.2(a) and (c) are hereby amended as follows:
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e), below, AVIF and AIM agree to indemnify and hold harmless LIFE COMPANY, UNDERWRITER, their respective affiliates, and each person, if any, who controls LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of Section 15 of the 1933 Act and each of their respective Trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of AVIF and/or AIM) or actions in respect thereof (including, to the extent reasonable, legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law, or otherwise; provided, the Account owns shares of the Fund and insofar as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's Disclosure Documents, or sales literature or advertising of AVIF (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing; or
(ii) arise out of or as a result of any other statements or representations (other than statements or representations contained in any Account's Disclosure Documents, or sales literature or advertising for the Contracts, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of AVIF, AIM or their affiliates and on which such persons have reasonably relied) or the unlawful conduct of AVIF, AIM or their affiliates or persons under its control, in connection with the sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Account's Disclosure Documents, or sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF or AIM to perform the obligations, provide the services and furnish the materials required of it under the terms of this Agreement, or any material breach of any representation and/or warranty made by AVIF or AIM in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF or AIM.
(c) Neither AVIF nor AIM shall be liable under this
Section 12.2 with respect to any losses, claims, damages, liabilities
or actions to which an Indemnified Party would otherwise be subject by
reason of willful malfeasance or negligence in the performance by that
Indemnified Party of its duties or by reason of such Indemnified
Party's reckless disregard of its obligations and duties (i) under this
Agreement, or (ii) to LIFE COMPANY, UNDERWRITER, each Account or
Participants.
11. Section 18(a) is hereby added and Section 18 is redesignated as Section
(b) - (d) as follows:
(a) For purposes of this Agreement, "Personal Information" means financial and medical information that identifies an individual personally and is not available to the public, including, but not limited to, credit history, income, financial benefits, policy or claim information and medical records. Each Party agrees to use and disclose Personal Information only to carry out the purposes for which it was disclosed to them and will not use or disclose Personal Information if prohibited by applicable law, including, without limitation, statutes and regulations enacted pursuant to the Gramm-Leach-Bliley Act of 1999 (Public Law 106-102). If any Party outsources services to a third party, such third party will agree in writing to maintain the security and confidentiality of any information shared with them.
(b) AVIF acknowledges that the identities of the customers of LIFE COMPANY or any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for purposes of this Section 18), information maintained regarding those customers, and all computer programs and procedures or other information developed by the LIFE COMPANY Protected Parties or any of their employees or agents in connection with LIFE COMPANY's performance of its duties under this Agreement are the valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it comes into possession of any list or compilation of the identities of or other information about the LIFE COMPANY Protected Parties, or any other information or property of the LIFE COMPANY Protected Parties, other than such information as may be independently developed or compiled by AVIF from information supplied to it by the LIFE COMPANY Protected Parties who also maintain accounts directly with AVIF, AVIF will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with LIFE COMPANY's prior written consent; or (b) as required by law or judicial process.
(c) LIFE COMPANY acknowledges that the identities of the customers of AVIF or any of its affiliates (collectively, the "AVIF Protected Parties" for purposes of this Section 18), information maintained regarding those customers, and all computer programs and procedures or other information developed by the AVIF Protected Parties or any of their employees or agents in connection with AVIF's performance of its duties under this Agreement are the valuable property of the AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of any list or compilation of the identities of or other information about the AVIF Protected Parties or any other information or property of the AVIF Protected Parties, other than such information as may be independently developed or compiled by LIFE COMPANY from information supplied to it by the AVIF Protected Parties who also maintain accounts directly with LIFE COMPANY, LIFE COMPANY will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with AVIF's prior written consent; or (b) as required by law or judicial process.
(d) Each Party acknowledges that any breach of the agreements in this Section 18 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate.
12. The term "Account" as used in the Agreement, and as reflected in Schedule A to the Agreement, shall include Separate Account ICMG Series III-B.
13. LIFE COMPANY represents and warrants that Separate Account ICMG Series III-B is exempt from registration under the 1940 Act and that the Contracts funded thereby are exempt from registration under the Securities Act of 1933 (the "1933 Act").
14. Schedule A to the Agreement is hereby amended and replaced in its entirety by Schedule A attached hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 1 to be executed in its name and on its behalf by its duly authorized representative on this 29th day of April, 2002, to be effective as of November 1, 2000.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
----------------------------- ----------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
----------------------------- ----------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
9
|
HARTFORD LIFE INSURANCE COMPANY,
on behalf of itself and its
separate accounts
Attest: [ILLEGIBLE] By: /s/ Joseph F. Mahoney, Jr.
----------------------------- -----------------------------
Name: [ILLEGIBLE] Name: Joseph F. Mahoney, Jr.
Title: Product Filings Director Title: Vice President
HARTFORD SECURITIES DISTRIBUTION
COMPANY, INC.
Attest: /s/ Debra Hampson By: /s/ George R. Jay
----------------------------- -----------------------------
Name: Debra Hampson Name: George R. Jay
Title: Counsel Title: Controller
HARTFORD EQUITY SALES COMPANY,
INC.
Attest: /s/ Debra Hampson By: /s/ George R. Jay
----------------------------- -----------------------------
Name: Debra Hampson Name: George R. Jay
Title: Counsel Title: Controller
|
SCHEDULE A
AVIF FUNDS AVAILABLE UNDER THE CONTRACTS
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Global Utilities 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. Telecommunications and Technology Fund
AIM V.I. Value Fund
ACCOUNTS AND ASSOCIATED CONTRACTS
Account Contract(s)
------- -----------
Hartford Life Separate Account Two Nations Variable Annuity Contract
ICMG Series III-B GVL-93
|
EXHIBIT h(36)(c)
AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 2, 1998, by and among AIM Variable Insurance Funds, a Delaware Trust, A I M Distributors, Inc., a Delaware corporation, and Hartford Life Insurance Company, a Connecticut life insurance company, and Hartford Securities Distribution Company, Inc., a Connecticut corporation, is hereby amended as follows:
All parties agree to add Hartford Life and Annuity, a Connecticut life insurance company, as a party to the Agreement and any amendments thereof.
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect. Unless otherwise specified, all defined terms shall have the same meaning given to them in the Agreement.
Effective Date: September 20, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
------------------------ -----------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: [ILLEGIBLE]
------------------------ -----------------------------------
Name: Nancy L. Martin Name: [ILLEGIBLE]
Title: Assistant Secretary Title: President
HARTFORD LIFE INSURANCE COMPANY ON
BEHALF OF ITSELF AND ITS ACCOUNTS
Attest: /s/ [ILLEGIBLE] BY: /s/ Stephen T. Joyce
------------------------ -----------------------------------
Name: [ILLEGIBLE] Name: Stephen T. Joyce
Title: Senior Vice President Title: Senior Vice President
Page 1 of 2
|
HARTFORD SECURITIES DISTRIBUTION
COMPANY, INC.
Attest: [ILLEGIBLE] By: /s/ Steve T. Joyce
------------------------ -----------------------------------
Name: [ILLEGIBLE] Name: Steve T. Joyce
Title: Assistant Vice President Title: Senior Vice President
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
Attest: [ILLEGIBLE] BY: /s/ Steve T. Joyce
------------------------ -----------------------------------
Name: [ILLEGIBLE] Name: Steve T. Joyce
Title: Assistant Vice President Title: Senior Vice President
|
EXHIBIT h(38)(h)
AMENDMENT NO. 7
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 27, 1998, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Allmerica Financial Life Insurance and Annuity Company, a Delaware life insurance company and Allmerica Investments, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
----------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
----------------------------------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund Fulcrum Variable Life Account Fulcrum Fund Variable Annuity
----------------------------------------------------------------------------------
AIM V.I. Blue Chip Fund FUVUL Separate Account ValuPlus Assurance (First Union)
----------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund Separate Account VA-P Pioneer Vision; Pioneer C-Vision; and
AIM V.I. Dent Demographic Trends Fund Pioneer XtraVision; Pioneer No-Load
----------------------------------------------------------------------------------
AIM V.I. Growth Fund Separate Account VA-K (Delaware) Delaware Medallion; Delaware Golden
AIM V.I. High Yield Fund Medallion
----------------------------------------------------------------------------------
AIM V.I. International Growth Fund Separate Account VA-K Agency Ultimate Advantage; Advantage,
AIM V.I. Premier Equity Fund ExecAnnuity; IVA; Fund Quest; Annuity
Scout
----------------------------------------------------------------------------------
Group VEL Account Executive Solutions
----------------------------------------------------------------------------------
Allmerica Select Separate Account Select Reward, Select Resource (I &
II), Select Charter; Select Acclaim
----------------------------------------------------------------------------------
Allmerica Select Separate Account II Select Life II
----------------------------------------------------------------------------------
Separate Account IMO Allmerica Select Life Plus; Allmerica
VUL 2001; VUL 2001 Survivorship
----------------------------------------------------------------------------------
Allmerica Select Separate Account III Select III, VEL III
----------------------------------------------------------------------------------
Inheiritage Account Select Inheiritage
----------------------------------------------------------------------------------------------------------------------------
SERIES II SHARES
----------------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund Separate Account IMO Allmerica Select Life Plus, Allmerica
AIM V.I. Capital Development VUL 2001, VUL 2001 Survivorship
Fund
----------------------------------------------------------------------------------
Separate Account VA-K ExecAnnuity Plus; Allmerica
Advantage; Allmerica Immediate
Advantage; Premier Choice
----------------------------------------------------------------------------------
Allmerica Select Separate Account Select Charter; Select Reward; Select
Resource (I & II); Select Acclaim
----------------------------------------------------------------------------------
Allmerica Select Separate Account III Select SPL II
----------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: May 1, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
------------------------------ ----------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------------------ ----------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
(SEAL)
ALLMERICA FINANCIAL LIFE INSURANCE AND
ANNUITY COMPANY
Attest: [ILLEGIBLE] By: /s/ Mark A. Hug
----------------------------- ----------------------------------
Name: Name: Mark A. Hug
Title: Title: President
(SEAL)
ALLMERICA INVESTMENTS, INC.
Attest: /s/ Karen Harrington By: /s/ William F. Monroe Jr.
----------------------------- ----------------------------------
Name: Karen Harrington Name: William F. Monroe Jr.
Title: Title: President
|
(SEAL)
EXHIBIT h(39)(h)
AMENDMENT NO. 7
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 27, 1998, by and among AIM Variable Insurance Funds, Inc., a Maryland corporation, A I M Distributors, Inc., a Delaware corporation, First Allmerica Financial Life Insurance Company, a Delaware life insurance company and Allmerica Investments, Inc., is hereby amended as follows:
Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
SCHEDULE A
------------------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER SEPARATE ACCOUNTS POLICIES FUNDED BY THE
THE POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
------------------------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Aggressive Growth Fund Separate Account FUVUL ValuePlus Assurance (First Union)
---------------------------------------------------------------------------------
AIM V.I. Blue Chip Fund Separate Account VA-P Pioneer Vision; Pioneer C-Vision;
AIM V.I. Capital Appreciation Fund Pioneer XtraVision; Pioneer No-Load
---------------------------------------------------------------------------------
AIM V.I. Dent Demographic Trends Fund Separate Account VA-K (Delaware) Delaware Medallion; Delaware Golden
Medallion;
---------------------------------------------------------------------------------
AIM V.I. Growth Fund Separate Account VA-K Agency C-Shares; ExecAnnuity;
AIM V.I. High Yield Fund Annuity Scout; Fund Quest; Allmerica
AIM V.I. International Growth Fund Immediate Advantage ("IVA")
---------------------------------------------------------------------------------
AIM V.I. Premier Equity Fund Allmerica Select Separate Account Select Reward; Secondary Acclaim, Select
Resource, Select Charter
---------------------------------------------------------------------------------
Allmerica Select Separate Account II Select Life, Select Single Premium
Life, Select VUL 2001
---------------------------------------------------------------------------------
Separate Account SPVL Select III
------------------------------------------------------------------------------------------------------------------------------------
SERIES II SHARES
------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Basic Value Fund Separate Account IMO Allmerica Select Life Plus; Allmerica VUL
AIM V.I. Capital Development 2001; VUL 2001 Survivorship
Fund
---------------------------------------------------------------------------------
Separate Account SPVL Select SPL II
---------------------------------------------------------------------------------
Inheiritage Account Select Inheiritage
---------------------------------------------------------------------------------
Separate Account VA-K ExecAnnuity Plus; Allmerica Advantage;
Allmerica Immediate Advantage; Premier
Choice
---------------------------------------------------------------------------------
Allmerica Select Separate Account Select Charter; Select Reward; Select
Resource (I & II); Select Acclaim
------------------------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: May 1, 2002
AIM VARIABLE INSURANCE FUNDS INC.
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
------------------------------ ----------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
------------------------------ ----------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
(SEAL)
FIRST ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ Mark A. Hug
------------------------------ ----------------------------------
Name: Name: Mark A. Hug
Title: Title: Vice President
(SEAL)
ALLMERICA INVESTMENTS, INC.
Attest: /s/ Karen Harrington By: /s/ William F. Monroe Jr.
------------------------------ ---------------------------------
Name: Karen Harrington Name: William F. Monroe Jr.
Title: Title: President
|
(SEAL)
EXHIBIT h(50)(b)
AMENDMENT
TO
PARTICIPATION AGREEMENT
(Series I shares)
This amendment (the "Amendment") is made and entered into as of May 1, 2002, by and among AIM Variable Insurance Funds, Principal Life Insurance Company, and Princor Financial Services Corporation (collectively, the "parties") in order to modify that certain Participation Agreement (the "Agreement") entered into by the parties as of June 8, 1999.
The parties agree to amend the Agreement as follows:
1. Schedule A to the Agreement is hereby deleted and the Schedule A attached to this Amendment is substituted therefor.
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Gary T. Crum
--------------------------- -----------------------------
Name: Nancy L. Martin Name: Gary T. Crum
Title: Assistant Secretary Title: Senior Vice President
(SEAL)
PRINCOR FINANCIAL SERVICES
CORPORATION
Attest: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
--------------------------- ----------------------------
Name: [ILLEGIBLE] Name: [ILLEGIBLE]
Title: [ILLEGIBLE] Title: [ILLEGIBLE]
(SEAL)
PRINCIPAL LIFE INSURANCE
COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ David House
---------------------------- ----------------------------
Name: [ILLEGIBLE] Name: DAVID HOUSE
Title: [ILLEGIBLE] Title: ASST. DIR.
(SEAL)
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
(Series I shares)
AIM V.I. Aggressive Growth Fund
AIM V.I. Core Equity Fund
AIM V.I. Growth Fund
AIM V.I. International Growth Fund
AIM V.I. Premier Equity Fund
SEPARATE ACCOUNTS UTILIZING AND CONTRACTS PROVIDED BY THE SEPARATE ACCOUNTS
Principal Life Insurance Company Principal Life Insurance Company
Separate Account B Variable Life Separate Account
-------------------------------- --------------------------------
(1) The Principal(R) Variable Annuity (1) PrinFlex Life(R) Variable
Life Insurance
(2) Principal Freedom Variable Annuity (2) Survivorship Variable
Universal Life Insurance
(3) Flexible Variable Life
Insurance
(4) Principal Variable Universal Life
Accumulator (VUL)
(5) Executive Variable Universal Life (EVUL)
|
EXHIBIT h(50)(c)
AMENDMENT
TO
PARTICIPATION AGREEMENT
This amendment (the "Amendment") is made and entered into as of August 15, 2002 by and among AIM Variable Insurance Funds ("AVIF"), Principal Life Insurance Company ("LIFE COMPANY"), and Princor Financial Services Corporation (collectively, the "parties") in order to modify that certain Participation Agreement (the "Agreement") entered into by the parties as of June 8, 1999.
The parties agree to amend the Agreement as follows:
The following is added under: "SECTION 2 PROCESSING AND TRANSACTIONS" before
SECTION 2.1(a):
The Parties intend that processing and settlement of purchase and redemption transactions for Shares (collectively, "Share transactions") shall occur via the Fund/SERV and Networking systems of the National Securities Clearing Corporation (hereinafter, "NSCC"). LIFE COMPANY and AIM each represents and warrants that it or one of its affiliates: (a) has entered into an agreement with NSCC, (b) has met and will continue to meet all of the requirements to participate in Fund/SERV and Networking, and (c) intends to remain at all times in compliance with the then current rules and procedures of NSCC, all to the extent necessary or appropriate to facilitate such communications, processing, and settlement of Share transactions. AIM agrees to provide LIFE COMPANY or such other entity as Life Company directs with account positions and activity data relating to Share transactions via Networking. LIFE COMPANY shall pay for Shares in the manner and within the time as required by the Fund/SERV and Networking rules.
For purposes of this Agreement, "Fund/SERV" shall mean NSCC's system for automated, centralized processing of mutual fund purchase and redemption orders, settlement, and account registration; "Networking" shall mean NSCC's (Level Zero) system that allows mutual funds and life insurance companies to exchange account level information electronically. In all cases, processing and settlement of Share transactions shall be done in a manner consistent with applicable law.
In the event that any Party is prohibited or unable to communicate, process or settle Share transactions via Fund/SERV or Networking, such Party shall provide prompt notice to the other Parties. After all Parties have been notified, the provisions of paragraphs (b) and (c) of this Section 2.1 shall apply.
SCHEDULE A to the Agreement is hereby deleted in its entirety and replaced with the following:
-----------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
CONTRACTS UTILIZING THE FUNDS SEPARATE ACCOUNTS
-----------------------------------------------------------------------------------------------------------------------
(SERIES I SHARES) - Principal Life Insurance Company - The Principal(R) Variable Annuity
AIM V.I. Aggressive Growth Fund Separate Account B - Principal Freedom Variable
AIM V.I. Core Equity Fund Annuity
AIM V.I. Growth Fund
AIM V.I. International Growth Fund - PrinFlex Life(R) Variable Life
AIM V.I. Premier Equity Fund - Principal Life Insurance Company Insurance
Variable Life Separate Account - Survivorship Variable
Universal Life Insurance
- Flexible Variable Life
Insurance
- Principal Variable Universal
Life Accumulator (VUL)
- Executive Variable Universal
Life (EVUL)
- Benefit Variable Universal
Life (BVUL)
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
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
(SEAL)
PRINCOR FINANCIAL SERVICES
CORPORATION
Attest: /s/ Amy B. McCann By: /s/ [ILLEGIBLE]
---------------------------- ---------------------------
Name: Amy B. McCann Name: [ILLEGIBLE]
Title: Title: [ILLEGIBLE]
(SEAL)
PRINCIPAL LIFE INSURANCE
COMPANY
Attest: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
---------------------------- ---------------------------
Name: [ILLEGIBLE] Name: [ILLEGIBLE]
Title: Title: ASST. DIRECTOR
|
(SEAL)
EXHIBIT h(65)(b)
[LETTERHEAD OF AIM FUNDS LOGO]
--Servicemark--
April 27, 2000
VIA FEDERAL EXPRESS
Ted Shea
Sun Life Assurance Company of Canada (U.S.)
One Copley Place, Suite 200
Boston, MA 02116
Re: Notice of Assignment and Consent
Dear Mr. Shea:
Sun Life Insurance and Annuity Company of New York, Clarendon Insurance Agency, Inc. and AIM Variable Insurance Funds, Inc. are parties to a Participation Agreement dated April 17, 2000 (the "Agreement").
On May 1, 2000, AIM Variable Insurance Funds, Inc., a Maryland corporation, will be reorganized into AIM Variable Insurance Funds, a Delaware business trust. AIM Variable Insurance Funds will succeed to all the rights and obligations of AIM Variable Insurance Funds, Inc. This reorganization will result in a technical change of control of AIM Variable Insurance Funds, Inc. and thus an assignment of the Agreement.
Such assignment requires the consent of the parties. Accordingly, AIM Variable Insurance Funds, Inc. requests that you PROVIDE YOUR CONSENT TO THE ASSIGNMENT OF THE AGREEMENT AS DESCRIBED ABOVE BY SIGNING WHERE INDICATED BELOW AND RETURNING ONE MANUALLY-EXECUTED COPY OF THIS LETTER TO LAURIE HOLLIS NO LATER THAN MAY 8, 2000. THIS LETTER SHALL CONSTITUTE AN AMENDMENT TO THE AGREEMENT EFFECTIVE MAY 1, 2000.
[AIM FUNDS LOGO]
--Servicemark--
Thank you for your prompt attention and assistance in this matter. If you have any questions, please call Laurie Hollis at 713-214-1785.
Sincerely,
/s/ Carol F. Relihan
----------------------------
Carol F. Relihan
Senior Vice President
Sun Life Insurance and Annuity Company of Clarendon Insurance Agency, Inc.
New York
ACKNOWLEDGED AND AGREED: ACKNOWLEDGED AND AGREED:
By: /s/ Edward Shea By: /s/ George E. Maden
----------------------------------- ----------------------------
Name: Edward Shea Name: George E. Maden
Title: [ILLEGIBLE] Title: AVP & Senior Counsel
Date: _________________________________ Date:__________________________
ACKNOWLEDGED AND AGREED:
By: /s/ Norton A. Goss, II By: /s/ Norton A. Goss, II
----------------------------------- ----------------------------
Name: Norton A. Goss, II Name: Norton A. Goss, II
Title: AVP Compliance Title: AVP Compliance
Date: _________________________________ Date:__________________________
|
EXHIBIT h(65)(c)
AMENDMENT NO. 2
PARTICIPATION AGREEMENT
The Participation Agreement, made and entered into as of the 17th day of April, 2000, and amended on May 1, 2000 (the "Agreement"), by and among AIM Variable Insurance Funds, a Delaware business trust, AIM Distributors, Inc., a Delaware corporation, Sun Life Insurance and Annuity Company of New York, a New York life insurance company ("Insurer"), and Clarendon Insurance Agency, Inc., a Massachusetts corporation, is hereby amended as follows:
Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
----------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE SEPARATE
POLICIES UTILIZING THE FUNDS ACCOUNTS
----------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) FUTURITY - NY VARIABLE AND FIXED
AIM V.I. Growth Fund Variable Account C ANNUITY CONTRACT
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
----------------------------------------------------------------------------------------------------------------------
SERIES (I) SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.)Variable FUTURITY ACCOLADE NY VARIABLE AND
AIM V.I. Growth Fund Account C FIXED ANNUITY CONTRACT
AIM V.I. Growth and Income Fund
AIM V.I. International Equity Fund
AIM V.I. Value Fund
----------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: September 1, 2001
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
-------------------------- --------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Nancy L. Martin By: /s/ Michael J. Cemo
-------------------------- --------------------------------
Name: Nancy L. Martin Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
Attest: /s/ Maura Murphy By: /s/ Ronald J. Fernandes
-------------------------- --------------------------------
Name: Maura Murphy Name: Ronald J. Fernandes
Title: Senior Counsel Title: Vice President, Retirement
Products & Services
By: /s/ Edward M. Shea
--------------------------------
Name: Edward M. Shea
Title: Assistant Vice President and
Senior Counsel
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ Maura Murphy By: /s/ Norton A. Goss, II
-------------------------- --------------------------------
Name: Maura Murphy Name: Norton A. Goss, II
Title: Senior Counsel Title: Assistant Vice President
By: /s/ George E. Maden
--------------------------------
Name: George E. Maden
Title: Secretary
|
EXHIBIT h(65)(d)
AMENDMENT NO. 3
PARTICIPATION AGREEMENT
The Participation Agreement, made and entered into as of the 17th day of April, 2000, and amended on May 1, 2000 and again on September 1, 2000, (the "Agreement"), by and among AIM Variable Insurance Funds, a Delaware business trust, A I M Distributors, Inc., a Delaware corporation, Sun Life Insurance and Annuity Company of New York, a New York life insurance company ("Insurer"), and Clarendon Insurance Agency, Inc. a Massachusetts corporation, is hereby amended as follows:
Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
---------------------------------- --------------------- ------------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY THE
POLICIES UTILIZING THE FUNDS SEPARATE ACCOUNTS
---------------------------------- --------------------- ------------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund
AIM.V.I. Growth Fund Sun Life (N.Y.) Futurity - NY Variable and Fixed
AIM V.I. Growth and Income Fund Variable Account C Annuity Contract
AIM V.I. International Growth Fund
---------------------------------- --------------------- ------------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund
AIM.V.I. Growth Fund Sun Life (N.Y.) Futurity Accolade - NY Variable and
AIM V.I. Growth and Income Fund Variable Account C Fixed Annuity Contract
AIM V.I. International Growth Fund
AIM V.I. Value Fund
---------------------------------- --------------------- ------------------------------------
SERIES II SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) All-Star
AIM V.I. International Growth Fund Variable Account C All-Star Freedom
AIM V.I. Premier Equity Fund All-Star Extra
---------------------------------- --------------------- ------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: April 1, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim A. Coppedge By: /s/ Carol F. Relihan
------------------------- ------------------------------
Name: Jim A. Coppedge Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim A. Coppedge By: /s/ Michael J. Cemo
------------------------- ------------------------------
Name: Jim A. Coppedge Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
Attest: /s/ Maura Murphy By: /s/ Edward M. Shea
------------------------- ------------------------------
Name: Maura Murphy Name: Edward M. Shea
Title: Senior Counsel Title: Assistant Vice President
and Senior Counsel
By: /s/ Philip K. Polkinghorn
------------------------------
Name: Philip K. Polkinghorn
Title: Vice President, Retirement
Products & Services
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ Maura Murphy By: /s/ George E. Maden
------------------------- -----------------------------
Name: Maura Murphy Name: George E. Maden
Title: Senior Counsel Title: Secretary and Clerk
By: /s/ William T. Evers
-----------------------------
Name: William T. Evers
Title: Assistant Secretary
|
EXHIBIT h(65)(e)
AMENDMENT NO. 4
PARTICIPATION AGREEMENT
The Participation Agreement, made and entered into as of the 17th day of April, 2000, and amended on May 1, 2000 and again on September 1, 2000, and again on April 1, 2002 (the "Agreement"), by and among AIM Variable Insurance Funds, a Delaware business trust, A I M Distributors, Inc., a Delaware corporation, Sun Life Insurance and Annuity Company of New York, a New York life insurance company ("Insurer"), and Clarendon Insurance Agency, Inc. a Massachusetts corporation, is hereby amended as follows:
Schedule A of the Agreement is deleted in its entirety and replaced with the following:
SCHEDULE A
---------------------------------- ---------------------- --------------------------------
FUNDS AVAILABLE UNDER THE SEPARATE ACCOUNTS CONTRACTS FUNDED BY
POLICIES UTILIZING THE FUNDS THE SEPARATE ACCOUNTS
---------------------------------- ---------------------- --------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund
AIM.V.I. Growth Fund Sun Life (N.Y.) Futurity - NY Variable and Fixed
AIM V.I. Growth and Income Fund Variable Account C Annuity Contract
AIM V.I. International Growth Fund
---------------------------------- ---------------------- --------------------------------
SERIES I SHARES
AIM V.I. Capital Appreciation Fund
AIM.V.I. Growth Fund Sun Life (N.Y.) Futurity Accolade - NY Variable
AIM V.I. Growth and Income Fund Variable Account C and Fixed Annuity Contract
AIM V.I. International Growth Fund
AIM V.I. Value Fund
---------------------------------- ---------------------- --------------------------------
SERIES I SHARES Sun Life (N.Y.) DVA
AIM V.I. Capital Appreciation Fund KBL Variable Account A
AIM.V.I. Growth Fund
AIM V.I. International Growth Fund
AIM V.I. Premier Equity Fund
---------------------------------- ---------------------- --------------------------------
SERIES II SHARES
AIM V.I. Capital Appreciation Fund Sun Life (N.Y.) All-Star
AIM V.I. International Growth Fund Variable Account C All-Star Freedom
AIM V.I. Premier Equity Fund All-Star Extra
---------------------------------- ---------------------- --------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: December 31, 2002
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim A. Coppedge By: /s/ Carol F. Relihan
-------------------------- -----------------------------
Name: Jim A. Coppedge Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim A. Coppedge By: /s/ Michael J. Cemo
-------------------------- -----------------------------
Name: Jim A. Coppedge Name: Michael J. Cemo
Title: Assistant Secretary Title: President
1
|
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF NEW YORK
Attest: /s/ Maura Murphy By: /s/ Edward M. Shea
-------------------------- -----------------------------
Name: Maura Murphy Name: Edward M. Shea
Title: Senior Counsel Title: Assistant Vice President and
Senior Counsel
By: /s/ Philip K. Polkinghom
-----------------------------
Name: Philip K. Polkinghom
Title: Vice President, Retirement
Products & Services
CLARENDON INSURANCE AGENCY, INC.
Attest: /s/ Maura Murphy By: /s/ George E. Maden
--------------------------- -----------------------------
Name: Maura Murphy Name: George E. Maden
Title: Senior Counsel Title: Secretary and Clerk
By: /s/ William T. Evers
-----------------------------
Name: William T. Evers
Title: Assistant Secretary
|
EXHIBIT h(79)(b)
AMENDMENT NO. 1
PARTICIPATION AGREEMENT
The Participation Agreement (the "Agreement"), dated July 24, 2001, by and among AIM Variable Insurance Funds, a Delaware trust, A I M Distributors, Inc., a Delaware corporation, Lincoln Benefit Life Insurance Company, a Nebraska life insurance company, and ALFS, 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
---------------------------------------------------------------------------------------------------------------------
SEPARATE
ACCOUNTS
FUNDS AVAILABLE UNDER THE UTILIZING THE CONTRACTS FUNDED BY THE
POLICIES FUNDS SEPARATE ACCOUNTS
---------------------------------------------------------------------------------------------------------------------
SERIES I SHARES
Lincoln Benefit Life - LBL Advantage
AIM V.I. Dent Demographic Trends Fund Variable Annuity Account
Lincoln Benefit Life - Consultant Accumulator VUL
Variable Life Account - Consultant Protector VUL
---------------------------------------------------------------------------------------------------------------------
SERIES II SHARES
AIM V.I. Capital Appreciation Fund
AIM V.I. Core Equity 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. International Growth Fund
AIM V.I. Money Market Fund
AIM V.I. Premier Equity Fund
---------------------------------------------------------------------------------------------------------------------
|
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Effective Date: December 18, 2002.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim Coppedge By: /s/ Carol F. Relihan
------------------------------- -----------------------------------
Name: Jim Coppedge Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
|
(SEAL)
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim Coppedge By: /s/ Michael J. Cemo
------------------------------- -----------------------------------
Name: Jim Coppedge Name: Michael J. Cemo
Title: Assistant Secretary Title: President
(SEAL)
LINCOLN BENEFIT LIFE COMPANY
Attest: /s/ Kari Stanway By: /s/ Timothy N. Vander Pas
------------------------------- -----------------------------------
Name : Kari Stanway Name: Timothy N. Vander Pas
Title: Fund Relationship Manager Title: Assistant Vice President
(SEAL)
ALFS, INC.
Attest: /s/ Kari Stanway By: /s/ John R. Hunter
------------------------------- -----------------------------------
Name: Kari Stanway Name: John R. Hunter
Title: Fund Relationship Manager Title: President
|
(SEAL)
EXHIBIT h(85)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
AUSA LIFE INSURANCE COMPANY, INC.,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AFSG SECURITIES CORPORATION
AS UNDERWRITER
OF VARIABLE CONTRACTS AND POLICIES
TABLE OF CONTENTS
Description Page Section 1. Available Funds.................................................................................. 4 1.1 Availability..................................................................................... 4 1.2 Addition, Deletion or Modification of Funds...................................................... 4 1.3 No Sales to the General Public................................................................... 4 Section 2. Processing Transactions.......................................................................... 4 2.1 Timely Pricing and Orders........................................................................ 4 2.2 Timely Payments.................................................................................. 5 2.3 Applicable Price................................................................................. 5 2.4 Dividends and Distributions...................................................................... 6 2.5 Book Entry....................................................................................... 6 Section 3. Costs and Expenses............................................................................... 6 3.1 General.......................................................................................... 6 3.2 Registration..................................................................................... 6 3.3 Other (Non-Sales-Related)........................................................................ 7 3.4 Other (Sales-Related)............................................................................ 7 3.5 Parties To Cooperate............................................................................. 7 Section 4. Legal Compliance................................................................................. 7 4.1 Tax Laws......................................................................................... 7 4.2 Insurance and Certain Other Laws................................................................. 10 4.3 Securities Laws.................................................................................. 10 4.4 Notice of Certain Proceedings and Other Circumstances............................................ 11 4.5 LIFE COMPANY To Provide Documents; Information About AVIF........................................ 12 4.6 VIF To Provide Documents; Information About LIFE COMPANY......................................... 13 Section 5. Mixed and Shared Funding......................................................................... 14 5.1 General.......................................................................................... 14 5.2 Disinterested Directors.......................................................................... 15 5.3 Monitoring for Material Irreconcilable Conflicts................................................. 15 5.4 Conflict Remedies................................................................................ 16 5.5 Notice to LIFE COMPANY........................................................................... 17 5.6 Information Requested by Board of Directors...................................................... 17 5.7 Compliance with SEC Rules........................................................................ 17 5.8 Other Requirements............................................................................... 18 Section 6. Termination...................................................................................... 18 6.1 Events of Termination............................................................................ 18 6.2 Notice Requirement for Termination............................................................... 19 6.3 Funds To Remain Available........................................................................ 19 6.4 Survival of Warranties and Indemnifications...................................................... 20 6.5 Continuance of Agreement for Certain Purposes.................................................... 20 Section 7. Parties To Cooperate Respecting Termination...................................................... 20 Section 8. Assignment....................................................................................... 20 Section 9. Notices.......................................................................................... 20 |
Section 10. Voting Procedures................................................................................ 21 Section 11. Foreign Tax Credits.............................................................................. 22 Section 12. Indemnification.................................................................................. 22 12.1 Of AVIF by LIFE COMPANY and UNDERWRITER.......................................................... 22 12.2 Of LIFE COMPANY and UNDERWRITER by AVIF.......................................................... 24 12.3 Effect of Notice................................................................................. 27 12.4 Successors....................................................................................... 27 Section 13. Applicable Law................................................................................... 27 Section 14. Execution in Counterparts........................................................................ 27 Section 15. Severability..................................................................................... 27 Section 16. Rights Cumulative................................................................................ 27 Section 17. Headings......................................................................................... 27 Section 18. Confidentiality.................................................................................. 28 Section 19. Trademarks and Fund Names........................................................................ 28 Section 20. Parties to Cooperate............................................................................. 29 |
[ ]
FORM OF PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of May, 2002 ("Agreement"), by and among AIM Variable Insurance Funds, a Maryland corporation ("AVIF"); AUSA Life Insurance Company, Inc., a New York company ("LIFE COMPANY"), on behalf of itself and each of its segregated asset accounts listed in Schedule A hereto, as the parties hereto may amend from time to time (each, an "Account," and collectively, the "Accounts"); and AFSG Securities Corporation, an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of eighteen separate series ("Series"), shares ("Shares") of each of which are registered under the Securities Act of 1933, as amended (the "1933 Act") and are currently sold to one or more separate accounts of life insurance companies to fund benefits under variable annuity contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto as the Parties hereto may amend from time to time (each a "Fund"; reference herein to "AVIF" includes reference to each Fund, to the extent the context requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity contracts and variable life insurance contracts ("Contracts") as set forth on Schedule A hereto, as the Parties hereto may amend from time to time, which Contracts (hereinafter collectively, the "Contracts"), if required by applicable law, will be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each of which may be divided into two or more subaccounts ("Subaccounts"; reference herein to an "Account" includes reference to each Subaccount thereof to the extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each of which is registered as a unit investment trust investment company under the 1940 Act (or exempt therefrom), and the security interests deemed to be issued by the Accounts under the Contracts will be registered as securities under the 1933 Act (or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
AVIF will make Shares of each Fund available to LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Directors of AVIF may refuse to sell Shares of any Fund to any person, or suspend or terminate the offering of Shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the Directors acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, such action is deemed in the best interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds to provide additional funding media for the Contracts, or to delete, combine, or modify existing Funds, by amending Schedule A hereto. Upon such amendment to Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall include a reference to any such additional Fund. Schedule A, as amended from time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
AVIF represents and warrants that no Shares of any Fund have been or will be sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) AVIF or its designated agent will use its best efforts to
provide LIFE COMPANY with the net asset value per Share for each Fund by 6:00
p.m. Central Time on each Business Day. As used herein, "Business Day" shall
mean any day on which (i) the New York Stock Exchange is open for regular
trading, (ii) AVIF calculates the Fund's net asset value, and (iii) LIFE COMPANY
is open for business.
(b) LIFE COMPANY will use the data provided by AVIF each Business Day pursuant to paragraph (a) immediately above to calculate Account unit values and to process transactions that receive that same Business Day's Account unit values. LIFE COMPANY will perform such Account processing the same Business Day, and will place corresponding orders to purchase or redeem Shares with AVIF by 9:00 a.m. Central Time the following Business Day; provided, however, that AVIF shall provide additional time to LIFE COMPANY in the event that AVIF is unable to meet the 6:00 p.m. time stated in paragraph (a) immediately above. Such additional time shall be equal to the additional time that AVIF takes to make the net asset values available to LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and redemption orders with respect to each Fund and shall transmit one net payment per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value information (as determined under SEC guidelines), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY.
2.2 TIMELY PAYMENTS.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from purchase payments, premium payments, surrenders and other transactions under Contracts (collectively, "Contract transactions") and that LIFE COMPANY receives prior to the close of regular trading on the New York Stock Exchange on a Business Day will be executed at the net asset values of the appropriate Funds next computed after receipt by AVIF or its designated agent of the orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the designated agent of AVIF for receipt of orders relating to Contract transactions on each Business Day and receipt by such designated agent shall constitute receipt by AVIF; provided that AVIF receives notice of such orders by 9:00 a.m. Central Time on the next following Business Day or such later time as computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY will be effected at the net asset values of the appropriate Funds next computed after receipt by AVIF or its designated agent of the order therefor, and such orders will be irrevocable.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written confirmation) on or prior to the payment date to LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY hereby elects to reinvest all dividends and capital gains distributions in additional Shares of the corresponding Fund at the ex-dividend date net asset values until LIFE COMPANY otherwise notifies AVIF in writing, it being agreed by the Parties that the ex-dividend date and the payment date with respect to any dividend or distribution will be the same Business Day. LIFE COMPANY reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash.
2.5 BOOK ENTRY.
Issuance and transfer of AVIF Shares will be by book entry only. Stock certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party will bear all expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
(a) AVIF will bear the cost of its registering as a management investment company under the 1940 Act and registering its Shares under the 1933 Act, and keeping such registrations current and effective; including, without limitation, the preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with respect to AVIF and its Shares and payment of all applicable registration or filing fees with respect to any of the foregoing.
(b) LIFE COMPANY will bear the cost of registering, to the extent required, each Account as a unit investment trust under the 1940 Act and registering units of interest under the Contracts under the 1933 Act and keeping such registrations current and effective; including, without limitation, the preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with respect to each Account and its units of interest and payment of all applicable registration or filing fees with respect to any of the foregoing.
3.3 OTHER (NON-SALES-RELATED).
(a) AVIF will bear, or arrange for others to bear, the costs of preparing, filing with the SEC and setting for printing AVIF's prospectus, statement of additional information and any amendments or supplements thereto (collectively, the "AVIF Prospectus"), periodic reports to shareholders, AVIF proxy material and other shareholder communications.
(b) LIFE COMPANY will bear the costs of preparing, filing with the SEC and setting for printing each Account's prospectus, statement of additional information and any amendments or supplements thereto (collectively, the "Account Prospectus"), any periodic reports to Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), voting instruction solicitation material, and other Participant communications.
(c) LIFE COMPANY will print in quantity and deliver to existing Participants the documents described in Section 3.3(b) above and the prospectus provided by AVIF in camera ready or computer diskette form. AVIF will print the AVIF statement of additional information, proxy materials relating to AVIF and periodic reports of AVIF.
3.4 OTHER (SALES-RELATED).
LIFE COMPANY will bear the expenses of distribution. These expenses would include by way of illustration, but are not limited to, the costs of distributing to Participants the following documents, whether they relate to the Account or AVIF: prospectuses, statements of additional information, proxy materials and periodic reports. These costs would also include the costs of preparing, printing, and distributing sales literature and advertising relating to the Funds, as well as filing such materials with, and obtaining approval from, the SEC, the NASD, any state insurance regulatory authority, and any other appropriate regulatory authority, to the extent required.
3.5 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in arranging to print, mail and/or deliver, in a timely manner, combined or coordinated prospectuses or other materials of AVIF and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) AVIF represents and warrants that each Fund is currently qualified as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and represents that it will use its best efforts to qualify and to maintain qualification of each Fund as a RIC. AVIF will notify LIFE COMPANY immediately upon
having a reasonable basis for believing that a Fund has ceased to so qualify or that it might not so qualify in the future.
(b) AVIF represents that it will use its best efforts to comply and to maintain each Fund's compliance with the diversification requirements set forth in Section 817(h) of the Code and Section 1.817-5(b) of the regulations under the Code. AVIF will notify LIFE COMPANY immediately upon having a reasonable basis for believing that a Fund has ceased to so comply or that a Fund might not so comply in the future. In the event of a breach of this Section 4.1(b) by AVIF, it will take all reasonable steps to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Section 1.817-5 of the regulations under the Code.
(c) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any Participant or any other claimant regarding any claims that could give rise to liability to AVIF or its affiliates as a result of such a failure or alleged failure; provided, however, that LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY to the IRS, any Participant or any other claimant in connection with any of the foregoing proceedings or contests (including, without limitation, any such materials to be submitted to the IRS pursuant to Treasury Regulations Section 1.817-5(a)(2)), (a) shall be provided by LIFE COMPANY to AVIF (together with any supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten (10) business days or such shorter period to which the Parties hereto agree prior to the day on which such proposed materials are to be submitted, and (b) shall not be submitted by LIFE COMPANY to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY shall not with respect to any claim of the IRS or any Participant that would give rise to a claim against AVIF or its affiliates (a) compromise or settle any claim, (b) accept any adjustment on audit, or (c) forego any allowable administrative or judicial appeals, without the express written consent of AVIF or its affiliates, which shall not be unreasonably withheld, provided that LIFE COMPANY shall not be required, after exhausting all administrative penalties, to appeal any adverse judicial decision unless AVIF or its affiliates shall have provided an opinion of independent counsel to the effect that a reasonable basis exists for taking such appeal; and provided further that the costs of any such appeal shall be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE COMPANY have any liability resulting from AVIF's refusal to accept the proposed settlement or compromise with respect to any failure caused by AVIF. As used in this Agreement, the term "affiliates" shall have the same meaning as "affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
(d) LIFE COMPANY represents and warrants that the Contracts currently are and will be treated as annuity contracts or life insurance contracts under applicable provisions of the
Code and that it will use its best efforts to maintain such treatment; LIFE COMPANY will notify AVIF immediately upon having a reasonable basis for believing that any of the Contracts have ceased to be so treated or that they might not be so treated in the future.
(e) LIFE COMPANY represents and warrants that each Account is a "segregated asset account" and that interests in each Account are offered exclusively through the purchase of or transfer into a "variable contract," within the meaning of such terms under Section 817 of the Code and the regulations thereunder. LIFE COMPANY will use its best efforts to continue to meet such definitional requirements, and it will notify AVIF immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) AVIF will use its best efforts to comply with any applicable state insurance laws or regulations, to the extent specifically requested in writing by LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance company duly organized, validly existing and in good standing under the laws of the State of New York and has full corporate power, authority and legal right to execute, deliver and perform its duties and comply with its obligations under this Agreement, (ii) it has legally and validly established and maintains each Account as a segregated asset account under the New York Insurance Code and the regulations thereunder, and (iii) the Contracts comply in all material respects with all other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Maryland and has full power, authority, and legal right to execute, deliver, and perform its duties and comply with its obligations under this Agreement.
4.3 SECURITIES LAWS.
(a) LIFE COMPANY represents and warrants that (i) interests in each Account pursuant to the Contracts will be registered under the 1933 Act to the extent required by the 1933 Act, (ii) the Contracts will be duly authorized for issuance and sold in compliance with all applicable federal and state laws, including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and New York law, (iii) each Account is and will remain registered under the 1940 Act, to the extent required by the 1940 Act, (iv) each Account does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, to the extent required, (v) each Account's 1933 Act registration statement relating to the Contracts, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder, (vi) LIFE COMPANY will amend the registration statement
for its Contracts under the 1933 Act and for its Accounts under the 1940 Act from time to time as required in order to effect the continuous offering of its Contracts or as may otherwise be required by applicable law, and (vii) each Account Prospectus will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this Agreement will be registered under the 1933 Act to the extent required by the 1933 Act and duly authorized for issuance and sold in compliance with Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to the extent required by the 1940 Act, (iii) AVIF will amend the registration statement for its Shares under the 1933 Act and itself under the 1940 Act from time to time as required in order to effect the continuous offering of its Shares, (iv) AVIF does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act registration statement, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and rules thereunder, and (vi) AVIF's Prospectus will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in accordance with the laws of any state or other jurisdiction if and to the extent reasonably deemed advisable by AVIF.
(d) AVIF represents and warrants that all of its trustees, officers, employees, investment advisers, and other individuals/entities having access to the funds and/or securities of the Fund are and continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF will immediately notify LIFE COMPANY of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to AVIF's registration statement under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to such registration statement or AVIF Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of AVIF's Shares, or (iv) any other action or circumstances that may prevent the lawful offer or sale of Shares of any Fund in any state or
jurisdiction, including, without limitation, any circumstances in which (a) such Shares are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law, or (b) such law precludes the use of such Shares as an underlying investment medium of the Contracts issued or to be issued by LIFE COMPANY. AVIF will make every reasonable effort to prevent the issuance, with respect to any Fund, of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
(b) LIFE COMPANY will immediately notify AVIF of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to each Account's registration statement under the 1933 Act relating to the Contracts or each Account Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Account Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of each Account's interests pursuant to the Contracts, or (iv) any other action or circumstances that may prevent the lawful offer or sale of said interests in any state or jurisdiction, including, without limitation, any circumstances in which said interests are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law. LIFE COMPANY will make every reasonable effort to prevent the issuance of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of all SEC registration statements, Account Prospectuses, reports, any preliminary and final voting instruction solicitation material, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to each Account or the Contracts, contemporaneously with the filing of such document with the SEC or other regulatory authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which AVIF or any of its affiliates is named, at least
five (5) Business Days prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be used if
AVIF or its designated agent objects to such use within five (5) Business Days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. AVIF hereby designates AIM as the entity to
receive such sales literature, until such time as AVIF appoints another
designated agent by giving notice to LIFE COMPANY in the manner required by
Section 9 hereof.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
AVIF or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating
to Shares, as such registration statement and AVIF Prospectus may be amended from time to time; or (ii) in reports or proxy materials for AVIF; or (iii) in published reports for AVIF that are in the public domain and approved by AVIF for distribution; or (iv) in sales literature or other promotional material approved by AVIF, except with the express written permission of AVIF.
(d) LIFE COMPANY shall adopt and implement procedures reasonably designed to ensure that information concerning AVIF and its affiliates that is intended for use only by brokers or agents selling the Contracts (i.e., information that is not intended for distribution to Participants) ("broker only materials") is so used, and neither AVIF nor any of its affiliates shall be liable for any losses, damages or expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (e.g., on-line networks such as the Internet or other electronic messages), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of all SEC registration statements, AVIF Prospectuses, reports, any preliminary and final proxy material, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to AVIF or the Shares of a Fund, contemporaneously with the filing of such document with the SEC or other regulatory authorities.
(b) AVIF will provide to LIFE COMPANY camera ready or computer diskette copies of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF statements of additional information, proxy materials, periodic reports to shareholders and other materials required by law to be sent to Participants who have allocated any Contract value to a Fund. AVIF will provide such copies to LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may be, to print and distribute such materials within the time required by law to be furnished to Participants.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, or any of its respective affiliates is named, or that refers to the Contracts, at least five (5) Business Days prior to its use or such shorter period as the Parties hereto may, from time to time, agree upon. No such material shall be used if LIFE COMPANY or its designated agent objects to such use within five (5) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time
to time, agree upon. LIFE COMPANY shall receive all such sales literature until such time as it appoints a designated agent by giving notice to AVIF in the manner required by Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any information or make any representations or statements on behalf of or concerning LIFE COMPANY, each Account, or the Contracts other than (i) the information or representations contained in the registration statement, including each Account Prospectus contained therein, relating to the Contracts, as such registration statement and Account Prospectus may be amended from time to time; or (ii) in published reports for the Account or the Contracts that are in the public domain and approved by LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, and its respective affiliates that is intended for use only by brokers or agents selling the Contracts (i.e., information that is not intended for distribution to Participants) ("broker only materials") is so used, and neither LIFE COMPANY, nor any of its respective affiliates shall be liable for any losses, damages or expenses relating to the improper use of such broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (e.g., on-line networks such as the Internet or other electronic messages), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
The SEC has granted an order to AVIF exempting it from certain provisions of the 1940 Act and rules thereunder so that AVIF may be available for investment by certain other entities, including, without limitation, separate accounts funding variable annuity contracts or variable life insurance contracts, separate accounts of insurance companies unaffiliated with LIFE
COMPANY, and trustees of qualified pension and retirement plans (collectively, "Mixed and Shared Funding"). The Parties recognize that the SEC has imposed terms and conditions for such orders that are substantially identical to many of the provisions of this Section 5. Sections 5.2 through 5.8 below shall apply pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of directors a majority of whom (the "Disinterested Directors") are not interested persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the rules thereunder and as modified by any applicable orders of the SEC, except that if this condition is not met by reason of the death, disqualification, or bona fide resignation of any director, then the operation of this condition shall be suspended (a) for a period of forty-five (45) days if the vacancy or vacancies may be filled by the Board; (b) for a period of sixty (60) days if a vote of shareholders is required to fill the vacancy or vacancies; or (c) for such longer period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
AVIF agrees that its Board of Directors will monitor for the existence of any material irreconcilable conflict between the interests of the Participants in all separate accounts of life insurance companies utilizing AVIF ("Participating Insurance Companies"), including each Account, and participants in all qualified retirement and pension plans investing in AVIF ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Directors of AVIF of the existence of or any potential for any such material irreconcilable conflict of which it is aware. The concept of a "material irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder, but the Parties recognize that such a conflict may arise for a variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract and variable life insurance contract Participants or by Participants of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist the Board of Directors in carrying out its responsibilities by providing the Board of Directors with all information reasonably necessary for the Board of Directors to consider any issue raised, including information as to a decision by LIFE COMPANY to disregard voting instructions of Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the members of the Board of Directors or a majority of the Disinterested Directors that a material irreconcilable conflict exists, LIFE COMPANY will, if it is a Participating Insurance Company for which a material irreconcilable conflict is relevant, at its own expense and to the extent reasonably practicable (as determined by a majority of the Disinterested Directors), take whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts from AVIF or any Fund and reinvesting such assets in a different investment medium, including another Fund of AVIF, or submitting the question whether such segregation should be implemented to a vote of all affected Participants and, as appropriate, segregating the assets of any particular group (e.g., annuity Participants, life insurance Participants or all Participants) that votes in favor of such segregation, or offering to the affected Participants the option of making such a change; and
(ii) establishing a new registered investment company of the type defined as a "management company" in Section 4(3) of the 1940 Act or a new separate account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY may be required, at AVIF's election, to withdraw each Account's investment in AVIF or any Fund. No charge or penalty will be imposed as a result of such withdrawal. Any such withdrawal must take place within six (6) months after AVIF gives notice to LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Directors informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors will determine whether or not any proposed action adequately remedies any material irreconcilable conflict. In no event, however, will AVIF or any of its affiliates be required to establish a new funding medium for any Contracts. LIFE COMPANY will not be required by the terms hereof to establish a new funding medium for any Contracts if an offer to do so has been declined by vote of a majority of Participants materially adversely affected by the material irreconcilable conflict.
5.5 NOTICE TO LIFE COMPANY.
AVIF will promptly make known in writing to LIFE COMPANY the Board of Directors' determination of the existence of a material irreconcilable conflict, a description of the facts that give rise to such conflict and the implications of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Directors of AVIF such reports, materials or data as the Board of Directors may reasonably request so that the Board of Directors may fully carry out the obligations imposed upon it by the provisions hereof or any exemptive order granted by the SEC to permit Mixed and Shared Funding, and said reports, materials and data will be submitted at any reasonable time deemed appropriate by the Board of Directors. All reports received by the Board of Directors of potential or existing conflicts, and all Board of Directors actions with regard to determining the existence of a conflict, notifying Participating Insurance Companies and Participating Plans of a conflict, and determining whether any proposed action adequately remedies a conflict, will be properly recorded in the minutes of the Board of Directors or other appropriate records, and such minutes or other records will be made available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which AVIF is serving as an investment medium for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to Mixed and Shared Funding, AVIF agrees that it will comply with the terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with the terms and conditions of such exemptive relief that is afforded by any of said rules that are applicable.
5.8 OTHER REQUIREMENTS.
AVIF will require that each Participating Insurance Company and Participating Plan enter into an agreement with AVIF that contains in substance the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the Fund, upon six (6) months advance written notice to the other parties, or, if later, upon receipt of any required exemptive relief from the SEC, unless otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY's obligations under this Agreement or related to the sale of the Contracts, the operation of each Account, or the purchase of Shares, if, in each case, AVIF reasonably determines that such proceedings, or the facts on which such proceedings would be based, have a material likelihood of imposing material adverse consequences on the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of LIFE COMPANY upon institution of formal proceedings against AVIF, its principal underwriter, or its investment adviser by the NASD, the SEC, or any state insurance regulator or any other regulatory body regarding AVIF's obligations under this Agreement or related to the operation or management of AVIF or the purchase of AVIF Shares, if, in each case, LIFE COMPANY reasonably determines that such proceedings, or the facts on which such proceedings would be based, have a material likelihood of imposing material adverse consequences on LIFE COMPANY, or the Subaccount corresponding to the Fund with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are not registered and, in all material respects, issued and sold in accordance with any applicable federal or state law, or (ii) such law precludes the use of such Shares as an underlying investment medium of the Contracts issued or to be issued by LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY cease to qualify as annuity contracts or life insurance contracts under the Code (other than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M of the Code) or if interests in an Account under the Contracts are not registered, where required, and, in all material respects, are not issued or sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this Agreement.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until the Party terminating this Agreement gives prior written notice to the other Party to this Agreement of its intent to terminate, and such notice shall set forth the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at least six (6) months in advance of the effective date of termination unless a shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at least ninety (90) days in advance of the effective date of termination unless a shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written notice shall be given as soon as possible within twenty-four (24) hours after the terminating Party learns of the event causing termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, AVIF will, at the option of LIFE COMPANY, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Fund (as in effect on such date), redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this
Section 6.3 will not apply to any terminations under Section 5 and the effect of such terminations will be governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS.
All warranties and indemnifications will survive the termination of this Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES.
If any Party terminates this Agreement with respect to any Fund pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this Agreement shall nevertheless continue in effect as to any Shares of that Fund that are outstanding as of the date of such termination (the "Initial Termination Date"). This continuation shall extend to the earlier of the date as of which an Account owns no Shares of the affected Fund or a date (the "Final Termination Date") six (6) months following the Initial Termination Date, except that LIFE COMPANY may, by written notice shorten said six (6) month period in the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to one another in taking all necessary and appropriate steps for the purpose of ensuring that an Account owns no Shares of a Fund after the Final Termination Date with respect thereto, or, in the case of a termination pursuant to Section 6.1(a), the termination date specified in the notice of termination. Such steps may include combining the affected Account with another Account, substituting other mutual fund shares for those of the affected Fund, or otherwise terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted by Section 9 hereof will be given by means mutually acceptable to the Parties concerned. Each other notice or communication required or permitted by this Agreement will be given to the following persons at the following addresses and facsimile numbers, or such other persons, addresses or facsimile numbers as the Party receiving such notices or communications may subsequently direct in writing:
AIM VARIABLE INSURANCE FUNDS
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
AUSA LIFE INSURANCE COMPANY, INC.
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
Facsimile: (319) 297-8290
Attn: Frank A. Camp, Division General Counsel
AFSG SECURITIES CORPORATION
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-0001
Facsimile: (319) 369-2589
Attn: Lisa A. Wachendorf, Chief Compliance Officer
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY will distribute all proxy material furnished by AVIF to Participants to whom pass-through voting privileges are required to be extended and will solicit voting instructions from Participants. LIFE COMPANY will vote Shares in accordance with timely instructions received from Participants. LIFE COMPANY will vote Shares that are (a) not attributable to Participants to whom pass-through voting privileges are extended, or (b) attributable to Participants, but for which no timely instructions have been received, in the same proportion as Shares for which said instructions have been received from Participants, so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass through voting privileges for Participants. Neither LIFE COMPANY nor any of its affiliates will in any way recommend action in connection with or oppose or interfere with the solicitation of proxies for the Shares held for such Participants. LIFE COMPANY reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. LIFE COMPANY shall be responsible for assuring that each of its Accounts holding Shares calculates voting privileges in a manner consistent with that of other Participating Insurance Companies or in the manner required by the Mixed and Shared Funding exemptive order obtained by AVIF. AVIF will notify LIFE COMPANY of any changes of interpretations or amendments to Mixed and Shared Funding exemptive order it has obtained. AVIF will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular, AVIF either will provide for annual meetings (except insofar as the SEC may interpret
Section 16 of the 1940 Act not to require such meetings) or will comply with
Section 16(c) of the 1940 Act (although AVIF is not one of the trusts described
in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, AVIF will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY concerning any decision to elect or not to elect pursuant to Section 853 of the Code to pass through the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF BY LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, its affiliates, and each person, if any, who controls AVIF or its affiliates within the meaning of Section 15 of the 1933 Act and each of their respective directors and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of LIFE COMPANY and UNDERWRITER) or actions in respect thereof (including, to the extent reasonable, legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise; provided, the Account owns shares of the Fund and insofar as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Account's 1933 Act registration statement, any Account Prospectus, the Contracts, or sales literature or advertising for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY or UNDERWRITER by or on behalf of AVIF for use in any Account's 1933 Act registration statement, any Account Prospectus, the Contracts, or sales literature or advertising or otherwise for use in connection with the sale of Contracts or Shares (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or representations (other than statements or representations contained in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of LIFE COMPANY, UNDERWRITER or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, UNDERWRITER or their respective affiliates or persons under their control (including, without limitation, their employees and "Associated Persons," as that term is defined in paragraph (m) of Article I of the NASD's By-Laws), in connection with the sale or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon and in conformity with information furnished to AVIF or its affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or their respective affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER to perform the obligations, provide the services and furnish the materials required of them under the terms of this Agreement, or any material breach of any representation and/or warranty made by LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY to qualify as annuity contracts or life insurance contracts under the Code, otherwise than by reason of any Fund's failure to comply with Subchapter M or Section 817(h) of the Code.
(b) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this Section 12.1 with respect to any losses, claims, damages, liabilities or actions to which an Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance by that Indemnified Party of its duties or by reason of that Indemnified Party's reckless disregard of obligations or duties (i) under this Agreement, or (ii) to AVIF.
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF shall have notified LIFE COMPANY and UNDERWRITER in writing within a reasonable time after the summons or other first legal process giving information of the nature of the action shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify LIFE COMPANY and UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER from any liability which they may have to the Indemnified Party against whom such action is brought otherwise than on account of this Section 12.1. Except as otherwise provided herein, in case any such action is brought against an Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled to participate, at their own expense, in the defense of such action and also shall be entitled to assume the defense thereof, with counsel approved by the Indemnified Party named in the action, which approval shall not be unreasonably withheld. After notice from LIFE COMPANY or UNDERWRITER to such Indemnified Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANY nor UNDERWRITER will be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof, other than reasonable costs of investigation.
12.2 OF LIFE COMPANY AND UNDERWRITER BY AVIF.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF agrees to indemnify and hold harmless LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective directors and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of AVIF) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law, or otherwise; provided, the Account owns shares of the Fund and insofar as
such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's 1933 Act registration statement, AVIF Prospectus or sales literature or advertising of AVIF (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to AVIF or its affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or their respective
affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, or in sales literature or advertising or otherwise for use in connection with the sale of Contracts or Shares (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or representations (other than statements or representations contained in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising for the Contracts, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of AVIF or its affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF or its affiliates or persons under its control (including, without limitation, their employees and "Associated Persons" as that term is defined in Section (n) of Article I of the NASD By-Laws), in connection with the sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF for use in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF to perform the obligations, provide the services and furnish the materials required of it under the terms of this Agreement, or any material breach of any representation and/or warranty made by AVIF in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF agrees to indemnify and hold harmless the Indemnified
Parties from and against any and all losses, claims, damages, liabilities
(including amounts paid in settlement thereof with, the written consent of AVIF)
or actions in respect thereof (including, to the extent reasonable, legal and
other expenses) to which the Indemnified Parties may become subject directly or
indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including,
without limitation, any income taxes and related penalties, rescission charges, liability under state law to Participants asserting liability against LIFE COMPANY pursuant to the Contracts, the costs of any ruling and closing agreement or other settlement with the IRS, and the cost of any substitution by LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY reasonably deems necessary or appropriate as a result of the noncompliance.
(c) AVIF shall not be liable under this Section 12.2 with respect to any losses, claims, damages, liabilities or actions to which an Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance by that Indemnified Party of its duties or by reason of such Indemnified Party's reckless disregard of its obligations and duties (i) under this Agreement, or (ii) to LIFE COMPANY, UNDERWRITER, each Account or Participants.
(d) AVIF shall not be liable under this Section 12.2 with respect to any action against an Indemnified Party unless the Indemnified Party shall have notified AVIF in writing within a reasonable time after the summons or other first legal process giving information of the nature of the action shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify AVIF of any such action shall not relieve AVIF from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this Section 12.2. Except as otherwise provided herein, in case any such action is brought against an Indemnified Party, AVIF will be entitled to participate, at its own expense, in the defense of such action and also shall be entitled to assume the defense thereof (which shall include, without limitation, the conduct of any ruling request and closing agreement or other settlement proceeding with the IRS), with counsel approved by the Indemnified Party named in the action, which approval shall not be unreasonably withheld. After notice from AVIF to such Indemnified Party of AVIF's election to assume the defense thereof, the Indemnified Party will cooperate fully with AVIF and shall bear the fees and expenses of any additional counsel retained by it, and AVIF will not be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof, other than reasonable costs of investigation.
(e) In no event shall AVIF be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, UNDERWRITER or any other Participating Insurance Company or any Participant, with respect to any losses, claims, damages, liabilities or expenses that arise out of or result from (i) a breach of any representation, warranty, and/or covenant made by LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY or any Participating Insurance Company to maintain its segregated asset account (which invests in any Fund) as a legally and validly established segregated asset account under applicable state law and as a duly registered unit investment trust under the provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by LIFE COMPANY or any Participating Insurance Company to maintain its variable annuity or life insurance contracts (with respect to
which any Fund serves as an underlying funding vehicle) as annuity contracts or life insurance contracts under applicable provisions of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party referred to in Sections 12.1(c) or 12.2(d) above of participation in or control of any action by the indemnifying Party will in no event be deemed to be an admission by the indemnifying Party of liability, culpability or responsibility, and the indemnifying Party will remain free to contest liability with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted under and in accordance with Maryland law, without regard for that state's principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts, each of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement will not be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, that the Parties are entitled to under federal and state laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes of reference only and shall not limit or define the meaning of the provisions of this Agreement.
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of LIFE COMPANY
or any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY Protected Parties' customers who
also maintain accounts directly with AVIF, AVIF will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
acknowledges that the identities of the customers of AVIF or any of its
affiliates (collectively, the "AVIF Protected Parties" for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the AVIF Protected
Parties or any of their employees or agents in connection with AVIF's
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of
any list or compilation of the identities of or other information about the AVIF
Protected Parties' customers or any other information or property of the AVIF
Protected Parties, other than such information as may be independently developed
or compiled by LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with AVIF's prior written consent; or (b) as required by
law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) A I M Management Group Inc. ("AIM" or "licensor"), an affiliate of AVIF, owns all right, title and interest in and to the name, trademark and service mark "AIM" and such other tradenames, trademarks and service marks as may be set forth on Schedule B, as amended from time to time by written notice from AIM to LIFE COMPANY (the "AIM licensed marks" or the "licensor's licensed marks") and is authorized to use and to license other persons to use such marks. LIFE COMPANY and its affiliates are hereby granted a non-exclusive license to use the AIM licensed marks in connection with LIFE COMPANY's performance of the services
contemplated under this Agreement, subject to the terms and conditions set forth in this Section 19.
(b) The grant of license to LIFE COMPANY and its affiliates ( the "licensee") shall terminate automatically upon termination of this Agreement. Upon automatic termination, the licensee shall cease to use the licensor's licensed marks, except that LIFE COMPANY shall have the right to continue to service any outstanding Contracts bearing any of the AIM licensed marks. Upon AIM's elective termination of this license, LIFE COMPANY and its affiliates shall immediately cease to issue any new annuity or life insurance contracts bearing any of the AIM licensed marks and shall likewise cease any activity which suggests that it has any right under any of the AIM licensed marks or that it has any association with AIM, except that LIFE COMPANY shall have the right to continue to service outstanding Contracts bearing any of the AIM licensed marks.
(c) The licensee shall obtain the prior written approval of the licensor for the public release by such licensee of any materials bearing the licensor's licensed marks. The licensor's approvals shall not be unreasonably withheld.
(d) During the term of this grant of license, a licensor may request that a licensee submit samples of any materials bearing any of the licensor's licensed marks which were previously approved by the licensor but, due to changed circumstances, the licensor may wish to reconsider. If, on reconsideration, or on initial review, respectively, any such samples fail to meet with the written approval of the licensor, then the licensee shall immediately cease distributing such disapproved materials. The licensor's approval shall not be unreasonably withheld, and the licensor, when requesting reconsideration of a prior approval, shall assume the reasonable expenses of withdrawing and replacing such disapproved materials. The licensee shall obtain the prior written approval of the licensor for the use of any new materials developed to replace the disapproved materials, in the manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that, to the best of the knowledge of the licensee, the licensor's licensed marks are valid and enforceable trademarks and/or service marks and that such licensee does not own the licensor's licensed marks and claims no rights therein other than as a licensee under this Agreement; (ii) agrees never to contend otherwise in legal proceedings or in other circumstances; and (iii) acknowledges and agrees that the use of the licensor's licensed marks pursuant to this grant of license shall inure to the benefit of the licensor.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and all appropriate governmental authorities (including, without limitation, the SEC, the NASD and state insurance regulators) and will permit each other and such authorities reasonable access to its books and records (including copies thereof) in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers signing below.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Nancy L. Martin By: /s/ Carol F. Relihan
--------------------------- --------------------------------
Name: Nancy L. Martin Name: Carol F. Relihan
Title: Assistant Secretary Title: Senior Vice President
AUSA LIFE INSURANCE COMPANY, INC.,
on behalf of itself and its separate
accounts
Attest: /s/ Frank A. Camp By: /s/ Larry N. Norman
-------------------------- --------------------------------
Name: Frank A. Camp Name: Larry N. Norman
Title: Vice President Title: Vice President
AFSG SECURITIES CORPORATION
Attest: /s/ Frank A. Camp By: /s/ Lisa A. Wachendorf
-------------------------- --------------------------------
Name: Frank A. Camp Name: Lisa A. Wachendorf
Title: Secretary Title: Vice President and Chief
Compliance Officer
|
SCHEDULE A
SERIES II SHARES
--------------------------------------------------------------------------------------------------------------------------
FUNDS AVAILABLE SEPARATE ACCOUNTS POLICIES FUNDED
UNDER THE POLICIES UTILIZING THE FUNDS BY THE SEPARATE ACCOUNTS
--------------------------------------------------------------------------------------------------------------------------
- AIM V.I. Basic Value Fund Separate Account VA BNY AUSA Life Insurance Company,
- AIM V.I. Capital Appreciation Inc. Policy Form No. AV343 101
Fund 90 396 under the marketing name
"AUSA Landmark Variable
Annuity"
------------------------------------------------ ------------------------------------- -----------------------------------
|
EXHIBIT h(86)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS,
A I M DISTRIBUTORS, INC.,
CUNA MUTUAL LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
CUNA BROKERAGE SERVICES, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
Section 1. Available Funds...................................................................................... 2
1.1 Availability................................................................................... 2
1.2 Addition, Deletion or Modification of Funds.................................................... 2
1.3 No Sales to the General Public................................................................. 2
Section 2. Processing Transactions.............................................................................. 3
2.1 Timely Pricing and Orders...................................................................... 3
2.2 Timely Payments................................................................................ 3
2.3 Applicable Price............................................................................... 4
2.4 Dividends and Distributions.................................................................... 4
2.5 Book Entry..................................................................................... 4
Section 3. Costs and Expenses................................................................................... 5
3.1 General........................................................................................ 5
3.2 Parties To Cooperate........................................................................... 5
Section 4. Legal Compliance..................................................................................... 5
4.1 Tax Laws....................................................................................... 5
4.2 Insurance and Certain Other Laws............................................................... 7
4.3 Securities Laws................................................................................ 8
4.4 Notice of Certain Proceedings and Other Circumstances.......................................... 9
4.5 LIFE COMPANY To Provide Documents; Information About AVIF...................................... 9
4.6 AVIF To Provide Documents; Information About LIFE COMPANY...................................... 10
Section 5. Mixed and Shared Funding............................................................................. 12
5.1 General........................................................................................ 12
5.2 Disinterested Trustees......................................................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts............................................... 12
5.4 Conflict Remedies.............................................................................. 13
5.5 Notice to LIFE COMPANY......................................................................... 14
5.6 Information Requested by Board of Trustees..................................................... 14
5.7 Compliance with SEC Rules...................................................................... 15
5.8 Other Requirements............................................................................. 15
Section 6. Termination.......................................................................................... 15
6.1 Events of Termination.......................................................................... 15
6.2 Notice Requirement for Termination............................................................. 16
6.3 Funds To Remain Available...................................................................... 16
6.4 Survival of Warranties and Indemnifications.................................................... 17
6.5 Continuance of Agreement for Certain Purposes.................................................. 17
Section 7. Parties To Cooperate Respecting Termination.......................................................... 17
Section 8. Assignment........................................................................................... 17
Section 9. Notices.............................................................................................. 17
Section 10. Voting Procedures................................................................................... 18
Section 11. Foreign Tax Credits................................................................................. 18
Section 12. Indemnification..................................................................................... 18
|
12.1 Of AVIF and AIM by LIFE COMPANY and UNDERWRITER................................................ 18
12.2 Of LIFE COMPANY and UNDERWRITER by AVIF and AIM................................................ 21
12.3 Effect of Notice............................................................................... 23
12.4 Successors..................................................................................... 23
Section 13. Applicable Law...................................................................................... 23
Section 14. Execution in Counterparts........................................................................... 24
Section 15. Severability........................................................................................ 24
Section 16. Rights Cumulative................................................................................... 24
Section 17. Headings............................................................................................ 24
Section 18. Confidentiality..................................................................................... 24
Section 19. Trademarks and Fund Names........................................................................... 25
Section 20. Parties to Cooperate................................................................................ 25
Section 21. Amendments.......................................................................................... 25
|
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of October, 2002 ("Agreement"), by and among AIM Variable Insurance Funds, a Delaware Trust ("AVIF"), AIM Distributors, Inc., a Delaware corporation ("AIM"), CUNA Mutual Life Insurance Company, an Iowa life insurance company ("LIFE COMPANY"), on behalf of itself and each of its segregated asset accounts listed in Schedule A hereto, as the parties hereto may amend from time to time (each, an "Account," and collectively, the "Accounts"); and CUNA Brokerage Services, Inc., an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("UNDERWRITER") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of eighteen separate series ("Series"), shares ("Shares") each of which are registered under the Securities Act of 1933, as amended (the "1933 Act") and are currently sold to one or more separate accounts of life insurance companies to fund benefits under variable annuity contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto as the Parties hereto may amend from time to time (each a "Fund"; reference herein to "AVIF" includes reference to each Fund, to the extent the context requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity contracts and variable life insurance contracts ("Contracts") as set forth on Schedule A hereto, as the Parties hereto may amend from time to time, which Contracts (hereinafter collectively, the "Contracts"), will not be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each of which may be divided into two or more subaccounts ("Subaccounts"; reference herein to an "Account" includes reference to each Subaccount thereof to the extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each of which has not been nor will be registered as a unit investment trust investment company under the 1940 Act and the security interests deemed to be issued by the Accounts under the Contracts will not be registered as securities under the 1933 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, AIM is a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY
AVIF will make Shares of each Fund available to LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Trustees of AVIF may refuse to sell Shares of any Fund to any person, or suspend or terminate the offering of Shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the Trustees acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, such action is deemed in the best interests of the shareholders of such Fund.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS
The Parties hereto may agree, from time to time, to add other Funds to provide additional funding media for the Contracts, or to delete, combine, or modify existing Funds, by amending Schedule A hereto. Upon such amendment to Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall include a reference to any such additional Fund. Schedule A, as amended from time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC
AVIF represents and warrants that no Shares of any Fund have been or will be sold to the general public, it is understood by the Parties that AVIF may sell shares of any Fund to any person eligible to invest in that Fund in accordance with applicable provisions of Section 817(h) of the Code and the regulations thereunder, and that if such provisions are not applicable, then AVIF may sell shares of any Fund to any person, including members of the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS
(a) AVIF or its designated agent will use its best efforts to
provide LIFE COMPANY with the net asset value per Share for each Fund by 5:30
p.m. Central Time on each Business Day. As used herein, "Business Day" shall
mean any day on which (i) the New York Stock Exchange is open for regular
trading, (ii) AVIF calculates the Fund's net asset value, and (iii) LIFE COMPANY
is open for business.
(b) LIFE COMPANY will use the data provided by AVIF each Business Day pursuant to paragraph (a) immediately above to calculate Account unit values and to process transactions that receive that same Business Day's Account unit values. LIFE COMPANY will perform such Account processing the same Business Day, and will place corresponding orders to purchase or redeem Shares with AVIF by 9:00 a.m. Central Time the following Business Day; provided, however, that AVIF shall provide additional time to LIFE COMPANY in the event that AVIF is unable to meet the 5:30 p.m. time stated in paragraph (a) immediately above. Such additional time shall be equal to the additional time that AVIF takes to make the net asset values available to LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and redemption orders with respect to each Fund and shall transmit one net payment per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value information (as determined under SEC guidelines), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY. Materiality and reprocessing cost reimbursement shall be determined in accordance with standards established by the Parties as provided in Schedule B, attached hereto and incorporated herein.
2.2 TIMELY PAYMENTS
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
2.3 APPLICABLE PRICE
(a) Share purchase payments and redemption orders that result from purchase payments, premium payments, surrenders and other transactions under Contracts (collectively, "Contract transactions") and that LIFE COMPANY receives prior to the close of regular trading on the New York Stock Exchange on a Business Day will be executed at the net asset values of the appropriate Funds next computed after receipt by AVIF or its designated agent of the orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the designated agent of AVIF for receipt of orders relating to Contract transactions on each Business Day and receipt by such designated agent shall constitute receipt by AVIF; provided that AVIF receives notice of such orders by 9:00 a.m. Central Time on the next following Business Day or such later time as computed in accordance with Section 2.1(b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY will be effected at the net asset values of the appropriate Funds next computed after receipt by AVIF or its designated agent of the order therefor, and such orders will be irrevocable.
(c) Notwithstanding any provision of the Agreement to the contrary, the Parties agree that AVIF shall determine the applicable price for Share orders attributable to Contracts funded by unregistered Accounts in accordance with Section 2.3(a) hereof, provided that LIFE COMPANY represents and warrants that it is legally or contractually obligated to treat such orders in the same manner as orders attributable to Contracts funded by registered Accounts. Each Share order placed by LIFE COMPANY that is attributable, in whole or in part, to Contracts funded by an unregistered Account, shall be deemed to constitute such representation and warranty by LIFE COMPANY unless the order specifically states to the contrary. Otherwise, AVIF shall determine the applicable price for Share orders attributable to Contracts funded by unregistered Accounts in accordance with Section 2.3(b) hereof. As used herein, an Account is registered if it is registered under the 1940 Act.
2.4 DIVIDENDS AND DISTRIBUTIONS
AVIF will furnish notice by wire or telephone (followed by written confirmation) on or prior to the payment date to LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY hereby elects to reinvest all dividends and capital gains distributions in additional Shares of the corresponding Fund at the ex-dividend date net asset values until LIFE COMPANY otherwise notifies AVIF in writing, it being agreed by the Parties that the ex-dividend date and the payment date with respect to any dividend or distribution will be the same Business Day. LIFE COMPANY reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash.
2.5 BOOK ENTRY
Issuance and transfer of AVIF Shares will be by book entry only. Stock certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL
Except as otherwise specifically provided in Schedule C, attached hereto and made a part hereof, each Party will bear, or arrange for others to bear, all expenses incident to its performance under this Agreement.
3.2 PARTIES TO COOPERATE
Each Party agrees to cooperate with the others, as applicable, in arranging to print, mail and/or deliver, in a timely manner, combined or coordinated prospectuses or other materials of AVIF and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS
(a) AVIF represents and warrants that each Fund is currently qualified as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and represents that it will qualify and to maintain qualification of each Fund as a RIC. AVIF will notify LIFE COMPANY immediately upon having a reasonable basis for believing that a Fund has ceased to so qualify or that it might not so qualify in the future.
(b) AVIF represents that it will comply and to maintain each Fund's compliance with the diversification requirements set forth in Section 817(h) of the Code and Section 1.817-5(b) of the regulations under the Code. AVIF will notify LIFE COMPANY immediately upon having a reasonable basis for believing that a Fund has ceased to so comply or that a Fund might not so comply in the future. In the event of a breach of this Section 4.1(b) by AVIF, it will take all reasonable steps to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Section 1.817-5 of the regulations under the Code. In the event of a breach of this Section 4.1(b) by AVIF, it will take all reasonable steps to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Section 1.817-5 of the regulations under the Code. The representations and warranties of this Section 4.1(b) shall not apply with respect to any Fund whose beneficial interests are held solely by owners of "pension plan contracts" within the meaning of Section 818(a) of the Code and other persons whose federal income tax treatment is not dependent on the Fund's compliance with the requirements of Section 817(h) of the Code.
(c) Notwithstanding any other provision of this Agreement, LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize
any liability of AVIF or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations
Section 1.817-5(a)(2), to the Commissioner of the IRS
that such failure was inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any Participant or any other claimant regarding any claims that could give rise to liability to AVIF or its affiliates as a result of such a failure or alleged failure; provided, however, that LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY to the IRS, any Participant or any other claimant in connection with any of the foregoing proceedings or contests (including, without limitation, any such materials to be submitted to the IRS pursuant to Treasury Regulations Section 1.817-5(a)(2)), (a) shall be provided by LIFE COMPANY to AVIF (together with any supporting information or analysis); subject to the confidentiality provisions of Section 18, at least ten (10) business days or such shorter period to which the Parties hereto agree prior to the day on which such proposed materials are to be submitted, and (b) shall not be submitted by LIFE COMPANY to any such person without the express written consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure;
(vii) LIFE COMPANY shall not with respect to any claim of the IRS or any Participant that would give rise to a claim against AVIF or its affiliates (a) compromise or settle any claim, (b) accept any adjustment on audit, or (c)
forego any allowable administrative or judicial appeals, without the express written consent of AVIF or its affiliates, which shall not be unreasonably withheld, provided that LIFE COMPANY shall not be required, after exhausting all administrative remedies, to appeal any adverse judicial decision unless AVIF or its affiliates shall have provided an opinion of independent counsel to the effect that a reasonable basis exists for taking such appeal; and provided further that the costs of any such appeal shall be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE COMPANY have any liability resulting from AVIF's refusal to accept the proposed settlement or compromise with respect to any failure caused by AVIF. As used in this Agreement, the term "affiliates" shall have the same meaning as "affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
(d) LIFE COMPANY represents and warrants that the Contracts currently are and will be treated as annuity contracts or life insurance contracts under applicable provisions of the Code and that it will maintain such treatment; LIFE COMPANY will notify AVIF immediately upon having a reasonable basis for believing that any of the Contracts have ceased to be so treated or that they might not be so treated in the future.
(e) LIFE COMPANY represents and warrants that each Account is a "segregated asset account" and that interests in each Account are offered exclusively through the purchase of or transfer into a "variable contract," within the meaning of such terms under Section 817 of the Code and the regulations thereunder. LIFE COMPANY will continue to meet such definitional requirements, and it will notify AVIF immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS
(a) AVIF will use its best efforts to comply with any applicable state insurance laws or regulations, to the extent specifically requested in writing by LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance company duly organized, validly existing and in good standing under the laws of the State of Iowa and has full corporate power, authority and legal right to execute, deliver and perform its duties and comply with its obligations under this Agreement, (ii) it has legally and validly established and maintains each Account as a segregated asset account under Iowa Insurance Law and the regulations thereunder, and (iii) the Contracts comply in all material respects with all other applicable federal and state laws and regulations.
(c) AVIF represents and warrants that it is lawfully organized, validly existing, and in good standing under the laws of the State of Delaware and has full power, authority, and legal right to execute, deliver, and perform its duties and comply with its obligations under this Agreement.
4.3 SECURITIES LAWS
(a) LIFE COMPANY represents and warrants that (i) each Account is
exempt from the registration requirement of the 1940 Act under the provisions of
Section 3(c)(1) thereof, (ii) that each Account is exempt to the extent required
by Section 12(d)(1)(E) of the 1940 Act, (iii) that the Policies are exempt from
the registration requirement of the 1933 Act under the provisions of Section
4(2) thereof, (iv) each Account's private placement memoranda and other
documents pursuant to which Contracts are offered, will at all times comply in
all material respects with all applicable requirements of the 1933 Act and the
rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this Agreement will be registered under the 1933 Act to the extent required by the 1933 Act and duly authorized for issuance and sold in compliance with Delaware law, (ii) AVIF is and will remain registered under the 1940 Act to the extent required by the 1940 Act, (iii) AVIF will amend the registration statement for its Shares under the 1933 Act and itself under the 1940 Act from time to time as required in order to effect the continuous offering of its Shares, (iv) AVIF does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act registration statement, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and rules thereunder, and (vi) AVIF's Prospectus will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in accordance with the laws of any state or other jurisdiction if and to the extent reasonably deemed advisable by AVIF.
(d) AVIF represents and warrants that all of its trustees, officers, employees, investment advisers, and other individuals/entities having access to the funds and/or securities of the Fund are and continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES
(a) AVIF or AIM will immediately notify LIFE COMPANY of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to AVIF's registration statement under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to such registration statement or AVIF Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of AVIF's Shares, or (iv) any other action or circumstances that may prevent the lawful offer or sale of Shares of any Fund in any state or jurisdiction, including, without limitation, any circumstances in which (a) such Shares are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law, or (b) such law precludes the use of such Shares as an underlying investment medium of the Contracts issued or to be issued by LIFE COMPANY. AVIF and AIM will make every reasonable effort to prevent the issuance, with respect to any Fund, of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time.
(b) LIFE COMPANY or UNDERWRITER will immediately notify AVIF of
(i) the issuance by any court or regulatory body of any stop order, cease and
desist order, or other similar order with respect to each Account relating to
the Contracts, (ii) any request by the SEC for any amendment to such
registration statement or Account Prospectus that may affect the offering of
Shares of AVIF, (iii) the initiation of any proceedings for that purpose or for
any other purpose relating to the registration or offering of each Account's
interests pursuant to the Contracts, or (iv) any other action or circumstances
that may prevent the lawful offer or sale of said interests in any state or
jurisdiction, including, without limitation, any circumstances in which said
interests are not registered and, in all material respects, issued and sold in
accordance with applicable state and federal law. LIFE COMPANY and UNDERWRITER
will make every reasonable effort to prevent the issuance of any such stop
order, cease and desist order or similar order and, if any such order is issued,
to obtain the lifting thereof at the earliest possible time.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF
(a) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of all private placement memorandums, reports, any preliminary and final voting instruction solicitation material, applications for exemptions, exemptive orders, requests for no-action letters, and all amendments to any of the above, that relate to each Account or the Contracts, contemporaneously with the filing of such document with the SEC or other regulatory authorities used in connection with the offer and sale of the Policies, as applicable.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which AVIF or any of its affiliates is named, at least five (5) Business Days prior to its use or such shorter period as the Parties hereto may, from time to time, agree upon. No such material shall be used if AVIF or its designated agent objects to such use within five (5) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time to time, agree upon. AVIF hereby designates AIM as the entity to receive such sales literature, until such time as AVIF appoints
another designated agent by giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) The parties hereto recognize that due to the private placement
nature of the Policies covered hereby, the use of sales literature or other
promotional materials in connection with the offer or sale of the Policies is
severely limited and it could jeopardize the Policies' exemption from
registration status. Notwithstanding the foregoing, LIFE COMPANY will furnish,
or will cause to be furnished, to AVIF and AIM for review, any material in which
AVIF, or any Series thereof, or advisor is named, before such material is
submitted to any regulatory body for review, and in any event, at least fifteen
(15) Business Days prior to its use. No such material will be used if AVIF or
AIM objects to its use in writing within fifteen (15) Business Days after
receipt of such material.
(d) LIFE COMPANY and its affiliates and agents shall not give any information or make any representations on behalf of AVIF or concerning AVIF other than the information or representations contained in a Registration Statement or prospectus for AVIF, as such Registration Statement and prospectus may be amended or supplemented from time to time, or in reports of AVIF or reports prepared for distribution to owners of shares of AVIF or for owners of the Policies, or in material approved by AVIF or its designee, without the written permission of AVIF.
(e) For the purposes of this Section 4.5, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (e.g., on-line networks such as the Internet or other electronic messages), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, private placement memorandums or related materials, statements of additional information, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of all SEC registration statements, AVIF Prospectuses, reports, any preliminary and final proxy material, applications for exemptions, exemptive orders, requests for no-action letters, and all amendments to any of the above, that relate to AVIF or the Shares of a Fund, contemporaneously with the filing of such document with the SEC or other regulatory authorities.
(b) AVIF will provide to LIFE COMPANY a camera ready copy of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF statements of additional information, any proxy materials, periodic reports to shareholders and other materials required by law to be sent to Participants who have allocated any Contract value to a Fund. AVIF will provide such copies to LIFE COMPANY in a timely manner so as to enable LIFE COMPANY,
as the case may be, to print and distribute such materials within the time required by law to be furnished to Participants.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, or any of its respective affiliates is named, or that refers to the Contracts, at least five (5) Business Days prior to its use or such shorter period as the Parties hereto may, from time to time, agree upon. No such material shall be used if LIFE COMPANY or its designated agent objects to such use within five (5) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time to time, agree upon. LIFE COMPANY shall receive all such sales literature until such time as it appoints a designated agent by giving notice to AVIF in the manner required by Section 9 hereof.
(d) Neither AVIF nor any of its affiliates will give any information or make any representations or statements on behalf of or concerning LIFE COMPANY, each Account, or the Contracts other than (i) the information or representations contained in the registration statement, including each Account Prospectus contained therein, relating to the Contracts, as such registration statement and Account Prospectus may be amended from time to time; or (ii) in published reports for the Account or the Contracts that are in the public domain and approved by LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY.
(e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, and its respective affiliates that is intended for use only by brokers or agents selling the Contracts (i.e., information that is not intended for distribution to Participants) ("broker only materials") is so used, and neither LIFE COMPANY, nor any of its respective affiliates shall be liable for any losses, damages or expenses relating to the improper use of such broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (e.g., on-line networks such as the Internet or other electronic messages), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL
The SEC has granted an order to AVIF exempting it from certain provisions of the 1940 Act and rules thereunder so that AVIF may be available for investment by certain other entities, including, without limitation, separate accounts funding variable annuity contracts or variable life insurance contracts, separate accounts of insurance companies unaffiliated with LIFE COMPANY, and trustees of qualified pension and retirement plans (collectively, "Mixed and Shared Funding"). The Parties recognize that the SEC has imposed terms and conditions for such orders that are substantially identical to many of the provisions of this Section 5. Sections 5.2 through 5.8 below shall apply pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the private placement memorandums pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED TRUSTEES
AVIF agrees that its Board of Trustees shall at all times consist of trustees a majority of whom (the "Disinterested Trustees") are not interested persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the rules thereunder and as modified by any applicable orders of the SEC, except that if this condition is not met by reason of the death, disqualification, or bona fide resignation of any trustee, then the operation of this condition shall be suspended (a) for a period of forty-five (45) days if the vacancy or vacancies may be filled by the Board;(b) for a period of sixty (60) days if a vote of shareholders is required to fill the vacancy or vacancies; or (c) for such longer period as the SEC may prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS
AVIF agrees that its Board of Trustees will monitor for the existence of any material irreconcilable conflict between the interests of the Participants in all separate accounts of life insurance companies utilizing AVIF ("Participating Insurance Companies"), including each Account, and participants in all qualified retirement and pension plans investing in AVIF ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Trustees of AVIF of the existence of or any potential for any such material irreconcilable conflict of which it is aware. The concept of a "material irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder, but the Parties recognize that such a conflict may arise for a variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract and variable life insurance contract Participants or by Participants of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist the Board of Trustees in carrying out its responsibilities by providing the Board of Trustees with all information reasonably necessary for the Board of Trustees to consider any issue raised, including information as to a decision by LIFE COMPANY to disregard voting instructions of Participants. LIFE COMPANY's responsibilities in connection with the foregoing shall be carried out with a view only to the interests of Participants.
5.4 CONFLICT REMEDIES
(a) It is agreed that if it is determined by a majority of the members of the Board of Trustees or a majority of the Disinterested Trustees that a material irreconcilable conflict exists, LIFE COMPANY will, if it is a Participating Insurance Company for which a material irreconcilable conflict is relevant, at its own expense and to the extent reasonably practicable (as determined by a majority of the Disinterested Trustees), take whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, which steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts from AVIF or any Fund and reinvesting such assets in a different investment medium, including another Fund of AVIF, or submitting the question whether such segregation should be implemented to a vote of all affected Participants and, as appropriate, segregating the assets of any particular group (e.g., annuity Participants, life insurance Participants or all Participants) that votes in favor of such segregation, or offering to the affected Participants the option of making such a change; and
(ii) establishing a new registered investment company of the type defined as a "management company" in Section 4(3) of the 1940 Act or a new separate account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of LIFE COMPANY's decision to disregard any Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY may be required, at AVIF's election, to withdraw each Account's investment in AVIF or any Fund. No charge or penalty will be imposed as a result of
such withdrawal. Any such withdrawal must take place within six (6) months after AVIF gives notice to LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Trustees informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees will determine whether or not any proposed action adequately remedies any material irreconcilable conflict. In no event, however, will AVIF or any of its affiliates be required to establish a new funding medium for any Contracts. LIFE COMPANY will not be required by the terms hereof to establish a new funding medium for any Contracts if an offer to do so has been declined by vote of a majority of Participants materially adversely affected by the material irreconcilable conflict.
5.5 NOTICE TO LIFE COMPANY
AVIF will promptly make known in writing to LIFE COMPANY the Board of Trustees' determination of the existence of a material irreconcilable conflict, a description of the facts that give rise to such conflict and the implications of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF TRUSTEES
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Trustees of AVIF such reports, materials or data as the Board of Trustees may reasonably request so that the Board of Trustees may fully carry out the obligations imposed upon it by the provisions hereof or any exemptive order granted by the SEC to permit Mixed and Shared Funding, and said reports, materials and data will be submitted at any reasonable time deemed appropriate by the Board of Trustees. All reports received by the Board of Trustees of potential or existing conflicts, and all Board of Trustees actions with regard to determining the existence of a conflict, notifying Participating Insurance Companies and Participating Plans of a conflict, and determining whether any proposed action adequately remedies a conflict, will be properly recorded in the minutes of the Board of Trustees or other appropriate records, and such minutes or other records will be made available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES
If, at any time during which AVIF is serving as an investment medium for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to Mixed and Shared Funding, AVIF agrees that it will comply with the terms and conditions thereof and that the terms of this Section 5 shall be deemed modified if and only to the extent required in order also to comply with the terms and conditions of such exemptive relief that is afforded by any of said rules that are applicable.
5.8 OTHER REQUIREMENTS
AVIF will require that each Participating Insurance Company and Participating Plan enter into an agreement with AVIF that contains in substance the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the Fund, upon six (6) months advance written notice to the other parties, or, if later, upon receipt of any required exemptive relief from the SEC, unless otherwise agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY's obligations under this Agreement or related to the sale of the Contracts, the operation of each Account, or the purchase of Shares, if, in each case, AVIF reasonably determines that such proceedings, or the facts on which such proceedings would be based, have a material likelihood of imposing material adverse consequences on the Fund with respect to which the Agreement is to be terminated; or
(c) at the option of LIFE COMPANY upon institution of formal proceedings against AVIF, its principal underwriter, or its investment adviser by the NASD, the SEC, or any state insurance regulator or any other regulatory body regarding AVIF's obligations under this Agreement or related to the operation or management of AVIF or the purchase of AVIF Shares, if, in each case, LIFE COMPANY reasonably determines that such proceedings, or the facts on which such proceedings would be based, have a material likelihood of imposing material adverse consequences on LIFE COMPANY, or the Subaccount corresponding to the Fund with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are not registered where required and, in all material respects, issued and sold in accordance with any applicable
federal or state law, or (ii) such law precludes the use of such Shares as an underlying investment medium of the Contracts issued or to be issued by LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY cease to qualify as annuity contracts or life insurance contracts under the Code (other than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M of the Code) or if interests in an Account under the Contracts are not registered, where required, and, in all material respects, are not issued or sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this Agreement.
6.2 NOTICE REQUIREMENT FOR TERMINATION
No termination of this Agreement will be effective unless and until the Party terminating this Agreement gives prior written notice to the other Party to this Agreement of its intent to terminate, and such notice shall set forth the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at least six (6) months in advance of the effective date of termination unless a shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at least ninety (90) days in advance of the effective date of termination unless a shorter time is agreed to by the Parties hereto; and
(c) in the event that any termination is based upon the provisions of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written notice shall be given as soon as possible within twenty-four (24) hours after the terminating Party learns of the event causing termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE
Notwithstanding any termination of this Agreement, AVIF will, at the option of LIFE COMPANY, continue to make available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Fund (as in effect on such date), redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 6.3 will not apply to any terminations under Section 5 and the effect of such terminations will be governed by Section 5 of this Agreement.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS
All warranties and indemnifications will survive the termination of this Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES
If any Party terminates this Agreement with respect to any Fund pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this Agreement shall nevertheless continue in effect as to any Shares of that Fund that are outstanding as of the date of such termination (the "Initial Termination Date"). This continuation shall extend to the earlier of the date as of which an Account owns no Shares of the affected Fund or a date (the "Final Termination Date") six (6) months following the Initial Termination Date, except that LIFE COMPANY may, by written notice shorten said six (6) month period in the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to one another in taking all necessary and appropriate steps for the purpose of ensuring that an Account owns no Shares of a Fund after the Final Termination Date with respect thereto, or, in the case of a termination pursuant to Section 6.1(a), the termination date specified in the notice of termination. Such steps may include combining the affected Account with another Account, substituting other mutual fund shares for those of the affected Fund, or otherwise terminating participation by the Contracts in such Fund.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written consent of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted will be given by means mutually acceptable to the Parties concerned. Each other notice or communication required or permitted by this Agreement will be given to the following persons at the following addresses and facsimile
numbers, or such other persons, addresses or facsimile numbers as the Party receiving such notices or communications may subsequently direct in writing:
AIM VARIABLE INSURANCE FUNDS
A I M DISTRIBUTORS, INC..
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Facsimile: (713) 993-9185
Attn: Nancy L. Martin, Esq.
CUNA MUTUAL LIFE INSURANCE COMPANY
CUNA BROKERAGE SERVICES, INC.
5910 Mineral Point Road
Madison, WI 53703
Facsimile:
Attn: Legal Division
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY will vote Fund shares held by each Separate Account in the same proportion as the vote of all other holders of shares of the Fund, to the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act and will refrain from substituting Fund shares unless the SEC shall have approved such substitution in the manner provided in Section 26 of the 1940 Act.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE COMPANY concerning any decision to elect or not to elect pursuant to Section 853 of the Code to pass through the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND AIM BY LIFE COMPANY AND UNDERWRITER
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless AVIF, AIM, their affiliates, and each person, if any, who controls AVIF, AIM, or their affiliates within the meaning of Section 15 of the 1933 Act and each of their respective trustees and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of LIFE COMPANY and
UNDERWRITER) or actions in respect thereof (including, to the extent reasonable, legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise; provided, the Account owns shares of the Fund and insofar as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in private placement memorandums and related materials, the Contracts, or to the extent prepared by LIFE COMPANY or UNDERWRITER, or agents thereof, materials relating to the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY or UNDERWRITER by or on behalf of AVIF or AIM for use in any Account's 1933 Act registration statement, any Account Prospectus, the Contracts, or sales literature or advertising or otherwise for use in connection with the sale of Contracts or Shares (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales
literature or advertising of AVIF, or any amendment
or supplement to any of the foregoing, not supplied
for use therein by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates and on
which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of LIFE
COMPANY, UNDERWRITER or their respective affiliates
or persons under their control (including, without
limitation, their employees and "persons associated
with a member," as that term is defined in paragraph
(q) of Article I of the NASD's By-Laws), in
connection with the sale or distribution of the
Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon and in conformity with information furnished to AVIF, AIM or their affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or their respective affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or
advertising of AVIF, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or UNDERWRITER to perform the obligations, provide the services and furnish the materials required of them under the terms of this Agreement, or any material breach of any representation and/or warranty made by LIFE COMPANY or UNDERWRITER in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY to qualify as annuity contracts or life insurance contracts under the Code, otherwise than by reason of any Fund's failure to comply with Subchapter M or Section 817(h) of the Code.
(b) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this Section 12.1 with respect to any losses, claims, damages, liabilities or actions to which an Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance by that Indemnified Party of its duties or by reason of that Indemnified Party's reckless disregard of obligations or duties (i) under this Agreement, or (ii) to AVIF or AIM.
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF or AIM shall have notified LIFE COMPANY and UNDERWRITER in writing within a reasonable time after the summons or other first legal process giving information of the nature of the action shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify LIFE COMPANY and UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER from any liability which they may have to the Indemnified Party against whom such action is brought otherwise than on account of this Section 12.1. Except as otherwise provided herein, in case any such action is brought against an Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled to participate, at their own expense, in the defense of such action and also shall be entitled to assume the defense thereof, with counsel approved by the Indemnified Party named in the action, which approval shall not be unreasonably withheld. After notice from LIFE COMPANY or UNDERWRITER to such Indemnified Party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANY nor UNDERWRITER will be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof, other than reasonable costs of investigation.
12.2 OF LIFE COMPANY AND UNDERWRITER BY AVIF AND AIM
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM agree to indemnify and hold harmless LIFE COMPANY,
UNDERWRITER, their respective affiliates, and each person, if any, who controls
LIFE COMPANY, UNDERWRITER or their respective affiliates within the meaning of
Section 15 of the 1933 Act and each of their respective trustees and officers,
(collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of AVIF and/or AIM) or actions in respect
thereof (including, to the extent reasonable, legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law, or otherwise; provided, the Account owns shares of the Fund and
insofar as such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's 1933 Act registration statement, AVIF Prospectus or sales literature or advertising of AVIF (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to AVIF or its affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or their respective affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, or in sales literature or advertising or otherwise for use in connection with the sale of Contracts or Shares (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or representations (other than statements or representations contained in the private placement memorandums or related materials, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of AVIF, AIM or their affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF, AIM or their affiliates or persons under their control (including, without limitation, their employees and "persons associated with a member" as that term is defined in Section (q) of Article I of the NASD By-Laws), in connection with the sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained, any Account Prospectus, sales literature or advertising, the private placement memorandums or related materials, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY, UNDERWRITER or their respective affiliates by or on behalf of AVIF or AIM for use in the private placement memorandums or related materials, any Account covering the Contracts, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF to perform the obligations, provide the services and furnish the materials required of it under the terms of this Agreement, or any material breach of any representation and/or warranty made by AVIF in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF.
(b) The parties agree that the foregoing indemnification by AVIF shall not apply to any acts or omissions of AIM. Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e) hereof, AVIF and AIM agree to indemnify and hold harmless the Indemnified Parties from and against any and all losses, claims, damages, liabilities (including amounts paid in settlement thereof with, the written consent of AVIF and/or AIM) or actions in respect thereof (including, to the extent reasonable, legal and other expenses) to which the Indemnified Parties may become subject directly or indirectly under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or actions directly or indirectly result from or arise out of the failure of any Fund to operate as a regulated investment company in compliance with (i) Subchapter M of the Code and regulations thereunder, or (ii) Section 817(h) of the Code and regulations thereunder, including, without limitation, any income taxes and related penalties, rescission charges, liability under state law to Participants asserting liability against LIFE COMPANY pursuant to the Contracts, the costs of any ruling and closing agreement or other settlement with the IRS, and the cost of any substitution by LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY reasonably deems necessary or appropriate as a result of the noncompliance.
(c) Neither AVIF nor AIM shall be liable under this Section 12.2 with respect to any losses, claims, damages, liabilities or actions to which an Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance by that Indemnified Party of its duties or by reason of such Indemnified Party's reckless disregard of its obligations and duties (i) under this Agreement, or (ii) to LIFE COMPANY, UNDERWRITER, each Account or Participants.
(d) Neither AVIF nor AIM shall be liable under this Section 12.2
with respect to any action against an Indemnified Party unless the Indemnified
Party shall have notified AVIF and/or AIM in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVIF or AIM of any such action shall not relieve
AVIF or AIM from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.2. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, AVIF and/or AIM will be entitled to participate,
at its own expense, in
the defense of such action and also shall be entitled to assume the defense thereof (which shall include, without limitation, the conduct of any ruling request and closing agreement or other settlement proceeding with the IRS), with counsel approved by the Indemnified Party named in the action, which approval shall not be unreasonably withheld. After notice from AVIF and/or AIM to such Indemnified Party of AVIF's or AIM's election to assume the defense thereof, the Indemnified Party will cooperate fully with AVIF and AIM and shall bear the fees and expenses of any additional counsel retained by it, and AVIF and AIM will not be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof, other than reasonable costs of investigation.
(e) In no event shall AVIF or AIM be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, UNDERWRITER or any other Participating Insurance Company or any Participant, with respect to any losses, claims, damages, liabilities or expenses that arise out of or result from (i) a breach of any representation, warranty, and/or covenant made by LIFE COMPANY or UNDERWRITER hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY or any Participating Insurance Company to maintain its segregated asset account (which invests in any Fund) as a legally and validly established segregated asset account under applicable state law; or (iii) the failure by LIFE COMPANY or any Participating Insurance Company to maintain its variable annuity or life insurance contracts (with respect to which any Fund serves as an underlying funding vehicle) as annuity contracts or life insurance contracts under applicable provisions of the Code.
12.3 EFFECT OF NOTICE
Any notice given by the indemnifying Party to an Indemnified Party referred to in Sections 12.1(c) or 12.2(d) above of participation in or control of any action by the indemnifying Party will in no event be deemed to be an admission by the indemnifying Party of liability, culpability or responsibility, and the indemnifying Party will remain free to contest liability with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS
A successor by law of any Party shall be entitled to the benefits of the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted under and in accordance with Delaware law, without regard for that state's principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts, each of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement will not be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, that the Parties are entitled to under federal and state laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes of reference only and shall not limit or define the meaning of the provisions of this Agreement.
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of LIFE COMPANY
or any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for
purposes of this Section 18), information maintained regarding those customers,
and all computer programs and procedures or other information developed by the
LIFE COMPANY Protected Parties or any of their employees or agents in connection
with LIFE COMPANY's performance of its duties under this Agreement are the
valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it
comes into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY Protected Parties' customers who
also maintain accounts directly with AVIF, AVIF will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
acknowledges that the identities of the customers of AVIF or any of its
affiliates (collectively, the "AVIF Protected Parties" for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the AVIF Protected
Parties or any of their employees or agents in connection with AVIF's
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of
any list or
compilation of the identities of or other information about the AVIF Protected Parties' customers or any other information or property of the AVIF Protected Parties, other than such information as may be independently developed or compiled by LIFE COMPANY from information supplied to it by the AVIF Protected Parties' customers who also maintain accounts directly with LIFE COMPANY, LIFE COMPANY will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with AVIF's prior written consent; or (b) as required by law or judicial process. Each party acknowledges that any breach of the agreements in this Section 18 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) Except as may otherwise be provided in a License Agreement among A I M Management Group Inc., LIFE COMPANY and UNDERWRITER, neither LIFE COMPANY nor UNDERWRITER or any of their respective affiliates, shall use any trademark, trade name, service mark or logo of AVIF, AIM or any of their respective affiliates, or any variation of any such trademark, trade name, service mark or logo, without AVIF's or AIM's prior written consent, the granting of which shall be at AVIF's or AIM's sole option.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its investment adviser, its principal underwriter, or any affiliates thereof shall use any trademark, trade name, service mark or logo of LIFE COMPANY, UNDERWRITER or any of their affiliates, or any variation of any such trademark, trade name, service mark or logo, without LIFE COMPANY's or UNDERWRITER's prior written consent, the granting of which shall be at LIFE COMPANY's or UNDERWRITER's sole option.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and all appropriate governmental authorities (including, without limitation, the SEC, the NASD and state insurance regulators) and will permit each other and such authorities reasonable access to its books and records (including copies thereof) in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby.
SECTION 21. AMENDMENTS
No provision of this Agreement may be amended or modified in any manner except by a written agreement executed by all parties hereto.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers signing below.
AIM VARIABLE INSURANCE FUNDS
Attest: /s/ Jim Coppedge By: /s/ Robert H. Graham
------------------- ------------------------------
Name: Jim Coppedge Name: Robert H. Graham
Title Assistant Secretary Title: President
A I M DISTRIBUTORS, INC.
Attest: /s/ Jim Coppedge By: /s/ Michael J. Cemo
------------------- ------------------------------
Name: Jim Coppedge Name: Michael J. Cemo
Title: Assistant Secretary Title: President
|
CUNA MUTUAL LIFE INSURANCE COMPANY,
on behalf of itself and its separate
accounts
Attest: /s/ Margaret Gallardo-Cortez By: /s/ Michael S. Daubs
---------------------------- ---------------------------------
Name: Margaret Gallardo-Cortez Name: Michael S. Daubs
Title: Assistant Vice President- Title: Chief Officer - Investments
-------------------------
Associate General Counsel
|
CUNA BROKERAGE SERVICES, INC.
Attest: /s/ Terri Wilhelm By: /s/ Marcia L. Martin
------------------------- ------------------------------
Name: Terri Wilhelm Name: Marcia L. Martin
Title: Law Specialist II Title: President
|
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
AIM VARIABLE INSURANCE FUNDS
[LIST APPLICABLE PORTFOLIOS]
SEPARATE ACCOUNTS UTILIZING THE FUNDS
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
SCHEDULE B
AIM'S PRICING ERROR POLICIES
Determination of Materiality
In the event that AIM discovers an error in the calculation of the Fund's net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and the correct net asset value is less than .5% of the correct net asset value, AIM will reimburse the affected Fund to the extent of any loss resulting from the error. No other adjustments shall be made.
b. If the amount of the difference in the erroneous net asset value and the correct net asset value is .5% of the correct net asset value or greater, then AIM will determine the impact of the error to the affected Fund and shall reimburse such Fund (and/or LIFE COMPANY, as appropriate, such as in the event that the error was not discovered until after LIFE COMPANY processed transactions using the erroneous net asset value) to the extent of any loss resulting from the error. To the extent that an overstatement of net asset value per share is detected quickly and LIFE COMPANY has not mailed redemption checks to Participants, LIFE COMPANY and AIM agree to examine the extent of the error to determine the feasibility of reprocessing such redemption transaction (for purposes of reimbursing the Fund to the extent of any such overpayment).
Reprocessing Cost Reimbursement
To the extent a reprocessing of Participant transactions is required pursuant to paragraph (b), above, AIM shall reimburse LIFE COMPANY for LIFE COMPANY's reprocessing costs in an amount not to exceed $1.00 per contract affected by $10 or more.
The Pricing Policies described herein may be modified by AVIF as approved by its Board of Trustees. AIM agrees to use its best efforts to notify LIFE COMPANY at least five (5) days prior to any such regularly scheduled meeting of the Board of Trustees of AVIF to consider such proposed changes.
SCHEDULE C
EXPENSE ALLOCATIONS
=======================================================================================================================
LIFE COMPANY AVIF / AIM
-----------------------------------------------------------------------------------------------------------------------
preparing and (when applicable) filing the Account's Preparing and filing the Fund's registration statement
registration statement
-----------------------------------------------------------------------------------------------------------------------
text composition (when applicable) for Account and supplements text composition for Fund prospectuses and supplements
-----------------------------------------------------------------------------------------------------------------------
text alterations (when applicable) of private placement text alterations of prospectuses (Fund) and supplements
memorandums (Account) and supplements (Account) (Fund)
-----------------------------------------------------------------------------------------------------------------------
printing and Fund private placement memorandums and related a camera ready Fund prospectus
materials
-----------------------------------------------------------------------------------------------------------------------
text composition and printing Fund SAIs
-----------------------------------------------------------------------------------------------------------------------
mailing and distributing Fund SAIs to policy owners
upon request by policy owners
-----------------------------------------------------------------------------------------------------------------------
mailing and distributing private placement memorandums and
related materials (Account), prospectuses (Fund) and
supplements (Fund) to policy owners of record and to
prospective purchasers
-----------------------------------------------------------------------------------------------------------------------
text composition (Account), printing, mailing, and text composition of annual and semi-annual reports
distributing annual and semi-annual reports for Account (Fund (Fund)
and Account as, applicable)
-----------------------------------------------------------------------------------------------------------------------
text composition, printing, mailing, distributing, and text composition, printing, mailing, distributing and
tabulation of any proxy statements and voting instruction tabulation of any proxy statements and voting
solicitation materials to policy owners with respect to instruction solicitation materials to policy owners
Proxies related to the Account with respect to proxies related to the the Fund
-----------------------------------------------------------------------------------------------------------------------
preparation, printing and distributing private placement
memorandums and related materials insofar as such materials
relate to the Contracts and filing such materials with and
obtaining approval from, any state insurance regulatory
authority, and any other appropriate regulatory authority, to
the extent required
=======================================================================================================================
|
[FOLEY & LARDNER LETTERHEAD]
EXHIBIT i(1)(k)
CONSENT OF
FOLEY & LARDNER
We hereby consent to the reference to our firm under the caption "Counsel to the Trust" in the statement of additional information contained in Post-Effective Amendment No. 25 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 24, 2003
|
EXHIBIT j
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our reports each dated January 31, 2003 on the financial statements and financial highlights of AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Basic Value Fund, AIM V.I. Blue Chip Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Core Equity 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. High Yield Fund, AIM V.I. International Equity Fund, AIM V.I. Mid Cap Core Equity Fund, AIM V.I. Money Market Fund, AIM V.I. New Technology Fund, and AIM V.I. Premier Equity Fund, each a series of AIM Variable Insurance Funds. Such financial statements and financial highlights are included in the Post Effective Amendment 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 21, 2003
|
EXHIBIT m(c)
AMENDMENT NO. 2
TO
MASTER DISTRIBUTION PLAN
The Master Distribution Plan (the "Plan"), dated as of July 16, 2001, pursuant to Rule 12b-1 of AIM Variable Insurance Funds, a Delaware business trust, is hereby amended as follows:
Schedule A of the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM VARIABLE INSURANCE FUNDS
(SERIES II SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Portfolio (or Class thereof) designated below, a Distribution Fee determined by applying the annual rate set forth below as to each Portfolio (or Class thereof) to the average daily net assets of the Portfolio (or Class thereof) for the plan year, computed in a manner used for the determination of the offering price of shares of the Portfolio.
DISTRIBUTION
PORTFOLIO: FEE:
--------- ----
AIM V.I. Aggressive Growth Fund 0.25%
AIM V.I. Balanced Fund 0.25%
AIM V.I. Basic Value Fund 0.25%
AIM V.I. Blue Chip Fund 0.25%
AIM V.I. Capital Appreciation Fund 0.25%
AIM V.I. Capital Development Fund 0.25%
AIM V.I. Core Equity Fund 0.25%
AIM V.I. Dent Demographic Trends Fund 0.25%
AIM V.I. Diversified Income Fund 0.25%
AIM V.I. Global Utilities Fund 0.25%
AIM V.I. Government Securities Fund 0.25%
AIM V.I. Growth Fund 0.25%
AIM V.I. High Yield Fund 0.25%
AIM V.I. International Growth Fund 0.25%
AIM V.I. Mid Cap Core Equity Fund 0.25%
AIM V.I. Money Market Fund 0.25%
AIM V.I. New Technology Fund 0.25%
AIM V.I. Premier Equity Fund 0.25%"
|
All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: May 1, 2002
AIM VARIABLE INSURANCE FUNDS
(on behalf of its Series II Shares)
Attest: /s/ Nancy L. Martin By: /s/ Robert H. Graham
---------------------------- -------------------------------
Assistant Secretary Robert H. Graham
President
|
EXHIBIT p(1)
A I M MANAGEMENT GROUP INC.
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED SEPTEMBER 27, 2002)
WHEREAS, the members of the AIM Management Group are A I M Management Group Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and its wholly owned and indirect subsidiaries (individually and collectively referred to as "AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as principal underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the transfer agent, dividend disbursing agent and shareholder processing agent for AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and information which may have at least a temporary impact on the market price of securities, thus creating a potential for conflicts of interest between the persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect to each portfolio under management and the interests of the client accounts and of the shareholders of AIM's investment company clients must take precedence over the personal interests of the employees of AIM, thus requiring a rigid adherence to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no intentional or inadvertent action is taken by an employee of AIM which is, or appears to be, adverse to the interests of AIM or any of its client accounts, including the defining of standards of behavior for such employees, while at the same time avoiding unnecessary interference with the privacy or personal freedom of such employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the Code") on May 1, 1981, and adopted amendments thereto in January 1989, October 1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and now deem it advisable to update and revise said Code in light of new investment company products developed by AIM and changing circumstances in the securities markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM Advisors hereby adopt the following revised Code pursuant to the provisions of Rule 17j-1 under the Investment Company Act of 1940 ("1940 Act"), with the intention that certain provisions of the Code shall become applicable to the officers, directors and employees of AIM.
I. APPLICABILITY
A. The provisions of AIM's Code shall apply to certain officers, directors and employees (as hereinafter designated) of AIM. Unless otherwise indicated, the term "employee" as used herein means: (i) all officers, directors and employees of AIM Advisors and its wholly owned and indirect subsidiaries and (ii) officers, directors and employees of AIM Management who
have an active part in the management, portfolio selection, underwriting or shareholder functions with respect to AIM's investment company clients or provide one or more similar services for AIM's non-investment company clients. The term "employee" does not include directors of AIM Management who do not maintain an office at the home office of AIM Management and who do not regularly obtain information concerning the investment recommendations or decisions made by AIM on behalf of client accounts ("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless such
person or entity has adopted a code of ethics in compliance with
Section 17(j) of the 1940 Act; or, in the event that such person or
entity is domiciled outside of the United States, has adopted
employee standards of conduct that provide equivalent protections to
AIM's client accounts. In performing sub-advisory services, such
person or entity will be subject to the direction and supervision of
AIM, and subject to the policies and control of the Boards of
Directors/Trustees of the respective AIM investment company
client(s).
II. INTERPRETATION AND ENFORCEMENT
A. The Chief Executive Officer of AIM Management shall appoint a Code of Ethics Committee ("Committee"). The Committee shall have the responsibility for interpreting the provisions of the Code, for adopting and implementing Procedures for the enforcement of the provisions of the Code, and for determining whether a violation of the provisions of the Code, or of any such related Procedures has occurred. The Committee will appoint an officer to monitor personal investment activity by "Covered Persons" (as defined in the Procedures adopted hereunder), both before and after any trade occurs and to prepare periodic and annual reports, conduct education seminars and obtain employee certifications as deemed appropriate. In the event of a finding that a violation has occurred requiring significant remedial action, the Committee shall take such action as it deems appropriate on the imposition of sanctions or initiation of disgorgement proceedings. The Committee shall also make recommendations and submit reports to the Boards of Directors/Trustees of AIM's investment company clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor, and a statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant to
Section 204A under the 1940 Act; and the procedures designed to
prevent the misuse of material non-public information by any
person associated with such sub-advisor; and
o such other information as may reasonably be necessary for AIM to report to the Boards of Directors/Trustees of its investment company client account(s) as to such sub-advisor's adherence to the Boards' policies and controls referenced in Section I.B. above.
III. PROCEDURES ADOPTED UNDER THE CODE
From time to time, AIM's Committee shall adopt Procedures to carry out the intent of the Code. Among other things, the Procedures require certain new employees to complete an Asset Disclosure Form, a Brokerage Accounts Listing Form and such other forms as deemed appropriate by the Committee. Such Procedures are hereby incorporated into the Code and are made a part of the Code. Therefore, a violation of the Procedures shall be deemed a violation of the Code itself.
IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
A. Each employee shall have and maintain knowledge of and shall comply strictly with all applicable federal and state laws and all rules and regulations of any governmental agency or self-regulatory organization governing his/her actions as an employee.
B. Each employee shall comply with all laws and regulations, and AIM's prohibition against insider trading. Trading on or communicating material non-public information, or "inside information", of any sort, whether obtained in the course of research activities, through a client relationship or otherwise, is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines established by AIM to ensure compliance with applicable federal and state laws and regulations of governmental agencies and self-regulatory organizations. No employee shall knowingly participate in, assist, or condone any act in violation of any statute or regulation governing AIM or any act that would violate any provision of this Code, or of the Procedures adopted hereunder.
D. Each employee shall have and maintain knowledge of and shall comply with the provisions of this Code and any Procedures adopted hereunder.
E. Each employee having supervisory responsibility shall exercise reasonable supervision over employees subject to his/her control, with a view to preventing any violation by such persons of applicable statutes or regulations, AIM's corporate procedures, or the provisions of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of applicable statutes, regulations or provisions of the Code or of any Procedures adopted hereunder has occurred shall immediately report such evidence to the Chief Compliance Officer of AIM. Such action by the employee will remain confidential, unless the employee waives confidentiality or federal or state authorities compel disclosure. Failure to report such evidence may result in disciplinary proceedings and may include sanctions as set forth in Section VI hereof.
V. ETHICAL STANDARDS
A. Employees shall conduct themselves in a manner consistent with the highest ethical and fiduciary standards. They shall avoid any action, whether for personal profit or otherwise, that results in an actual or potential conflict of interest with AIM or its client accounts, or which may be otherwise detrimental to the interests of the members of AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary obligation to clients of AIM, and shall not deprive any client account of an investment opportunity in order to personally benefit from that opportunity.
C. Without the knowledge and approval of the Ethics Committee of AIM Management, employees shall not engage in a business activity or practice for compensation in competition with the members of AIM. Each employee, who is deemed to be a "Covered Person" as defined in the
Procedures adopted hereunder, shall obtain the written approval of the Ethics Committee to participate on a board of directors/trustees of any of the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend to raise proceeds in a public securities offering.
In the relatively small number of instances in which board approval is authorized, investment personnel serving as directors shall be isolated from those making investment decisions through AIM's "Chinese Wall" Procedures.
D. Each employee, in making an investment recommendation or taking any investment action, shall exercise diligence and thoroughness, and shall have a reasonable and adequate basis for any such recommendation or action.
E. Each employee shall not attempt to improperly influence for such person's personal benefit any investment strategy to be followed or investment action to be taken by the members of AIM for its client accounts.
F. Each employee shall not improperly use for such person's personal benefit any knowledge, whether obtained through such person's relationship with AIM or otherwise, of any investment recommendation made or to be made, or of any investment action taken or to be taken by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating to a client account's portfolio or transactions or to the investment recommendations of AIM, nor shall any employee disclose any non-public information relating to the business or operations of the members of AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a broker/dealer or other vendor who transacts business with AIM or its client accounts, any gifts, gratuities or other things of more than de minimis value or significance that their acceptance might reasonably be expected to interfere with or influence the exercise of independent and objective judgment in carrying out such person's duties or otherwise gives the appearance of a possible impropriety. For this purpose, gifts, gratuities and other things of value shall not include unsolicited entertainment so long as such unsolicited entertainment is not so frequent or extensive as to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of AIM shall not acquire securities for an account for which he/she has a direct or indirect beneficial interest in an initial public offering ("IPO") or on behalf of any person, entity or organization that is not an AIM client. All other employees shall not acquire securities for an account for which he/she has a direct or indirect beneficial interest offered in an IPO or on behalf of any person, entity or organization that is not an AIM client account except in those circumstances where different amounts of such offerings are specified for different investor types (e.g., private investors and institutional investors) and such transaction has been pre-cleared by the Compliance Office.
J. All personal securities transactions by employees must be conducted consistent with this Code and the Procedures adopted hereunder, and in such a manner as to avoid any actual or potential conflicts of interest or any abuse of such employee's position of trust and responsibility. Unless an exemption is available, employees who are deemed to be "Covered Persons" as defined in the Procedures adopted hereunder, shall pre-clear all personal securities transactions in securities in accordance with the Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined in the Procedures adopted hereunder, (or registered representative and/or principal of AIM), shall refrain from engaging in personal securities transactions in connection with a security that is not registered under Section 12 of the Securities Act of 1933 (i.e., a private placement security) unless such transaction has been pre-approved by the Chief Compliance Officer or the Director of Investments (or their designees).
L. Employees, who are deemed to be "Covered Persons" as defined in the Procedures adopted hereunder, may not engage in a transaction in connection with the purchase or sale of a security within seven calendar days before and after an AIM investment company client trades in that same (or equivalent) security unless the de minimis exemption is available.
M. Each employee, who is deemed to be a "Covered Person" as defined in the Procedures adopted hereunder, may not purchase and voluntarily sell, or sell and voluntarily purchase the same (or equivalent) securities of the same issuer within 60 calendar days unless such employee complies with the disgorgement procedures adopted by the Code of Ethics Committee. Subject to certain limited exceptions set forth in the related Procedures, any transaction under this provision may result in disgorgement proceedings for any profits received in connection with such transaction by such employee.
VI. SANCTIONS
Employees violating the provisions of AIM's Code or any Procedures adopted hereunder may be subject to sanctions, which may include, among other things, restrictions on such person's personal securities transactions; a letter of admonition, education or formal censure; fines, suspension, re-assignment, demotion or termination of employment; or other significant remedial action. Employees may also be subject to disgorgement proceedings for transactions in securities that are inconsistent with Sections V.L. and V.M. above.
VII. ADDITIONAL DISCLOSURE
This Code and the related Procedures cannot, and do not, cover every situation in which choices and decisions must be made, because other company policies, practices and procedures (as well as good common sense) and good business judgment also apply. Every person subject to this Code should read and understand these documents thoroughly. They present important rules of conduct and operating controls for all employees. Employees are also expected to present questions to the attention of their supervisors and to the Chief Compliance Officer (or designee) and to report suspected violations as specified in these documents.
For the Boards of Directors:
The AIM Management Group and its
subsidiaries
by: /s/ Bob Graham
-----------------------------------
Bob Graham
|